TaxTMI 
TaxTMI 
2015 (3) TMI 307
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....1 and 2 are the legal grounds which read as under: 1. The learned Commissioner of Income Tax (Appeals) erred in confirming the order of the ACIT even though the order was bad in law and void ab initio as the same had been framed in pursuance of an invalid notice issue u/s. 158BC. 2. The learned Commissioner of Income Tax (Appeals) erred in confirming the order of the ACIT even though the order was bad in law and void ab initio as the same had been framed in pursuance of a notice issue u/s. 143(2) which was served on the appellant beyond the prescribed period of one year. 2. In Ground No. 1, the assessee has challenged the legality and validity of the assessment framed in pursuance of the notice issued u/s. 158BC of the Income-tax Act. The facts which revealed from the record are as under. There was a search and survey action at the residential as well as business premises of the deceased assessee and the business premises of M/s. Devs Super Shoppe Pvt. Ltd. and other concern of the Anand Group at Devs Arcade, Samarth Nagar, Nasik on 11-08-2000. In consequence of search and seizure action, the Assessing Officer issued the notice u/s. 158BC dated 30-11-2000 which was served on the....
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....gh lays down a procedure but the Assessing Officer assumes the jurisdiction only when the notice is issue to the assessee directing the assessee to file the return of income for the Block Period as it then was. He submits that this issue has come for the consideration before the Hon'ble ITAT, J Bench, Mumbai in the case of Shri Ravendra M. Patil, Mumbai Vs. Dy. CIT, Central Circle-1, Thane/Mumbai being ITSS 143 & 196/Mum/2005 order dated 29-08-2012. He submits that in the case of ACIT and Another Vs. Hotel Blue Moon 321 ITR 362 (SC) the Hon'ble Supreme Court has explained that the Assessing Officer assumes the jurisdiction only after the notice u/s. 158BC has been issued to the assessee and hence, issuance of the notice is not procedural it is a legal mandatory requirement for assumption of the jurisdiction. He submits that the observations made by the Hon'ble High Court of Bombay in the case of Shirish Madhukar Dalvi Vs. ACIT and Others 287 ITR 242 (Bom) that notice u/s. 158BC(a) only provides for procedure to be adopted for block assessment and it does not confer jurisdiction to asses to the Assessing Officer is no more good law as in the clear terms the Hon'ble S....
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....tory requirement is that he must be given minimum 15 days' time, as per the provisions applicable at that point of time, to the assessee for filing his return for the Block Period. 7. In the case of Hotel Blue Moon (supra) the Hon'ble Supreme Court has examined whether the notice u/s. 143(2) of the Income-tax Act was required to be served on the assessee within the prescribed time limit given while framing the block assessment in consequence of the search and seizure actions which are applicable up to 30-06-2003. The Hon'ble Supreme Court after examining the entire scheme of the assessment to be framed in consequence of the search and seizure actions, when search initiated or equation made after 30-06-1995 but before the 01- 06-2003 and has held as under: 10. Sec. 158BA is an enabling section, empowering the AO, to assess "undisclosed income" as a result of search initiated or requisition made after 30th June, 1995, in accordance with the provisions of this chapter and tax the same at the fixed rate specified in s. 113. Sec. 158BB provides the methodology for computation of undisclosed income of the block period. Sec. 158BC prescribes the procedure for making the block as....
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....regular assessment already done or to be done. The assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of accounts or documents and such other materials or information as are available with the AO. Therefore, the income assessable in block assessment under Chapter XIV-B is the income not disclosed but found and determined as the result of search under s. 132 or requisition under s. 132A of the Act. 13. Sec. 158BC stipulates that the chapter would have application where search has been effected under s. 132 or on requisition of books of accounts, other documents or assets under s. 132A. By making the notice issued under this section mandatory, it makes such notice the very foundation for jurisdiction. Such notice under the section is required to be served on the person who is found to be having undisclosed income. The section itself prescribes the timelimit of 15 days for compliance. In respect of searches on or after 1st Jan., 1997, the time-limit may be given up to 45 days instead of 15 days for compliance. Such notice is prescribed under r. 12(1A) which in turn prescribes Form 2B for block return. 8. In t....
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.... Section 158 BC provides for a procedure to be adopted for block assessment. Under this procedure envisaged, the Assessing Officer shall serve a notice requiring the assessee to furnish his return within such time not being less than 15 days but not more than 45 days as specified in the notice. Therefore, the time to be granted to the assesse in terms of Section 158BC is a minimum of 15 days and a maximum of 45 days. If the said period of time is not granted, the notice is invalid rendering the entire proceedings as without jurisdiction. Admittedly in this case, the notice under Section 158BC calls upon the assessee to submit its return of income "within a period of 15 days". Within a period of 15 days is less than 15 days. Therefore, the mandatory period of time as stipulated under Section 158 BC has not been complied with. The notice therefore, is invalid. An invalid notice cannot confer any jurisdiction on the authority. Hence, the entire proceedings are band in law. The notice is ab initio void. 9. In the case of Shri Ravendra M. Patil (supra) the ITAT, J Bench, Mumbai after considering the decisions of the Hotel Blue Moon (supra), Shri Shirish Madhukar Dalvi (supra) and M/s. ....
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....ed for furnishing the return within 15 days and not less than 15 days, which means more than 15 days with a rider of 45 days. The term not less than 15 days has been clarified by the CBDT in Circular No.717 in Para 39.3(e) as under: "(e) Procedure for making block assessment: The Assessing Officer shall serve a notice on such person requiring him to furnish within such time, not being less than 15 days, as may be specified in the notice, a return in the prescribed form and verified in the same manner as a return under clause (i) of sub-section (1) of section 142 setting forth his total income including undisclosed income for the block period. The officer shall proceed to determine the undisclosed income of the block period and provisions of section 142, sub-sections (2) and (3) of section 143 and section 144 shall apply accordingly. The Assessing Officer shall not be required to issue any notice under section 148 for the purpose of proceedings under this chapter. Though the block period can be extended upto 10 years in the case where the assessee has not disclosed undisclosed income in anyone or more of the previous years in the block periods and the Assessing Officer also does no....
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....on 132 or books of account, other document or assets are requisitioned under Section 132A, it is only then, the Assessing Officer shall proceed to assess the undisclosed income. Therefore, Section 158 BA provides for jurisdiction to the Assessing Officer to assess the undisclosed income in accordance with Chapter XIV-B. Section 158 BA(2) is a charging section, 158BB provides for computation of undisclosed income for the block period and 158 BC provides for procedure for block assessment. Therefore, a notice under Section 158 BC provides for a procedure to be adopted for block assessment. Under this procedure envisaged, the Assessing Officer shall serve a notice requiring the assessee to furnish his return within such time not being less than 15 days but not more than 45 days as specified in the notice. Therefore, the time to be granted to the assessee in terms of Section 158 BC is a minimum of 15 days and a maximum of 45 days. If the said period of time is not granted, the notice is invalid rendering the entire proceedings as without jurisdiction. Admittedly in this case, the notice under Section 158BC calls upon the assessee to submit its return of income "within a period of 15 da....
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....pecific prejudice was suffered by the appellant. At any rate, the notice dt. 6th July, 1998 suffered from only technical defects, if any, and, in our opinion, it was protected under the umbrella of s. 292B of the Act" 12. It is clear from the facts of the said case that when the subsequent notice was issued then the alleged defective notice did not cause any prejudice to the assessee. Therefore, the said decision is not applicable in the facts of the present case where the only notice issued u/s. 158BC was contrary to the provisions of sec. 158BC. 13. As regards the Special Bench decision in case of Navin Verma vs. ACIT 100 ITD 73, the said decision has been considered by the Hon'ble Punjab & Haryana High Court in the case of Niranjan Lal Verma (supra) wherein the Counsel for the assessee gave up the objection raised before the Tribunal regarding invalidity of the notice issued U/S.158BD. Therefore, no finding has been given by Hon'ble Punjab & Haryana High Court on the issue of validity of notice. 14. In view of the facts and circumstances of the case, we hold that the period of time stipulated u/s. 158BC is not less than 15 days and, therefore, the notice allowed the a....