COMMISSIONER OF INCOME TAX vs. KISHOR KUMAR SACHDEVA

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 18.5.2007, Annexure A.3 passed by the Income Tax Appellate Tribunal, Delhi Bench 'A' New Delhi in IT (SS) A No.390/Del/2005 for the block assessment period 1.4.1989 to 31.3.1999. 2. On 22.4.2008, the appeal was admitted to consider following substantial questions of law:- i) Whether the Hon'ble ITAT was right in law in holding the notice issued by the Assessing Officer under Section 158 BD not allowing the minimum period of 15 days to the assessee for filing the return for the block period as invalid? ii) Whether the Hon'ble ITAT was right in quashing the Block Assessment made consequent to the above notice under Section 158 BD of Income Tax Act, though Section 292B of Income Tax Act specifically provides that no proceeding under Income Tax Act shall be invalid or shall be deemed Singh Gurbax 2014.03.20 10:18 I attest to the accuracy and integrity of this document High Court Chandigarh to be invalid by reason of any mistake, omission or defect in a notice?

Briefly, the facts necessary for adjudication of the controversy involved, as available on the record, may be noticed. A search was conducted at the business as well as residential premises of Shri M.L.Saini and others under section 132 of the Act on 10.3.1999. During the course of search, certain incriminating documents were found and seized and it was found that some of the entries appearing in the said documents representing undisclosed income were related to the assessee. A notice under Section 158BD of the Act was issued to the assessee on 5.3.2001. Since the said notice remained un-complied with, notice under Section 142(1) of the Act was issued by the Assessing Officer which was duly served on the assessee on 25.4.2002. In response to the said notice, return for the block period was filed by the assessee showing his undisclosed income as Nil. The assessment under Section 158BD of the Act was completed on 31.3.2003, Annexure A.1 and undisclosed income of ` 5,06,200/- was assessed. The appeal filed by the assessee was partly accepted by the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 30.3.2005, Annexure A.2, the CIT(A) rejected the plea of the assessee on the issue of juri iction and validity of notice under Section 158BD of the Act. The CIT(A) confirmed some additions made by the Assessing Officer. Still not satisfied, the assessee filed appeal before the Tribunal. The Tribunal vide order dated 18.5.2007, Annexure A.3 impugned herein allowed the appeal and quashed the assessment by following the decision of Delhi 'B' Bench of the Tribunal No.8/DEL/2005. Hence the present appeal by the revenue.

We have heard learned counsel for the appellant and perused the Singh Gurbax 2014.03.20 10:18 I attest to the accuracy and integrity of this document High Court Chandigarh record.

Learned counsel for the appellant has placed reliance on the judgment of this Court in ITA No.616 of 2009 (Commissioner of Income Tax, Faridabad v. Shri Joginder Singh, Prop. M/s Sabharwal Electronics, IJ/6, NIT, Faridabad) decided on 17.10.2012, wherein while dealing with identical issue, it was recorded as under:- “5.The primary issue that arises for consideration in these appeals is whether the proceedings in pursuance to notice issued to the assessee under Section 158BD of the Act giving less than 15 clear days time to the assessee to file the return for the block period were void ab initio.

The matter is no longer res integra. This Court in Commissioner of Income Tax V. Naveen Verma, (2012) 346 ITR 100 delving into identical issue had recorded as under:- “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).”

It was held in Naveen Verma's case (supra) that unless prejudice was shown to have been caused to the assessee or no notice had been served, it was only in those circumstances that the proceedings could be held to be void which is not the question here.

Accordingly, the substantial questions of law are answered in favour of the revenue and against the assessee. Singh Gurbax 2014.03.20 10:18 I attest to the accuracy and integrity of this document High Court Chandigarh Consequently, both the appeals are allowed. The impugned order dated 23.2.2009 in both the cases is set aside and the matter is remanded to the Tribunal for fresh decision on merits in accordance with law.

The issue raised herein is squarely covered by the decision of this Court in Shri Joginder Singh's case (supra). Accordingly, the substantial questions of law in the present appeal are answered in favour of the revenue and against the assessee. The appeal stands allowed. The impugned order dated 18.5.2007, Annexure A.3 is set aside and the matter is remanded to the Tribunal for fresh decision on merits in accordance with law. (Ajay Kumar Mittal) Judge February 11, 2014 (Anita Chaudhry) gs'