TaxTMI 
TaxTMI 
2026 (2) TMI 216
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.... 2. The details of the eighteen (18) appeals, the orders impugned, the assessment years involved, names of the appellants and the respondents, for convenience, are reproduced hereunder: Sl.No. ITTA. No. ITA No. Assessment Year Appellant Respondent 1 252/2008 IT(SS)A.No. 160/Hyd/2003 Block Period 1991-92 to 2001-01 & broken period from 01.04.2000 to 04.08.2000 Anupama Chand Dy. Commissioner of Income Tax, Central Circle-4, Hyderabad. 2 253/2008 IT(SS)A.No. 169/Hyd/2003 " Deep Chand " 3 254/2008 IT(SS)A.No. 156/Hyd/2003 " Moti Chand " 4 255/2008 IT(SS)A.No. 162/Hyd/2003 " Rajkumari Chand " 5 256/2008 IT(SS)A.No. 153/Hyd/2003 " Trilok Chand " 6 257/2008 IT(SS)A.No. 158/Hyd/2003 " Ranjana Chand " 7 258/2008 IT(SS)A.No. 168/Hyd/2003 " Jamuna Bai (Died) per Lrs. 2 to 6 " 8 259/2008 IT(SS)A.No. 157/Hyd/2003 " Gopi Chand " 9 260/2008 IT(SS)A.No. 170/Hyd/2003 " Ramesh Chand " 10 261/2008 IT(SS)A.No. 167/Hyd/2003 " Jamuna Bai (Died) per Lrs. 2 to 5 " 11 262/2008 IT(SS)A.No. 165/Hyd/200....
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.... appellants filed return in the prescribed form in Form No.2B on 09.01.2001 for the block period admitting 'NIL' undisclosed income under Section 158-B(b) of the Act. The Assessing Authority after issuance of notice under Sections 143(2) and 142(1) of the Act, taking into account all the relevant evidence, determined the undisclosed income for the block period as Rs. 1,11,120/- (minor variations of amounts in other appeals) under Section 158-BC(c) r/w Section 143(3) and determined tax thereupon including surcharge and the assessment orders in the respective batch of appeals passing orders under Section 158-BD r/w 158-BC on 31.12.2002. 6. Aggrieved thereupon, all the assessees have filed appeals before the CIT(A) and the all the said appeals were dismissed by the CIT(A) on 21.10.2003, but however, the CIT(A) enhanced the undisclosed income and directed the Assessing Authority to take the said undisclosed income and collect the tax thereupon. Subsequently, all the assessees challenged the said appellate orders passed by the CIT(A) before the learned ITAT. 7. The brief contentions of the assessee before the Tribunal were that the CIT(A) has no jurisdiction to enhance the assesse....
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....of respective appeals, upon considering the submissions made by the learned Senior Counsel Sri Avinash Desai and Sri A.V.A. Siva Karthikeya, learned counsel for the appellants, the substantial questions of law that arise for determination in this batch of appeals appear to be threefold and they are: 1. Whether the notice under Section 143(2) of the Act is to be served or issued within the prescribed period from the last day of month, on which the return is filed by the assessee? 2. Whether the notice under Section 158-BD of the Act should reflect the satisfaction on the part of the Assessing Officer? 3. Whether the proceedings would lapse, if the assessment orders are not passed within the period of two years from the initiation of the search? Contentions of the Counsel for appellants: 12. With regard to the first ground, the learned Senior Counsel along with other counsel for the appellants contended that Section 143(2) of the Act mandates that the notice thereunder must be served on the assessee within a period of one year (12 months) from the last day of the said calendar month in which the return is filed. In the present case, the return of the ....
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....ision Bench of the Delhi High Court in Commissioner of Income Tax v. Vardhman Estate Pvt. Ltd. (2006) 287 ITR 368 (Delhi) = MANU/DE/9256/2006 was relied upon by the learned Senior Counsel, wherein the Court categorically rejected the contention that the words "issued" and "served" are synonymous or interchangeable. It was held that the statutory requirement under Section 143(2) is that the notice must be served upon the assessee within the prescribed time and that mere issuance of notice would not validate proceedings, particularly under Section 158-BD of the Act. 16. On the basis of the above judgments, it was contended that the statutory expression "served" in Section 143(2) unequivocally requires actual service of notice upon the assessee within one year from the last day of the relevant month of filing return by the assessee. Since, in the present case, service of notice was affected on 04.02.2002, though issued on 29.01.2002, the proceedings suffer from a fatal legal infirmity and are therefore liable to be set aside. 17. Insofar as the second ground that, satisfaction on the part of the Assessing Officer should be reflected in the notice issued under Section 158-BD of t....
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.... the searched person, and failure to record such satisfaction would vitiate the entire proceedings. 21. Further, replying upon the Central Board of Direct Taxes(CBDT) Circular vide No.24/2015, dt.31.12.2015, wherein the judgment of the Hon'ble Supreme Court in Calcutta Knitwears's case (supra) was referred and issued specific guidelines to the taxing authorities mandating strict compliance with the requirement of recording a satisfaction note prior to transfer of records to the Assessing Officer having jurisdiction over the other person under Section 158-BD of the Act, and the Hon'ble Supreme Court held that: "the satisfaction note could be prepared at any of the following stages: a) At the time of or along with the initiation of proceedings against the searched person under Section 158-BC of the Act; b) Along with the assessment proceedings under Section 158-BC of the Act; and c) Immediately after the assessment proceedings are completed under Section 158-BC of the Act of the searched person." 22. By relying on the said judgment, the learned counsel would contend that in the instant appeals, notice issued u/s.158-BD Act has not recorded th....
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....he prescribed period, would not vitiate the proceedings, as the law mandates issuance of notice within the prescribed time and not its service. Accordingly, it was contended that the notice issued is valid and the proceedings are properly drawn. 26. The learned Senior Standing Counsel further submitted that though Section 143(2) uses the expression "served", it would only mean that the proceedings must be issued within the prescribed period of one year from the last day of the month in which the return was filed and not actual service thereof. Since the notice in the instant case was admittedly issued within the statutory period, the mandatory requirement stands satisfied and there is no procedural infirmity. Consequently, the first ground raised by the appellants was contended to be untenable and liable to be rejected 27. With regard to the second ground relating to the requirement of recording a satisfaction note under Section 158-BD of the Act prior to issuance of notice and so as to the 3rd ground that the proceedings have to be completed within two years from the date of search it was submitted that such contentions were neither urged before the CIT(Appeals) nor before t....
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....ee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return: Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished. 158BD. Undisclosed income of any other person - Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132-A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed [under section 158-BC] [ Inserted by Act 20 of 2002, Section 67 (w.e.f. 1.6.2002).] against such other person and the provisions of this Chapter shall apply accordingly." 31. In the factual matrix and statutory provisions above e....
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....ax v. Lunar Diamonds Ltd (2006) 281 ITR 1 (Delhi) = MANU/DE/0287/2005, and M/s Bansal's Reliance on Tea Consultancy and Plantation Services (India) P. Ltd. v. Union of India (2005) 278 ITR 356 (Delhi) = MANU/DE/0280/2005. 35. In the said decisions, it has been consistently held that the expressions "issued" and "served" are neither synonymous nor interchangeable and that issuance and service of notice constitute two distinct and independent statutory acts. The Courts have categorically held that Section 143(2) leaves no scope for ambiguity and mandates that notice must be served upon the assessee within the prescribed period, and that mere issuance of notice is insufficient to sustain the proceedings. 36. The said principle stands further fortified by the judgment of the Madras High Court in M. Chellappan's case (supra), wherein notices issued beyond the period prescribed under Section 143(2) were held to vitiate the assessments and were accordingly set aside. 37. Similarly, the Delhi High Court in Commissioner of Income Tax v. Inderpal Malhotra MANU/DE/9504/2007, following its earlier decision in Vardhman Estates Pvt. Ltd.'s case (supra), rejected the contention of the Re....