TaxTMI 
TaxTMI 
2009 (4) TMI 48
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ITA.No.200/2008, 1173/2007, 1034/2008, 916/2008, 203/2008, 862/2008, 655/2008, 204/2008, 1139/2008, 1202/2008, 831/2008, 1323/2008, 202/2008, 209/2008, 207/2008, 915/2008 Ms P.L. Bansal with Mr Sanjeev Rajpal and Mr R.D. Jolly with Ms Anshul Sharma and Ms Rani Kiyala For the Appellants. Mr Prakash Kumar in ITA 200/08. Mr Satyen Sethi with Mr Johnson Bara for Respondent in ITA 831/08 and 1034/08 Mr Manu Kumar Giri with Mr Anoop Sharma for the respondent in ITAs 655/08 and 862/08. Ms Aarti Saini for the respondent in ITA 1139/08. Mr M.P. Rastogi for the Respondent in ITA 1202/08. Mr Salil Aggarwal with Mr Prakash Kumar for the respondent in ITA 915/08 and 916/08. for the Respondents. JUDGMENT The judgment of the court was delivered by BADAR DURREZ AHMED, J. - In this batch of appeals the following substantial questions of law have been framed:- "(I) Whether issuance/service of notice under section 143 (2) within the prescribed period of time is a prerequisite of framing the block assessment order under chapter XIV B of the Income-tax Act, 1961 ? (II) If yes, whether such assessment would be invalid or irregular? " 2. ITA 200/2008 entitled CIT v. Paw....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roceed to make an assessment and determine the tax payable on the basis of the return filed in response to a notice under section 158BC(a), he has to follow the provisions of sub-section (2) of section 143. The requirement of a notice under sub-section (2) of section 143 cannot be dispensed with in a case where the Assessing Officer proceeds to make an inquiry for the purpose of assessment, and determination of taxes payable after issuing notice under section 142(1) as well." "In the instant case, the Assessing Officer did not act upon the return filed in response to the notice issued under section 158BB(a). He had issued a notice under section 142(1). He had proceeded to make an inquiry. This could not be done without a notice under sub-section (2) of section 143. The provisions of sub-section (3) quoted above clearly show that the powers under this sub-section could be invoked only after service of notices under sub-section (2). In the instant case, the Assessing Officer admittedly did not follow the provisions of sub-section (2) of section 143." "The words "so far as may be", will thus become mandatory where the Assessing Officer proceeds to make an inquiry in repudi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as liable to be quashed. The Tribunal also noted that the department had been given full opportunity to produce evidence in support of the issuance of a notice under section 143 (2), if any, but the Department could not do so. Consequently, the Tribunal, following similar decisions which in turn followed the said Gauhati High Court decision, allowed the assessees appeals. 5. The Revenue, being aggrieved by the said decision and other similar decisions of the Tribunal in the connected matters has preferred these appeals. Mr. Jolly, the learned counsel appearing on behalf of the revenue in some of the appeals, submitted that the time limit prescribed under the proviso to section 143 (2) is only for ensuring that in cases where an assessee files a return under section 139, the assessing Officer must either issue the intimation under section 143 (1) or issue a notice under section 143 (2) for completing assessment under section 143(3). He submitted that the requirement of a notice under section 143 (2) is essential for production of material by the assessee. This is so because in regular assessments the assessing officer in the first instance has no material available to him except ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stantive as well as procedural aspects of search cases. Under section 139 an assessee has to file the income tax return voluntarily if he is exigible to income tax. But, under chapter XIV B, there is no provision for filing the return voluntarily. She submitted that in the case of normal assessment if the assessee does not file a return under section 139 (1) then the assessing officer may call upon the assessee to file a return under section 142 (1) (i) of the said act. Where a return is filed either under section 139 or under section 142 (1) and if the assessing officer considers it necessary or expedient to ensure that the assessee has not understated the income etc then he is required to serve on the assessee a notice requiring him to attend on a specified date or to produce such evidence as he may rely upon in support of the return. According to the learned counsel, section 143 (2) has two limbs. The first limb deals with jurisdiction and the second with procedure. She submitted that the proviso to section 143 (2) puts an embargo on the assessing officer to exercise jurisdiction after the expiration of 12 months from the end of the month in which the return was filed by the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iii). She submitted that section 158 BC(b) prescribed the same manner for determining undisclosed income as is adopted in the case of a regular assessment but this is qualified by the words "so far as may be" which, according to her, means to the extent it is possible and practicable. It was her submission that once this search has been conducted, the assessee is already aware of the block assessment proceeding. She however admitted that for the purpose of observing the principles of natural justice, section 158 BC (b) has prescribed a manner of assessment similar to the manner stipulated for regular assessment. For this purpose, she submitted that, in terms of the provisions of section 143 (3), income is to be determined on the basis of evidence voluntarily filed by the assessee under section 143 (2) or as required by the assessing officer under section 142 (1). By observing the same procedure as that in the case of a regular assessment, the assessing officer, in the case of block assessment, can gather evidence for making the assessment. 12. Summing up her submissions thus far, Mrs Bansal submitted that the provisions of section 142, 143 (2), 143 (3) and 144 are to be observed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....officer in the issuance of a notice under section 143 (2) then such lapse would not render the block assessment invalid and would only be a curable irregularity. It was her contention that it is a well-established principle of law that where there is a lapse with regard to some procedural aspect then the same can be cured afterwards and would not render the consequential assessment order null and void. For this proposition she placed reliance on a decision of the Supreme Court in the case of CIT v. Jai Prakash Singh: 219 ITR 77. 15. It was also her submission that once the search is valid and some incriminating material is found during the search, the assessing officer has no option but to issue a notice under section 158 BC (a) and once such notice is validly issued then the assessing officer would be in seizin of the case and have jurisdiction to determine the undisclosed income. Once this jurisdiction is validly assumed then any lapse in the procedural part would not render the assessment order to be null and void. It was her contention that the procedural part of section 143 (2) is nothing but the incorporation of the rule of the audi alterem partem. 16. Finally, she subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case of Janki Exports International v. Union of India: 278 ITR 296 (Del), Mr. Aggarwal submitted that the provisions of section 158 BD have been found to be analogous to section 148 insofar as the procedure that is required to be followed is concerned. 19. It was further contended that after a notice under section 158 BC is issued the assessee is required to file a return within the stipulated period. Once the return is filed, it is open to the assessing officer to accept the same or to require further investigation. If he accepts the return of undisclosed income as it is then, there would be no necessity of issuing any notice under section 143 (2) of the said act. However, if the assessing officer is not satisfied with the return so filed then he is required to issue a further notice under section 143 (2) before an assessment order is passed. At this juncture, it would be appropriate to refer to the provisions of section 143 (2) as applicable to the present appeals:- "(2) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall, if he considers it necessary or expedient to ensure tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the view that the language used in section 143 (2) of the said act was similar to the language used in section 16 (2) of the Wealth Tax Act. The Bombay High Court also took the view that two High Courts, Madras and Gauhati, had taken a view that the notice under section 143 (2) was mandatory even in a case of reopening of assessment under section 148 of the said act. Even independently, the Bombay High Court after having examined the scope and effect of sections 14 to 16 on the one hand and section 17 on the other of the Wealth Tax Act was of the opinion that there was no escape from arriving at the conclusion that when the assessing officer invoked section 17, the provisions of sections 14 and 16 to the extent applicable, for the purposes of making an order of reassessment, would have to be followed and the same would include the time limit prescribed for a notice under section 16 (2). The Court observed that once the language of section 17 itself required that other provisions, to the extent applicable, would apply considering the return is filed under section 14, it contemplated that both procedural and substantive provisions would apply. Consequently, the Bombay High Court ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ter XIV B proceedings. Since section 143(2) was a condition precedent for a regular assessment under section 143 (3) it was equally so for computing undisclosed income. 26. Mr. Ashwini Taneja, advocate, appearing for the respondent assessee in ITA 1139/2008 pointed out that the decision of the Gauhati High Court in Bandana Gogoi (supra) was taken in appeal before the Supreme Court by the Department. However, the special leave petition was dismissed by the Supreme Court on 05.09.2008 on the ground of delay though the question of law was kept open. He also contended that in case an assessing officer wants to make a variation to the return as filed, a notice has to be issued under section 143 (2) and that, too, within the time limit prescribed by the proviso thereto. He further submitted that section 158 BC of the said act prescribes the procedure for block assessment. Sub-clause (a) thereof requires the issuance of a notice by the assessing officer directing the assessee to file a return within the stipulated period in the prescribed form [form 2B] and verified in the same manner as a return under section 142 (1) (i) of the said act. This in itself indicates that there is a link w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Singh:- "Incorporation of an earlier act into a later act is a legislative device adopted for the sake of convenience in order to avoid verbatim reproduction of the provisions of the earlier act into the later. When an earlier act or certain of its provisions are incorporated by reference into a later act, the provisions so incorporated become part and parcel of the later act as if they had been "bodily transposed into it". The effect of incorporation is admirably stated by Lord Escher, M.R.: "if a subsequent act brings into itself by reference some of the clauses of a former act, the legal effect of that, as has often been held, is to write those sections into the new act as if they had been actually written in it with the pen, printed in it"." Consequently, it was submitted that the provisions of section 143 (2) have been incorporated in section 158 BC (b). It would mean that the said provision ought to be read as if it had been actually written in it. Therefore, section 143 (2) would apply in its entirety, that is, including the proviso thereto. The learned counsel also submitted that the proviso to section 143(2) placed an embargo upon assessment beyond a certain period of time....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be waived, for consent could not give a court jurisdiction where there was none. Even if there was inherent jurisdiction, certain provisions could not be waived. What can be waived would be only those provisions which are for the private benefit and protection of an individual in private capacity, which might be dispensed with without infringing any public right or public policy. The learned Chief Justice in terms pointed out that the revenue statutes are based on public policy. The revenue statutes protect the public on the one hand and confer power on the State on the other. Therefore, even in the context of such a revenue statute like a taxation measure such fetter on the jurisdiction being a fetter laid to protect public on wider ground of public policy, it was held that such provisions which confer jurisdiction on assessment and reassessment could never be waived for the simple reason that jurisdiction could neither be waived nor created by consent. In the concurring judgment his Lordship, Beg. J., at page 2077, also pointed out that if the notice under section 7(2) was a condition precedent to the exercise of jurisdiction to make the best judgment assessment, the doctrine of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ocedure of issuance of notice prescribed under section 143 (2). 35. While we do not entirely agree with the analysis that the provision becomes mandatory or directory depending upon what action the assessing officer takes, we are in agreement with the conclusion arrived at by the Gauhati High Court. We are of the view that section 143 (2) is a mandatory provision whether we look at it from the standpoint of a regular assessment or from the standpoint of an assessment under chapter XIV B. If the assessing officer, on receipt of the return of undisclosed income in the Form 2B from the assessee, is satisfied with the same as reflecting the true state of affairs then it is not necessary for him to embark upon any further enquiry or investigation. No further information or explanation is called for from the assessee. In such an eventuality he can straightaway pass the order under section 158 BC (c) of the said act. And, if he does so, the assessee cannot be heard to complain that no notice under section 143(2) was served upon him because his return as filed has been accepted. It is here that the expression "so far as may be apply" comes into play. Section 143 (2) has no application i....