BEST CITY REALTORS INDIA PVT. LTD,NEW DELHI vs. DEPUTY COMMISSIONER OF INCOME-TAX, NEW DELHI

The assessee also filed additional grounds of appeal with an application to admit the same by relying on the decision of Hon’ble Supreme Court in the case of NTPC Limited 229 ITR 383 (SC). The relevant additional grounds are given below :-

At the time of hearing, ld. AR for the assessee made submissions and pressed the jurisdictional issue raised in additional ground no.6 before us. The relevant facts relating to this issue are, a search & seizure operation under section 132 of the Income-tax Act, 1961 (for short ‘the Act’) was carried out at the business premises of Best Group at H-8, Best Plaza, Netaji Subhash Place, Pitampura, New Delhi as well as on residential premises of the Directors and their family members on 28.03.2011. The assessee is one of the group company, the case of the assessee was centralized with Central Circle 11, New Delhi. Subsequently, notice u/s 142 (1) was issued on 24.09.2012 and subsequently, another notice along with questionnaire were issued on 11.10.2012. In response, assessee filed copy of earlier return of income on 29.09.2011 and subsequently, notices u/s 142(1) & 143(2) of the Act were issued on 23.10.2012.

At the time of hearing, ld. AR for the assessee brought to our notice page-1 of the paper book which is the return of income filed for the current assessment year 2011-12 and brought to our notice that the return was filed indicating Assessing Officer with Central Circle 4, Delhi and return of income was filed on 29.09.2011. He submitted that the limitation period for issue of notice u/s 143 (2) of the Act has to be within 6 months from the date of filing ROI, therefore, the period of limitation ends with 30.09.2012. In this case, he brought to our notice page 1 of the assessment order wherein it is mentioned as 23.10.2012 and he also brought to our notice copy of notice filed by the Revenue which is placed on record and as per which the date mentioned in the notice issued u/s 143 (2) of the Act is 23.10.2012. He also brought to our notice copy of order sheet from the assessment record, which is placed on record, clearly shows that the notice u/s 143 (2) was actually issued only on 23.10.2012. Therefore, he submitted that the notice issued u/s 143 (2) is beyond the limitation period, hence, the abovesaid notice is beyond jurisdiction and with the above notice, assessment order passed is also bad in law and without jurisdiction, hence it is liable to be quashed.

On the other hand, ld. DR for the Revenue concedes that as per the record found in the assessment record, it shows that it is only issued on 23.10.2012.

Considered the rival submissions and material placed on record. We observed that in this case, the Assessing Officer has issued several notices u/s 142(1) and failed to issue notice u/s 143 (2) of the Act which is very much relevant to assume the jurisdiction. However, we noticed that as per the record submitted before us which were extracted from the assessment record, it clearly shows that as per the order sheet and the actual notice issued u/s 143(2) was issued only on 23.10.2012 which is beyond the period of limitation specified u/s 143 (2) of the Act. Therefore, the assumption of the jurisdiction beyond ACIT vs. Hotel Blue Moon (2010) 321 ITR 362 (SC). Hon’ble Supreme Court held as under :- “15) We may now revert back to Section 158 BC(b) which is the material provision which requires our consideration. Section 158 BC(b) provides for enquiry and assessment. The said provision reads "that the assessing officer shall proceed to determine the undisclosed income of the Block period in the manner laid down in Section 158 BB and the provisions of Section 142, sub-section (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply." An analysis of this sub section indicates that, after the return is filed, this clause enables the assessing officer to complete the assessment by following the procedure like issue of notice under Sections 143(2)/142 and complete the assessment under Section 143(3). This Section does not provide for accepting the return as provided under Section 143(i)(a). The assessing officer has to complete the assessment under Section 143(3) only. In case of default in not filing the return or not complying with the notice under Sections 143(2)/142, the assessing officer is authorized to complete the assessment ex-parte under Section 144. Clause (b) of Section 158 BC by referring to Section 143(2) and (3) would appear to imply that the provisions of Section 143(1) are excluded. But Section 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under Section 143(2). However, if an assessment is to be completed under Section 143(3) read with Section 158- BC, notice under Section 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under Section 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the Section 158 BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the assessing officer while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This Section even speaks of sub- sections which are to be followed by the assessing officer. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the assessing officer, if for any reason, repudiates the return filed by the assessee in response to notice under Section 158 BC(a), the assessing officer must necessarily issue notice under Section 143(2) of the Act within the time prescribed in the proviso to Section 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of Section 158 BC(b) it has done so specifically. Thus, when Section 158 BC(b) specifically refers to applicability of the proviso thereto cannot be exclude. We may also notice here itself that the clarification given by CBDT in its circular No.717 dated 14th August, 1995, has a binding effect on the department, but not on the Court. This circular clarifies the requirement of law in respect of service of notice under sub-section (2) of Section 143 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act, for the determination of undisclosed income for a block period under the provisions of Section 158 BC, the provisions of Section 142 and sub-sections (2) and (3) of Section 143 are applicable and no assessment could be made without issuing notice under Section 143(2) of the Act. However, it is contended by Sri Shekhar, learned counsel for the department that in view of the expression "So far as may be" in Section 153 BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on the observation made by this Court in Dr. Pratap Singh's case [1985] 155 ITR 166(SC). In this case, the Court has observed that Section 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under Section 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in Section 165 has to be generally followed. The expression "so far as may be" has always been construed to mean that those provisions may be generally followed to the extent possible. The learned counsel for the respondent has brought to our notice the observations made by this Court in the case of Maganlal Vs. Jaiswal Industries, Neemach and Ors., [(1989) 4 SCC 344], wherein this Court while dealing with the scope and import of the expression "as far as practicable" has stated "without anything more the expression `as far as possible' will mean that the manner provided in the code for attachment or sale of property in execution of a decree shall be applicable in its entirety except such provision therein which may not be practicable to be applied." 16) The case of the revenue is that the expression `so far as may be apply' indicates that it is not expected to follow the provisions of Section 142, sub-sections 2 and 3 of Section 143 strictly for the purpose of Block assessments. We do not agree with the submissions of the learned counsel for the revenue, since we do not see any reason to restrict the scope and meaning of the expression `so far as may be apply'. In our view, where the assessing officer in repudiation of the return filed under Section 158 BC(a) proceeds to make an enquiry, he has necessarily to follow the provisions of Section 142, sub-sections (2) and (3) of Section 143. 17) Section 158 BH provides for application of the other provisions of the Act. It reads : "Save as otherwise provided in this Chapter, all the other provisions of this Act shall apply to assessment made under this Chapter."

Respectfully following the above decision, we are inclined to decide the issue raised in additional ground no.6 in favour of the assessee. Accordingly, the same is allowed.

With regard to other grounds of appeal