TaxTMI 
TaxTMI 
2016 (10) TMI 397
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....l objections and not deciding the Grounds of Appeal legally taken by the appellant though reproduced in its order under Statutory appeal indicate non-application of mind by the ITAT while deciding the appeal and thus deserve indulgence of this Hon'ble Court in setting aside the orders of ITAT and the Authorities below. ii) That the ITAT is not justified in concurring with the findings of CIT (A) without considering the arguments, explanations and judicial decisions and also without passing any speaking order on the legal issue of reference to special auditors u/s 142(2A)of the Income Tax Act, 1961 and that too having so done without affording any opportunity of being heard to the appellant being a basic and legal requirement of such reference. iii) That the ITAT is not justified in concurring with the findings of CIT(A) without considering the arguments, explanations and judicial decisions and also without passing any speaking order on the legal issue pertaining to "Dumb Document" giving no indication to prove having any connection any enquiry qua the said document and also not appreciating the legal principle that though any document found at the place of the....
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....ot belong to the appellant at all nor any material/evidence has been brought on record by the AO to prove any nexus wherein the appellant relies upon the basis as adopted in item H (supra). viii) That the ITAT has erred in concurring with the findings of the CIT (A) in confirming the additions to the extent of Rs. 22,43,258/- by wrongly presuming it to be cash found during the course of search as per para 3.8 of its order which factually incorrect as there was no such cash found during the search nor it was so held either by the AO or by the CIT(A) and thus ITAT without application of its mind concurred with the findings of AO. ix) That the order of the Tribunal is legally unsustainable & bad in law and perverse. 3. The appeal stands admitted only in respect of question No.(i). In our view, the other questions do not raise any substantial question of law. 4. This appeal was directed to be heard alongwith ITA No.121 of 2010, which is not on board today. In that appeal, another counsel is appearing on behalf of the respondent/assessee. However, learned counsel appearing on behalf of the department states that the appellant therein will be withdrawing that appe....
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....arlier before the Authorities. We have, however, permitted the appellant to raise the issue. 8. Mr. Mukhi, the learned counsel appearing on behalf of the appellant-assessee contends that block assessment proceedings are null and void, based on the following facts. On June 06, 1997, a search and seizure operation was conducted under Section 132(1) of the Act in the premises of the assessee and other members of his family and group concerns viz. M/s Muni Roller Flour Mills Private Limited and M/s Durga Trading Company, which is a sole propriety concern of the assessee. Documents were seized together with the regular books of accounts pertaining to the block period. The assessee filed the return on 12.05.1999 declaring his income to be "nil". During the search at the assessee's residence, several documents including ledgers, journals, cash books and stock register were seized. 9. Initially, the department served a notice dated 19.11.1997 upon the assessee. At the head of the notice, it is stated to be under Section 142 (1) of the Income Tax Act, 1961. This was an inadvertent error. The body of the notice makes it clear that it was in fact a notice under Section 158 BC. Th....
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....r the notice void. It is not the assessee's case that there was any other search and seizure operation other than the one conducted on 06.06.1997. That being the case, the block period also was obvious. It was as stipulated in Section 158B(a) which as it stood at the relevant time provided that unless otherwise required block period means the period comprising previous years relevant to the 10 assessment years preceding the previous year in which the search was conducted under Section 132. 15. In any event, this would be a mere technicality. The assessee was not prejudiced in any manner whatsoever. The assessee has not established that he was prejudiced on account of the notice not furnishing the block period or on account of it stating to be under Section 142(1). Section 292B is a complete answer to this contention. Section 292B reads as under:- "Return of income, etc., not to be invalid on certain grounds. ................ 292B. No return of income, assessment, notice summons or other proceeding, furnished or made or issued taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be in....
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....s requisitioned after the 30th day of June, 1995, but before the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days; (ii) in respect of search initiated or books of account or other documents or any assets requisitioned on or after the 1st day of January, 1997, serve a notice to such person requiring him to furnish within such time not being less than fifteen days but not more than forty-five 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 the undisclosed income for the block period : Provided that no notice under section 148 is required to be issued for the purpose of proceeding under this Chapter : Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return; (b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) an....
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....58BD to be defective, erred in holding that the defect was not curable under Section 292B of the Act?" The Tribunal allowed the assessee's appeal only on the ground that the assessment proceedings were vitiated on account of the assessee having not been given a clear period of 15 days for filing the return under Section 158BC. The Division bench held as under:- "8. The above provisions are statutory recognition of the principles of natural justice which are applicable to assessment proceedings under the Act. The affected party is entitled to the fair opportunity and fair procedure. Since the period of 15 days has been specified statutorily, it may not be fair to expect filing of return in shorter period. At the same time, the effect of violation of the principles of natural justice is not to always nullify the exercise of jurisdiction unless prejudice is caused. Where period specified in the notice is less than the statutory period, no prejudice is caused if return filed is taken into account. The notice specifying lesser period can be read as specifying the statutory period. The principle is duly recognised under section 292B of the Act." In State Bank of Patial....
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....s, if one is so inclined. The principle stated under (4) hereinbelow is only another way of looking at the same aspect as is dealt with herein and not a different or distinct principle." 11. We are of the view that the Tribunal erred in concluding that failure to give notice of 15 days will vitiate the assessment itself without considering the prejudice to the assessee. Total absence of notice may be on a different footing but if notice is duly served, the assessee can either avail of the statutory time for filing of the return irrespective of shorter period mentioned in the notice or can be given fresh opportunity if it is held that the assessee suffered prejudice on account of shorter period mentioned in the notice. In any situation, it is not permissible to quash the assessment proceedings merely on the ground that the period mentioned in the notice was lesser than the statutory period specified under section 158BC(a)." (emphasis supplied) There is no doubt that the judgment squarely covers the case against the appellant. Mr. Mukhi, however, submitted that we ought not to be bound by the judgment as the respondent did not appear before the Court in that case. We a....
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.... well as tax on completion of the proceedings to be made. Section BC(d) would authorise the Assessing Officer to apply the assets seized in the same manner as are applied under Section 132B." Indeed, the Supreme Court held the issuance of the notice under Section 158 BC to be mandatory. It is in that context that the Supreme Court held that such a notice is the very foundation for adjudication. It also held that the Section prescribed the time limit of 15 days for compliance. The Supreme Court, however, did not hold that if there is an inadvertent error such as the one in the present case, the notice would be void. Much less, is it held that the entire block assessment proceedings are void on account thereof. The issue that falls for our consideration was neither raised before, nor decided by the Supreme Court. The judgment, therefore, is of no assistance to the appellant. 26. Mr. Mukhi then relied upon the judgment of the Karnataka High Court in 'Commissioner of Income-Tax and another vs. Micro Labs Ltd.', [2012] 348 ITR 75, wherein it was held as under:- "The proceeding under Chapter XIV-B and the provisions of Section 139 are different. A return filed unde....
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....arlier notice dated 19.11.1997 which we have held is valid. 29. Mr. Putney, has relied upon the fact that the assessee had filed a return, pursuant to second notice dated 21.08.1998. He submitted that the assessee did not raise the objection. Had we come to the conclusion that the proceedings are void on account of the notice dated 21.08.1998 granting the petitioner less than 15 days to file a return it may have been possible to contend that the entire proceedings would have been vitiated and the appellant having filed a return may not have made a difference on the ground that there can be no estoppel against statute. 30. The analogy sought to be drawn with Section 148 of the Act is not well-founded. In answer, Mr. Putney, relied upon the judgment of a Division Bench of the Bombay High Court in 'Shirish Madhukar Dalvi vs. Assistant Commissioner of Income-Tax', [2006] 287 ITR 242, where it was held :- "49. Having said so, now it is necessary to consider one more potent legal submission of Mr. Sathe that the provisions of sections 148 and 158BC are synonymous and pari materia. Having examined the provisions of sections 148(1) and 158BC, side by side, it would b....
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....he context in which they are made. It is not permissible to read them in isolation or out of context. A stray sentence cannot be allowed to be put into service to draw a meaning which was never meant by the author himself. Thus, these observations by themselves do not mean that the rigour of section 148 stands substituted with that of section 158BC. Section 148 is a substantive section whereas section 158BC is a procedural section. Both sections definitely stand on different footings. As already observed, a procedural requirement can always be waived by the subject for which benefit they are enacted as such submission made by Mr. Sathe in this behalf does not hold water." 31. In any event, as we have already held, though the notice under Section 158 BC is mandatory errors such as those in the present case which do not cause the assessee any prejudice do not render either the notice or the block assessment proceedings void. 32. Question (i) and the questions raised in CM No.17939 of 2014 are, therefore, answered in favour of the Revenue-respondent. 33. As we mentioned earlier during the search and seizure operation several documents were seized. Many of them did not form pa....