TaxTMI 
TaxTMI 
2010 (4) TMI 837
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.... made to the extent of Rs. 6,03,065 by D. Suyaraj as discussed in para 5 and in not appreciating that they are not based on any materials found as a result of the search and even without the Revenue discharging the onus, under s. 69 for deeming it as undisclosed income in the facts and the circumstances of the case and in law. (3) The learned CIT(A) ought to have appreciated that the provisions of s. 40A(3) should not be applied where the profit is estimated by applying flat rate of the gross profit and alternatively should have allowed telescoping of the aggregate amount of Rs. 81,663 [(Rs. 2,76,000 as stated in para (11.3) and Rs. 2,05,663 as stated in para (13.3)] and limited the quantum of addition confirmed by him in respect of unaccounted cash (paras 9, 10 and 11) in the facts and the circumstances of the case and in law. (4) The learned CIT(A) has erred in confirming the additions of Rs. 2,88,022 (para 15) as credits appearing in the partners' account in the books of the appellant as the undisclosed income of the appellant in the facts and the circumstances of the case and in law. (5) The learned CIT(A) has erred in sustaining the additions of Rs. 2,57,275 (pa....
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....herein the partner of the assessee-firm has solemnly affirmed that no notice was served under s. 158BC on the assessee. 6. On the other hand, the learned Departmental Representative has submitted that there is a difference between the notice under ss. 143(2) and 158BC. The logic relating to notice under s. 143(2) cannot be applied to s. 158BC notice because these notices are for different purposes. Thus, the learned Departmental Representative has submitted that in the case relied on by the assessee in the case of Hotel Blue Moon (supra) is not applicable to the facts of the present case because in the said case, the issue was non service of the notice under s. 143(2) and not under s. 158BC. He has further contended that the AO has duly issued the notice dt. 6th Jan., 2000 and thereafter the assessee has filed the block return and participated in the block assessment proceedings. Therefore, the principle of justice was not violated. He has thus submitted that even otherwise non service of the notice under s. 158BC does not render the assessment as nullity but it is only a procedural irregularity and capable of being cured. He has relied upon the unreported decision of Hon'ble Su....
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....se the assessee filed the block return. 8. As regards the factum of service of the notice on the assessee is concerned, it is established from the assessment record that the Revenue has miserably failed even to prima facie show that any such notice was sent to the assessee. Therefore, we have no doubt and ambiguity in our mind that no notice was served upon the assessee under s. 158BC. Now, we take up the contention of the learned Departmental Representative that non-issuance of notice is only a procedural irregularity and cannot render the assessment nullity. Chapter XIV-B of the IT Act is a code in itself and a special procedure for assessment of search cases. The AO acquires the jurisdiction for initiation of the block assessment proceedings only after issuing a notice to the assessee. Therefore, the notice under s. 158BC is not a procedural requirement but, it gives the very jurisdiction to the AO to proceed under s. 158BC. Therefore, we are not in agreement with the contention of the learned Departmental Representative that non-service of notice under s. 158BC is merely a procedural irregularity. Without issuing notice, the AO cannot proceed under s. 158BC. Even the return ....
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.... we have no hesitation in holding that no notice under s. 143(2) of the Act had been served upon the assessee within the prescribed period and, therefore, the assessment made by the AO is invalid." 10. As held by the Delhi High Court, merely issuing a notice is not sufficient but, it has to be sent by a registered post along with acknowledgement due and duly served upon the assessee. Since in the case in hand, there is no material evidence or record to show that the notice was even sent to the assessee, therefore, the proceedings initiated by the AO under s. 158BC without jurisdiction are null and void ab initio. The case relied upon by the learned Departmental Representative is not applicable to the facts of the present case as the findings of the Hon'ble Supreme Court in the case of Deepak Agro Foods (supra) were on the issue of adjudication without hearing, which can be cured by a duly constituted legal proceeding. Whereas, in the case in hand, the jurisdiction itself is lacking in the absence of mandatory notice under s. 158BC. Accordingly, the block assessment as well as the proceedings under s. 158BC are not sustainable and liable to be annulled. 11. Since the block ass....
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....ing grounds : "(1) The learned CIT(A) has erred in sustaining the various additions aggregating to Rs. 6,24,778 in the facts and the circumstances of the case, and in law. (2) The learned CIT(A) ought to have held that as there was no search or seizure during the previous year, relevant to the asst. yr. 1999-2000 on the appellant, the return of income could not have been taken up for scrutiny, in terms of instructions of the Board (Instruction No. 1984), dt. 9th June, 2000 in the facts and the circumstances of the case and in law. (3) The learned CIT(A), has failed to hold that the AO has committed an error in rejecting the books and making the assessment without complying with requirements of s. 145(3) in the facts and the circumstances of the case and in law. (4) The learned CIT(A) ought to have held that the AO was not justified in making an addition of Rs. 2,35,480 by estimating the gross profit at 22 per cent, in the facts and the circumstances of the case, and in law. (5) The learned CIT(A) ought to have held that, having rejected the accounts as incorrect and incomplete and estimating the income, the disallowance of interest of Rs. 90,5....
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....tmental Representative and considered the relevant record. The learned Authorised Representative of the assessee has contended that the AO cannot adopt the dual methods for making the addition-one by rejecting the books of account and estimating the income on GP rate and at the same time making the addition on account of certain expenditure and credit. He has further contended that once the books are rejected and income was estimated on GP rate, then the AO cannot make any addition in respect of expenditure and credits on the basis of the same books. 19. On the other hand, the learned Departmental Representative has relied upon the orders of the lower authorities. 20. We have considered the rival contentions and relevant record. The assessee admitted the income in the return of income at Rs. 62,012. The AO noticed that the income admitted by the assessee comes to 20.14 per cent GP rate on the sales against 23.05 per cent GP rate disclosed in the immediate previous year. Accordingly, the AO rejected the books of account and made the addition by estimating the income on GP rate at 22 per cent instead of 20.14 per cent admitted by the assessee. Apart from this, the AO has also m....