TaxTMI 
TaxTMI 
2017 (10) TMI 1009
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....missioner") ruled that the proceedings ought to have been initiated under section 158 BD, the provision that concerns the undisclosed income belonging to some person other than the one regarding whom the search was made. 3. Acting on the Appellate Commissioner's direction, the Assessing Officer, on 28 July 2005, passed orders afresh: He determined the total undisclosed income at Rs. 2,02,71,670/-. On appeal, the Appellate Commissioner confirmed the assessment order. Aggrieved, Premkumar approached the Appellate Tribunal, which reversed the findings and ruled in Premkumar's favour. Now, the Revenue came in appeal before this Court. 4. The Tribunal had "no hesitation to quash the 158BD assessment in the case." But it dismissed the surcharge issue covering Rs. 20,67,710/- as "not pressed" by assessee-Premkumar. The Adjudicatory Ambit: 5. The Assessing Officer, to his credit, reassessed the case on remand and passed an order solid on facts and sound in reasoning. The Assessing Officer has, overall, done an impeccable job-its correctness not counting here. When the matter finally reached the Tribunal, it allowed the second appeal, excluding the issue 'not pressed' by Premkum....
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....en, Assessing Officer arrived at the undisclosed income for the block period: Assessment Year AY Undisclosed Income Rs. AY 1991-92 8,400 AY 1992-93 10,739 AY 1993-94 28,608 AY 1994-95 14,48,762 AY 1995-96 13,40,567 AY 1996-97 12,24,797 AY 1997-98 18,53,241 AY 1998-99 36,14,112 AY 1999-2000 45,43,633 AY 2000-01 46,01,2011 AY 2001-02 (Part) 15,97,600 Total Undisclosed Income 2,02,71,670 13. Finally, Assessing Officer directed Premkumar to pay, on the above undisclosed income, tax as follows: 14. Income Tax: Rs. 1,21,63,002/-; surcharge (at 17%): Rs. 20,67,710/-; Addl. Interest (u/s.158BFA for 18 months):Rs. 26,32,679/-. Total tax and interest payable was rounded to Rs. 1,68,63,390/- The Tribunal's Findings: (A) About the Properties: (i) Immovable: 15. Only two properties, out of nine, were in the assessee's name. The residential property was purchased in 1990-91 and was shown in the regular return filed for the relevant assessment year. About the 1/3rd share in the land at Mundaveli, the assessee explained that he used his 'chit' amount to buy it. (ii) Movable: 16. The movable proper....
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....ded us that the assessee himself declared an undisclosed income of Rs. 10,69,094 in the return filed on 14.01.2005 for the Block Period. 24. The ""Binani Zinc Diary"" found because of such simultaneous action, though seized by the CBI, is "evidence found a s result of search" within the meaning of section 158BB and can be used for computation of undisclosed income under section 158BC or 158BD, as the case may be, asserts the learned Senior Counsel. Assessee"s: 25. Sri K. I. Mayankutty Mathar, the learned counsel for assessee-Premkumar, has supported the Tribunal"s findings in their entirety. According to him, both the Assessing Officer and the Appellate Commissioner have misdirected themselves. And the Tribunal has corrected what he terms the glaring adjudicatory lapses and, so, quashed the proceedings, justly. 26. According to Sri Mather, the Appellate Commissioner"s direction to the Assessing Officer to reassess Premkumar under section 158 BD amounts usurpation of his legitimate adjudicatory powers as a primary authority. So he asserts that the resultant reassessment has been vitiated. To repel the Revenue"s contention that Premkumar ought to have challenged the Appel....
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....provision empowers the appellate authority, in an appeal against an order of assessment, to confirm, reduce, enhance, or annul the assessment. True, as rightly contended by Sri Mather, the assessee"s counsel, before 01.06.2001, section 251 (1) (a) has an appendage: "or he may set aside the assessment and refer the case back to the Assessing Officer for making a fresh assessment in accordance with the directions given by the Commissioner (Appeals) and after making such further inquiry as may be necessary, the Assessing Officer shall thereupon proceed to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment;". 31. Sri Mather relies on a CBDT"s circular to drive home how the amendment has affected the Appellate Commissioner"s powers. He has cited the circular in his written submissions. Para 78 of the clarificatory circular notes that the power of the Appellate Commissioner does not include the power to set aside the assessment. It was to finalize the assessment early and to avoiding prolonged litigation. The Appellate Commissioner will not set aside the assessment and refer the case back to the Assessing Officer ....
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.... the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court. Id." 36. The three-Judge Bench finally holds in Dhirendra Nath that where the court acts without inherent jurisdiction, a party affected cannot by waiver confer jurisdiction on it, which it has not. Where such jurisdiction is not wanting, a directory provision can obviously be waived. But a mandatory provision can only be waived if it is not conceived in the public interests, but in the interests of the party that waives it. 37. A distinction exists between the provisions that confer jurisdiction and those that regulate procedure. Jurisdiction can neither be waived nor created by consent, holds a Constitution Bench of the Supreme Court in Supdt. of Taxes, Dhubri v. Onkarmal Nathmal Trust AIR 1975 SC 2065. A procedural provision may be waived by conduct or agreement. Quoting with approval Kammins Ballrooms Co. Ltd. v. Zenith Investments (Torquay) Ltd., 1971 A.C. 850. Onkarmal, per C. N. Ray, C.J., further observes that waiver arises where a person is entitled t....
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....ims to serve a public interest: curtailing the adjudicatory delays and completing the assessments quickly. 43. The Revenue maintains that the authority who passed the order has the power to entertain an appeal, in the first place. If he has passed an order which does not strictly conform with the statutory mandate, he has, at best, exercised his power irregularly-or even illegally. But, by no stretch, he acted without authority; nor has his order become nullity. 44. When an order under section 271 (1) (C) is passed in violation of section 274 (1), it is statutory violation, observes the High Court of Andhra Pradesh in Thakur V. Hari Prasad. The order may have violated a statute, and it may amount to an illegal order. But it can be corrected under section 254 of the Act. The order does not, thereby, become void. Uncorrected in appropriate proceedings, the order continues to hold good and remains in currency. 45. In Sea Pearl Industries the Supreme Court examined Section 80-HHC of the Act. The Court observed that the object of Section 80- HHC is to grant an incentive to earners of foreign exchange. The matter will, therefore, must be considered by referring to this object. I....
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....ction 158BC as stated above. But Panchajanyam goes on to observe that there is no mention in Section 158BD that the AO before transferring the file to another officer having jurisdiction to assess the person other than the Assessee proceeded under Section 132 or 132A has to record his satisfaction in writing. It finally holds that the validity of assessment is not affected from the Assessment Officer"s failure to record his satisfaction under Section 158BD; it is only to transfer the file. Once the file is transferred, the transferring officer becomes functus officio and the jurisdiction for all purposes is transferred to the officer to whom file is transferred and who has jurisdiction to assess the Assessee about whom details are obtained while searching another assessee. 50. Contrary to Panchajanyam are the Supreme Court"s precedents. While dealing with a taxing provision, the principle of "strict interpretation" should be applied. The court shall not, observed the Supreme Court in Sneh Enterprises v. Commr. of Customs (2006) 7 SCC 714, interpret the statutory provision in such a manner as would create an additional fiscal burden on a person. It is also trite that while two in....