I.T.O. 16(3)(1), MUMBAI v. Sri. JAYENDRA P. AGARWAL, MUMBAI

ITSSA 68/MUM/2004 | misc
Pronouncement Date: 08-01-2010 | Result: Dismissed

Appeal Details

RSA Number 6819916 RSA 2004
Assessee PAN CEACT1995W
Bench Mumbai
Appeal Number ITSSA 68/MUM/2004
Duration Of Justice 5 year(s) 11 month(s) 4 day(s)
Appellant I.T.O. 16(3)(1), MUMBAI
Respondent Sri. JAYENDRA P. AGARWAL, MUMBAI
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 08-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 08-01-2010
Assessment Year misc
Appeal Filed On 03-02-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B: MUMBAI BEFORE SHRI PRAMOD KUMAR (AM) AND SHRI R.S. PADVEKAR (JM) IT (SS) A NO.68/MUM/2004 (BLOCK PERIOD: 1/4/1987 TO 14/9/1998) INCOME TAX OFFICER 16(3)(1) APPELLANT MATRUMANDIR MUMBAI-400007 V/S. MR. JAYENDRA P JHAVERI RESPONDENT 29 NIDHI KOTACHI WADI V.P. ROAD MUMBAI-400004 PAN : C.O. NO.166/MUM/2007 (ARISING OUT OF IT(SS) 68/MUM/2004) (BLOCK PERIOD: 1/4/1987 TO 14/9/1998) MR. JAYENDRA P JHAVERI CROSS OBJECTOR 29 NIDHI KOTACHI WADI V.P. ROAD MUMBAI-400004 PAN : V/S. INCOME TAX OFFICER 16(3)(3) APPELLANT ITO WD. 16(3)(1) MATRUMANDIR MUMBAI-400007 DEPARTMENT BY :S/SHRI S.S. RANA/VIKRAM GAUR/ KHAR E ASSESSEE BY : SHRI DHARMESH SHAH : O R D E R : PER R.S. PADVEKAR J.M THIS APPEAL IS FILED BY THE REVENUE CHALLENGING TH E IMPUGNED ORDER OF THE LD CIT(A) XVII DATED 7.11.2003 AND THIS APPE AL ARISES FROM THE BLOCK ASSESSMENT FRAMED AGAINST THE ASSESSEE U/S. 158 BD OF THE ACT. THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTION RAISING GRIEVANCE AGAINST THE IT (SS)A NO. 68/MUM/2004 & C.O. NO. 166/MUM/ 2007 2 IMPUGNED ORDER OF THE LD CIT(A). IN THE CROSS OBJE CTION THE ASSESSEE HAS CHALLENGED THE LEGALITY AND VALIDITY OF THE ASSESSM ENT FRAMED BY THE A.O U/S. 158 BD OF THE ACT VIDE ORDER DT. 31.1.2000. SO FAR AS THE CROSS OBJECTION IS CONCERNED THE ISSUES ARISING FROM THE SAME GO TO T HE ROOTS OF THE MATTER AS THE ASSESSEE HAS RAISED ISSUE ON JURISDICTION OF TH E A.O TO MAKE PRESENT ASSESSMENT ON THE REASON THAT THE A.O FAILED TO ISS UE THE NOTICE U/S. 143(2) FOR SELECTING THE ASSESSEES RETURN FOR SCRUTINY. WE THEREFORE CONSIDER FIT TO DECIDE THE CROSS OBJECTION FIRST AS THE BASIC LEGA L ISSUES ARE ARISING. 2. IN THE CROSS OBJECTION THE ASSESSEE HAS TAKEN T HE FOLLOWING EFFECTIVE GROUNDS : 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE PROC EEDINGS U/S. 158BD OF THE ACT ARE INVALID AND VOID AB INITIO. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE NOTIC ES ISSUED BY THE ASSESSING OFFICER DURING THE PROCEEDINGS ARE INVALI D AND ILLEGAL. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT NO SURCHA RGE CAN BE LEVIED IN BLOCK ASSESSMENT IN THE APPELLANTS CASE 3. BEFORE PROCEEDING TO DECIDE THE ISSUES ARISING F ROM THE CROSS OBJECTION IT IS NECESSARY TO PUT ON RECORD SOME FACTS PERTAI NING TO THIS CASE. THE REVENUES APPEAL AS WELL AS THE CROSS OBJECTION WER E DISPOSED OF BY THE TRIBUNAL VIDE COMMON ORDER DT. 25.9.2008. SUBSEQUE NTLY THE ASSESSEE MOVED THE MISCELLANEOUS APPLICATION PLEADING THAT T HE SAID ORDER MAY BE RE- CALLED AS THERE WERE MISTAKES IN THE ORDER OF THE T RIBUNAL WITHIN THE MEANING OF SECTION 254(2) OF THE ACT. THE TRIBUNAL WAS PLE ASED TO RE-CALL THE ORDER ACCEPTING THE PLEA OF THE ASSESSEE VIDE ORDER PASSE D U/S. 254(2) IN M.A. NO. 814/M/2008 DT. 2.4.2009. WHEN THE CROSS OBJECTION WAS ORIGINALLY HEARD AND DECIDED THE PLEA OF THE ASSESSEE ON THE LEGALITY AN D VALIDITY OF THE ASSESSMENT PROCEEDINGS ON THE REASON OF NON-ISSUE OF THE NOTIC E U/S. 143(2) WAS NOT ACCEPTED AND THE TRIBUNAL WAS OF THE VIEW THAT NON- ISSUE OF THE NOTICE U/S. IT (SS)A NO. 68/MUM/2004 & C.O. NO. 166/MUM/ 2007 3 143(2) WAS ONLY A PROCEDURAL LAPSE WHICH IS CURABLE AND THE TRIBUNAL RESTORED THE ENTIRE MATTER TO THE A.O TO COMPLETE THE SAME A FTER OBSERVANCE OF PROCEDURAL LAW RELATING TO THE ISSUE OF VARIOUS NO TICES UNDER THE ACT. EXCEPT SAID ISSUE NO OTHER ISSUES WERE DECIDED BY THE TR IBUNAL. THE TRIBUNAL ACCEPTED THE PLEA OF THE ASSESSEE THAT IN RESPECT O F THE SAID ISSUE THE DECISIONS CITED AT BAR WERE NOT CONSIDERED AND HENC E NOW THIS APPEAL IS AGAIN FIXED FOR HEARING AND HEARD BY THIS BENCH. 4. WE HAVE HEARD THE RIVAL SUBMISSION OF THE PARTI ES. IN THIS CASE THERE WAS A SEARCH AND SEIZURE OPERATION AGAINST THE BR OTHER OF THE ASSESSEE NAMELY SHRI YOGIN P. JAVERI ON 14 TH & 15 TH SEPTEMBER 1998 AND IN CONSEQUENCE OF THE SAID SEARCH OPERATIONS PROCEEDI NGS U/S. 158 BD WERE INITIATED AGAINST THE ASSESSEE. THE A.O. ISSUED T HE NOTICE TO THE ASSESSEE U/S. 158BD OF THE ACT ON 9.2.99 REQUIRING HIM TO FI LE THE BLOCK RETURN WITHIN 15 DAYS FROM THE SERVICE OF THE NOTICE. IN RESPONSE T O THE NOTICE ISSUED TO HIM U/S. 158BD THE ASSESSEE FILED THE RETURN FOR THE B LOCK PERIOD ON 21.5.99 DECLARING THE UNDISCLOSED INCOME AT NIL. THE RET URN FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT FOR THE BL OCK PERIOD WAS COMPLETED U/S. 158BD VIDE ORDER DT. 31.1.2000. THERE IS NO D ISPUTE ABOUT THE FACTS IN THIS CASE THAT THE A.O DID NOT ISSUE THE NOTICE U/S . 143(2) WHEN HE DECIDED TO VERIFY THE CORRECTNESS OF THE RETURN FOR BLOCK PER IOD FILED BY THE ASSESSEE IN RESPONSE OF THE NOTICE ISSUED TO HIM. THE LD COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN RESPECT OF FATE OF THE ASSESSMENT PROCEEDINGS WERE THE ASSESSEE FILED THE RETURN OF INCOME FOR TH E BLOCK PERIOD AND THE A.O DECIDES TO VERIFY THE CORRECTNESS OF THE SAID RETUR N BUT DID NOT ISSUE THE NOTICE U/S. 143(2) OF THE ACT NOW STANDS COVERED IN FAVOU R OF THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT V/S. MRS. MUDRA G. NANAVATI 227 CTR 387 (BOM). THE LD COUNSEL ALS O FILED THE COPY OF THE JUDGMENT WHICH IS PLACED ON RECORD. IT IS ALSO ARG UED THAT THE CONSISTENT VIEW HAS BEEN TAKEN BY THE DIFFERENT CO-ORDINATE BENCHES INCLUDING THE DECISION OF ITAT IN THE CASE OF ZEUS AIR SERVICES PVT. LTD. V /S. ACIT- ITA NO. 660 AND 753/MUM/2003 DT. 13.10.2008( TO WHICH ONE OF US I.E . JUDICIAL MEMBER IS A PARTY) . IN A DETAILED DECISION RENDERED BY THE TRIBUNAL IT HAS BEEN HELD THAT NON-ISSUE OF THE NOTICE U/S. 143(2) WILL VITIATE TH E ASSESSMENT PROCEEDINGS. IT IT (SS)A NO. 68/MUM/2004 & C.O. NO. 166/MUM/ 2007 4 IS ALSO ARGUED IN THAT CASE THAT THE TRIBUNAL HAS F OLLOWED THE DECISION OF THE ANOTHER CO-ORDINATE BENCH IN THE CASE OF MRS. MUDRA G. NANAVATI V/S. DCIT (ITA NO. 80/MUM/2004 DT. 23.5.2008 AND THE SAID DEC ISION HAS BEEN AFFIRMED BY THE HONBLE HIGH COURT OF BOMBAY. HE THEREFOR E PLEADED THAT THE ASSESSMENT FRAMED BY THE A.O U/S. 158 BD MAY BE QUA SHED. 5. PER CONTRA THE LD D.R. VEHEMENTLY SUBMITTED TH AT THE ISSUE OF NOTICE U/S. 143(2) IS A PART OF PROCEDURAL LAW. HE ALSO MADE T HE FOLLOWING WRITTEN SUBMISSIONS : 5.1 CHAPTER XIVB CONSISTS OF SECTION 158BA TO 158BH WAS INSERTED BY THE FINANCE ACT 1995 W.E.F 1.7.1995. WHILE COMPUTING TH E UNDISCLOSED INCOME FOR THE BLOCK PERIOD THE PROCEEDINGS ARE SET ROLLING B Y ISSUE OF NOTICE U/S. 158BC AND NON ISSUE OF NOTICE U/S. 143(2) OR 142(1) WOULD NOT VITIATE THE PROCEEDINGS IN ANY MANNER. THE A.O. MAY AT HIS DISC RETION IF IT FEELS NECESSARY AND TO THE EXTENT POSSIBLE MAY RESORT TO INVOKING PROVISION OF SECTION 143(2) AS AN ADDED TOOL FOR THE DETERMINATI ON OF THE UNDISCLOSED INCOME U/S. 158BC. IT IS NOT MANDATORY ON THE A.O. TO ISSUE THE NOTICE U/S. 143(2). 5.2 THAT THE PROVISIONS OF SECTION 158BC REQUIRES T HE RETURN TO BE COMPULSORY SCRUTINIZED VIS--VIS THE DOCUMENTS SEIZ ED DURING THE COURSE OF SEARCH AND THE EVIDENCES COLLECTED THEREON DURING T HE COURSE OF SEARCH THE ISSUE OF NOTICE U/S. 143(2) WILL ONLY HELP TO THE E XTENT THAT AN OPPORTUNITY OF BEING HEARD IS GIVEN TO THE ASSESSEE. THE REPRESEN TATION MADE BY THE ASSESSEE AND FURNISHING OF THE EVIDENCES AND RELEVA NT RECORD BY THE ASSESSEE IS A PREREQUISITE OF THE COMPULSORY SCRUTINY AS IS ENVISAGED IN THE SCHEME OF CHAPTER XIVB. IT IS FOR THIS PURPOSE THAT THE LEGI SLATURE IN THEIR WISDOM HAS USED THE WORD IN SO FAR AS MAY BE WHILE PRESCRIBI NG MANNER OF DETERMINING THE UNDISCLOSED INCOME WHICH AS CAN BE SEEN IS DIFF ERENT THAN THE NORMAL ASSESSMENT PROCEEDINGS. 5.3 RELIANCE IS PLACED ON THE HONBLE BOMBAY HIGH C OURTS DECISION IN THE CASE OF SHIRISH MADHUKAR DALVI ACIT & OTHERS 287 ITR 242 WHEREIN THE HONBLE HIGH COURT HAS HELD AS UNDER: A READING OF THIS PROVISION SUGGESTS THAT THIS SEC TION 158BA IS PROVISION WHICH PROVIDES FOR JURISDICTION IN FAVOUR OF THE A. O. TO ASSESS UNDISCLOSED INCOME IN ACCORDANCE WITH CHAPTER XIVB. WHEREAS SE CTION 158BA(2) IS A CHARGING SECTION; SECTION 158BB PROVIDES FOR COMPUT ATION OF UNDISCLOSED INCOME FOR THE BLOCK PERIOD; WHEREAS SECTION 158BC PROVIDES PROCEDURE FOR BLOCK ASSESSMENT. SECTION 158BA BESTOWS JURISDICTION ON THE ASSESSING OFFICER AND NOT SECTION 158BC AS SUBMITTED BY MR. S ATHE. THUS NOTICE U/S. IT (SS)A NO. 68/MUM/2004 & C.O. NO. 166/MUM/ 2007 5 158BC (A) CANNOT BE EQUATED WITH THAT OF NOTICE U/S . 148. THAT NOTICE U/S. 158BC(A) ONLY PROVIDES FOR PROCEDURE TO BE ADOPTED FOR BLOCK ASSESSMENT. IT DOES NOT CONFER JURISDICTION TO ASSESSEE IN FAVOUR OF THE ASSESSING OFFICER. IN THESE CIRCUMSTANCES SUBMISSION MADE BY MR. SATHE I S DEVOID OF ANY SUBSTANCE. 5.4 MOREOVER THE TECHNICALITY OF THE PROCEDURES AS ILL USTRATED BY THE APPELLANT I.E. ISSUE OF NOTICE U/S. 143(2) WITHIN A PERIOD OF ONE YEAR IS A PART AND PARCEL OF THE PROVISO TO SECTION 143(2). IT IS A SETTLED PRINCIPLE OF STATUTORY INTERPRETATION THAT PROVISO IS ADDED TO A N ENACTMENT TO QUALIFY OR CREATE AN EXCEPTION TO WHAT IS IN THE ENACTMENT AND ORDINARILY A PROVISO IS NOT INTERPRETED AS STATING A GENERAL RULE ( SHAH BHOJRA J KUVARJII OIL MILLS AND GINNING FACTORY VS. SUBHASH CHANDRA YOGIRAJ AIR 196 1 SC 596 PG. 1690 ). IT IS ALSO AN EQUALLY SETTLED PROPOSITION OF LAW THAT THE PROPER FUNCTIONING OF PROVISO IS THAT IT QUALIFIES THE GENERALITY OF AN E NACTMENT BY PROVIDING AN EXCEPTION AND PICKING OUT AS IT WERE FROM THE MAIN ENACTMENT A PORTION WHICH WHAT FOR THE PROVISO WOULD FALL WITHIN THE MA IN ENACTMENT. THIS PROVISO DOES NOT REFER TO A RETURN OF INCOME FILED IN RESPO NSE TO NOTICES U/S. 158BC BUT ONLY IMPLIEDLY MAKE REFERENCE TO RETURN FILED U/S. 139 OR IN RESPONSE TO NOTICE UNDER SUBSECTION (1) OF SECTION 142. THEREF ORE THE PROVISO CANNOT BE STRICTLY CONSTRUED AS APPLICABLE TO THE RETURN OF I NCOME FILED U/S. 158BC. 5.5 NON-ISSUE OF NOTICE U/S. 143(2) WHILE COMPLETING BL OCK ASSESSMENT IS ONLY AN IRREGULARITY AND NOT A NULLITY THIS IS THE VIEW TAKEN BY THE SPECIAL BENCH ITAT LUCKNOW IN THE CASE OF M/S. NAVAL KISHOR E AND SONS JEWELLERS VS. DCIT 87 ITD 407. THAT THE APPELLANT HEAVILY RELIED ON THE JUDGMENT DELIVERED BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF SM T. BANDANA GOGOI VS. C.I.T. & OTHERS REPORTED IN 289 ITR 28 WHICH HIGHLI GHTS AS UNDER : HENCE IN THE CASE OF BLOCK ASSESSMENT UNDER CHAPTE R XIV-B WHERE THE ASSESSING OFFICER DOES NOT PROCEED TO MAKE ASSESSME NT AND DETERMINE THE TAX PAYABLE ON THE BASIS OF THE RETURN FILED IN RESPONS E TO A NOTICE U/S. 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 SE CTION 143 CANNOT BE DISPENSED WITH IN A CASE WHERE THE ASSESSING OFFICE R PROCEEDS TO MAKE AN INQUIRY FOR THE PURPOSE OF ASSESSMENT AND DETERMIN ATION OF TAXES PAYABLE AFTER ISSUING NOTICE U/S. 142(1) AS WELL. 5.6 DURING THE COURSE OF APPELLATE PROCEEDINGS THE LEA RNED COUNSEL OF THE APPELLANT SUBMITTED A DECISION OF HONBLE MUMBAI HI GH COURT IN THE CASE OF CIT-12 VS. MS. MUDRA G. NANAVATHI WHEREIN HE STATE D THAT THE DECISION IN THE CASE OF CWT VS. HUF OF H.H. LATE SHRI J.M. SCINDIA REPORTED IN 300 ITR 193(BOM) HAS BEEN APPROVED. A PERUSAL OF THE ORDER WHICH IS A ONE PAGE ORDER REVEALED THAT OUR COUNSEL IN THE HIGH COURT HAS ACCEPTED THE POSITION THAT THE CASE IS COVERED AGAINST THE REVENUE BY THE JUDICIAL DECISION AS REFERRED TO ABOVE. IT IS RESPECTFULLY SUBMITTED THA T THE DECISION OF THE HONBLE IT (SS)A NO. 68/MUM/2004 & C.O. NO. 166/MUM/ 2007 6 MUMBAI HIGH COURT IN THE CASE OF CWT VS. HUF OF LAT E SHRI J.M. SCINDIA DEALS WITH THE ISSUE OF NOTICES U/S. 16(2) IN RELATION TO RE-ASSESSMENT OF WEALTH TAX PROCEEDINGS U/S. 16(3) R.W.S. 17. THE HONBLE BOMB AY HIGH COURT WHILE DELIVERING THE SAID JUDGMENT PLACED RELIANCE ON THE ORDER OF MADRAS HIGH COURT IN THE CASE OF CIT VS. M. CHELLAPPAN (281 ITR 444) AND ALSO IN THE CASE OF SMT. BANDANA GOGOI A JUDGMENT DELIVERED BY THE GAU HATI HIGH COURT. A PLAIN PERUSAL OF THE AFORESAID JUDGMENT REVEALED THAT THE CASE OF BANDANA GOGOI RELATES TO BLOCK ASSESSMENT WHILE THE CASE OF M. C HELLAPPAN RELATES TO RE- ASSESMENT PROCEEDINGS U/S. 147. 5.7 THE LAW LAID DOWN BY THE HONBLE HC OF GAUHATI IS PER INCURIAM AS IT FAILS TO DISCUSS THE IMPORTANT DECISIONS OF THE SUP REME COURT WHICH GOES TO THE VERY ROOT OF THE INTERPRETATION OF THE PROVISIO NS OF SECTION 158BC. (I) THE DECISION OF HONBLE SC IN THE CASE OF DR. PRAT AP SINGH REPORTED IN 155 ITR 166 SC WAS NOT CONSIDERED BY THE HONBLE HC OF GUWHATI WHICH CLEARLY DEFINE AND INTERPRET THE MEANING OF THE WOR D SO FAR AS MAY BE TO CONSTRUE IT TO MEAN TO THE EXTENT POSSIBLE. I T IS BECAUSE OF THIS THE HONBLE GAUHATI HC CONSTRUE THAT THE ISSUE IN NOTIC E U/S. 143(2) IS MANDATORY AND NOT DIRECTORY. THE SPECIAL BENCH OF ITAT AT LUCKNOW HAD THE OCCASION OF DISCUSSING THE LAW LAID DOWN BY THE SC IN THIS REGARD AND AFTER FULLY APPRECIATING THE FACTS THEY CAME TO A RIGHT CONCLUSION. THE DECISION OF THE HONBLE GUWHATI H C HAS RENDERED ITSELF AS PER INCURRIUM AS IT HAS NOT FOLLOWED THE LAW LAID DOWN BY THE HO NBLE SUPREME COURT .THE HONBLE SUPREME COURT IN THE CAS E OF S. SHANMUGAVIL NADAR(SUPRA) HAS OBSERVED THAT ARTICLE 141 OF THE CONSTITUTION OF INDIA SPEAKS OF DECLARATION OF LAW BY THE SUPREME COURT. THE LAW SO DECLARED BY THE SUPREME COURT IS BINDING ON ALL COURTS WITHIN THE TERRITORY OF INDIA. THE DOCTRINE OF PRE CEDENTS I.E. BEING BOUND BY THE PREVIOUS DECISIONS IS LIMITED TO THE D ECISION ITSELF AND NOT AS TO WHAT IS INVOLVED IN IT. BY NOT FOLLOWING THE DECISION OF HONBLE SUPREME COURT THE LAW LAID DOWN BY THE HONBLE HIG H COURT OF GAUHATI IS BAD IN LAW AND DOES NOT SET A PRECEDENCE. (II) SIMILARLY THE DECISION OF SUPREME COURT IN THE CASE OF JAYPRAKASH SINGH 219 ITR 737 (SC) HAS ALSO NOT BEEN CONSIDERED BY GA UHATI HC IN THE CASE OF SMT. BANDANA GOGOI WHICH HELD THAT AN OMIS SION TO SERVE OR ANY DEFECT IN THE SERVICE OF NOTICE PROVIDED BY THE PROCEDURE PROVISION DOES NOT EFFASE OR ERASE THE LIABILITY TO PAY TAX W HERE SUCH LIABILITY IS CREATED BY DISCTINCT SUBSTANTIVE PROVISION (CHARGIN G SECTION). ANY SUCH OMISSION OF DEFECT MAY RENDER THE ORDER MADE IRREGU LAR DEPENDING UPON THE NATURE OF THE PROVISIONS NOT COMPLIED WITH BUT CERTAINLY NOT VOID OR ILLEGAL. THE DECISION OF THE HONBLE HC OF GUWHATI HAS FAILED TO TAKE INTO COGNIZANCE THE RATIO DECIDENDI OF THIS IM PORTANT JUDGMENT OF THE HONBLE SC AND THEREFORE CAME TO A WRONG CONCLU SION. THE HONBLE IT (SS)A NO. 68/MUM/2004 & C.O. NO. 166/MUM/ 2007 7 SPECIAL BENCH LUCKNOW DID TAKE THIS IMPORTANT DECIS ION INTO ACCOUNT AND CAME TO THE RIGHT CONCLUSION. (III) THE DECISION OF THE HONBLE SC IN THE CASE BHAVNAG AR UNIVERSITY VS. PALITANA SUGAR MILLS LTD. [2003] 2 SCC III CLEARLY ILLUSTRATES THE POSITION OF LAW THAT WHEN A PUBLIC FUNCTIONARY IS DIRECTED T O FOLLOW CERTAIN PROCEDURE WITHOUT ANY CONSEQUENCE BEING SPELT OUT A S TO ITS NON COMPLIANCE IT IS ONLY DIRECTORY AND ONLY WHEN CONS EQUENCES FOR ITS FAILURE / NON COMPLIANCES SPLET OUT ONLY THEN IT IS IMPERATIVE FAILURE THAT AFFECTS THE ENTIRE PROCEEDINGS AND NOT OTHERWISE. THIS IMPORTANT JUDGEMENT OF THE HON;BLE SC WAS ALSO NOT TAKEN IN A CCOUNT WHILE DECIDING THE NATURE OF THE PROCEDURAL PROVISIONS OF SECTION 143 OF THE I.T.ACT 1961. THEREFORE THE DECISION OF THE HON BLE GUWHATI HC RENDERED ITSELF AS PER INQURIAM. 5.7 IN ORDER TO EXAMINE THE EXTENT OF PERSUASIVE EFFECT OF THE GAUHATI HIGH COURT DECISION IN THE CASE OF SMT. BANDANA GOGOI (S UPRA) IT IS NECESSARY TO EXAMINE THE CASE LAWS FOLLOWED BY THE HONBLE GAUHA TI HIGH COURT IN ARRIVING AT THE SAID DECISION. AFTER CAREFUL PERUSAL OF THE HONBLE GAUHATI HIGH COURTS ORDER IN THE ABOVE MENTIONED CASE IT IS SEEN THAT THE HONBLE COURT HAS MAINLY RELIED ON THE FOLLOWING HIGH COURT DECISIONS :- 1. C.I.T. VS. M. CHELLAPPAN & ANOTHER 281 ITR 444 (MAD ) 2. VIPAN KHANNA VS. C.I.T. & OTHERS 255 ITR 220 ( P & H) 5.8 THE HONBLE SUPREME COURT IN THE CASE OF A.C.I.T. V S. RAJESH JHAVERI STOCK BROKERS P. LTD. REPORTED IN 291 ITR 500 (SC) HELD THAT :- TAXING INCOME ESCAPING ASSESSMENT IN THE CASE OF A N INTIMATION U/S. 143(1)(A) IS COVERED BY THE MAIN PROVISION OF SECTI ON 147 AS SUBSTITUTED W.E.F. APRIL 1 1989 AND INITIATING REASSESSMENT PROCEEDI NGS IN THE CASE OF INTIMATION WOULD BE COVERED BY THE MAIN PROVISION O F SECTION 147 AND NOT THE PROVISO THERETO. ONLY ONE CONDITION HAS TO BE SATI SFIED. FAILURE TO TAKE STEPS U/S. 143(3) WILL NOT RENDER THE ASSESSING OFFICER P OWERLESS TO INITIATE REASSESSMENT PROCEEDINGS WHEN INTIMATION U/S. 143(1 ) HAS BEEN ISSUED. 0.9 THUS IT MAY BE SEEN THAT THE DECISION OF MADRAS HI GH COURT AND PUNJAB & HARYANA HIGH COURT IN THE CASES OF C.I.T. VS. M. CHELLAPPAN 281 ITR 444 AND VIPAN KHANNA VS. C.I.T. 255 ITR 220 FOLLOWED BY THE HONBLE GAUHATI HIGH COURT IN THE CASE OF BANDANA GOGOI VS. C.I.T. & ANO THER 289 ITR 28 ARE CONTRARY TO THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS P. LTD. 291 ITR 500. T HUS IN VIEW OF THE HONBLE SUPREME COURT DECISION IN THE ABOVE MENTIONED CASE THE RATIO OF THE DECISIONS IN THE CASE OF C.I.T. VS. M. CHELLAPPAN A ND VIPAN KHANNA VS. C.I.T. ARE NO MORE GOOD LAW. CONSEQUENTLY THE DECISION O F THE HONBLE GAUHATI HIGH COURT IN THE CASE OF BANDANA GOGOI RELIED UPON BY T HE ASSESSEE IS NOT THE CORRECT LAW. ORDER IS PASSED ON MATERIAL PARTLY REL EVANT AND PARTLY IRRELEVANT IT (SS)A NO. 68/MUM/2004 & C.O. NO. 166/MUM/ 2007 8 THEN ENTIRE ORDER IS VITIATED BECAUSE IT IS DIFFICU LT TO PREDICATE TO WHAT EXTENT THE EXTRANEOUS AND IRRELEVANT MATERIALS HAS INFLUEN CED THE AUTHORITY IN ARRIVING AT HIS FINDING. KINDLY REFER TO DHIRAJLAL GIRDHARI LAL 26 ITR 736 (SC) BHAGAT CONSTRUCTION CO. LTD. 250 ITR 291 (DEL) CHOITHRAM BEGRAJ LALVANEY 197 ITR 302 (BOM) SAGAR ENTRPRISES 257 ITR 335 (GUJ) CWT VS. GNANAGIRI GANESHAN 260 ITR 161 (MAD). ON THE SAME ANALOGY GAUHATI HI GH COURT ORDER PASSED AFTER CONSIDERATION OF TWO HIGH COURTS ORDER WHICH HAVE NOT BEEN APPROVED BY SUPREME COURT IN RAJESH JHAVERIS CASE IT IS SUBMI TTED WITH UTMOST RESPECT THAT GAUHATI HIGH COURTS DECISION MAY NOT BE FOLLO WED. ACCORDINGLY THE SAID DECISION OF THE GAUHATI HIGH COURT IN THE CASE OF S MT. BANDANA GOGOI (SUPRA) HAS NO PERSUASIVE VALUE SINCE IT IS AGAINST THE JUD GEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ACIT VS. RAJESH JHAVER I STOCK BROKERS P. LTD. 291 ITR 500. 5.9 FROM THE ABOVE FINDING OF THE HONBLE JURISDICTIONA L HIGH COURT IT IS CRYSTAL CLEAR THAT SECTION 158BC PROVIDES PROCEDURE FOR BLOCK ASSESSMENT AND THEREFORE NON-ISSUANCE OF NOTICE U/S. 143(2) OF TH E I.T. ACT OR BELATED SERVICE OF NOTICE U/S. 143(2) DOES NOT VITIATE THE ASSESSME NT PROCEEDINGS U/S. 158BC. IN THIS CONNECTION IT IS FURTHER MENTIONED HERE TH AT THE HONBLE GAUHATI HIGH COURT WHILE DECIDING THE CASE OF SMT. BANDANA GOGOI VS. CIT & ANOTHER RELIED ON THE DECISIONS OF THE HIGH COURTS WHICH PERTAIN T O RE-ASSESSMENT OR REOPENING OF ASSESSMENT U/S. 147 OF THE I.T. ACT. WHEREAS THE SAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF SHIRISH M. DALVI VS. ACIT COVERS DIRECTLY THE ISSUE OF LEGALITY OF BLOCK ASSE SSMENT U/S. 158BC WHICH HAS BEEN HELD TO BE PROCEDURAL. ATTENTION IS ALSO DRAWN TO THE RECENT JUDGMENT OF THE SUPREME COURT IN THE CASE OF DEEPAK AGRO FOODS VS. STATE OF RAJASTHAN AND OTHERS AND ALSO OF THE CASE LAW OF SAMBHAJI & ORS VS. GANGABAI & ORS WHEREIN THE HONBLE APEX COURT HAS HELD AS UNDER THE PROCEDURE LAW SO DOMINATE IN CERTAIN SYSTEM AS TO OVERPOWER SUBSTANTIVE RIGHTS AND SUBSTANTIAL JUSTICE. THE HUMANIST RULE T HAT PROCEDURE SHOULD BE HANDMAID NOT THE MISTRESS OF LEGAL JUSTICE COMPEL S CONSIDERATION OF VESTING A RESIDUARY POWER IN JUDGES TO ACT EX DEBITO JUSTITIA E WHERE THE TRAGIC SEQUEL OTHERWISE WOULD BE WHOLLY INEQUITABLE. JUSTICE IS T HE GOAL OF JURISPRUDENCE PROCEDURAL AS MUCH AS SUBSTANTIVE. NO PERSON HAS V ESTED RIGHT IN ANY COURSE OF PROCEDURE. HE HAS ONLY THE RIGHT TO PROSECUTION OR DEFENSE IN THE MANNER FOR THE TIME BEING BY OR FOR THE COURT IN WHICH TH E CASE IS PENDING AND IF BY AN ACT OF PARLIAMENT THE MODE OF PROCEDURE IS ALTE RED HE HAS NO THE RIGHT THAN TO PROCEED ACCORDINGLY TO THE ALTERED MODE. I T PROCEDURE LAW SHOULD NOT ORDINARILY BE CONSTRUED AS MANDATORY THE PROCEDURA L LAW IS ALWAYS SUBSERVIENT TO AND IS IN AID TO JUSTICE. ANY INTERP RETATION WHICH ELUDES OR FRUSTRATES THE RECIPIENT OF JUSTICE IS NOT TO BE FO LLOWED. IT (SS)A NO. 68/MUM/2004 & C.O. NO. 166/MUM/ 2007 9 THE PROCEDURAL OR IS NOT TO BE A TYRANT BUT A SERVA NT NOT AN OBSTRUCTION BUT AN AID TO JUSTICE. IT PROCEDURAL PRESCRIPTION IS THE H ANDMAID AND NOT THE MISTRESS A LUBRICANT NOT A RESISTANT TO THE ADMINISTRATION OF JUSTICE. 5.10 IT IS THEREFORE PRAYED THAT THE ASSESSMENT SH OULD NOT BE HELD AS NULL AND VOID ON THE FACT OF NON ISSUANCE OF NOTICE UNDE R SECTION 143(2) OF THE INCOME TAX ACT 1961. 6. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES. WE HAVE ALSO GIVEN OUR ANXIOUS CONSIDERATION TO THE WRITTEN SUBMISSIONS FI LED BY LD. D.R.. WE FIND THAT ADMITTEDLY IN THIS CASE THE A.O DID NOT ISSU E THE NOTICE U/S. 143(2) WHEN HE DECIDED TO SELECT THE RETURN FILED BY THE A SSESSEE FOR THE BLOCK PERIOD FOR VERIFICATION. NOW THIS ISSUE STANDS COVERED I N FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COU RT IN THE CASE OF MRS. MUDRA G. NANAVATI (SUPRA). SO FAR AS SUBMISSIONS OF THE L D. D.R. ARE CONCERNED HE TRIED TO LAY HIS EMPHASIS ON THE DECISION OF SHIRIS H M. DALVI (SUPRA). SO FAR AS DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF MRS. MUDRA G NANAVATI (SUPRA) IS CONCERN IT IS RENDERED AFTER T HE DECISION OF SHIRISH M. DALVI(SUPRA). MOREOVER DECISION IN THE CASE OF MRS . MUDRA G. NANAVATI (SUPRA) IS DIRECTLY ON THE ISSUE BEFORE US. IT IS ALSO PERT INENT TO NOTE THAT IN THE CASE OF M/S. ZEUS AIR SERVICES LTD. (SUPRA) TRIBUNAL HAS A LREADY CONSIDERED AND EXPLAINED THE DECISION OF SHIRISH M. DALVI (SUPRA) . IN OUR HUMBLE OPINION AS PER WELL SETTLED JUDICIAL PRINCIPLES WE HAVE TO FO LLOW THE DECISION IN THE CASE OF MRS. MUDRA G. NANAVATI (SUPRA). WE ACCORDINGLY R ESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF MRS. MUDRA G. NANAVATI (SUPRA) ANSWER THIS FIRST ISSUE IN FAVOUR OF THE AS SESSEE AND HOLD THAT THE ORDER PASSED BY THE A.O IS VOID AB INITIO AND ACCORDINGLY QUASH THE SAME. 7. AS THE BASIC ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE WE DO NOT CONSIDER NECESSARY TO DECIDE THE ANOTHER ISSUE ARIS ING FROM THE CROSS OBJECTIONS. 8. IN RESPECT OF THE REVENUES APPEAL BEING IT (SS) A NO. 68/MUM/2004 THE REVENUE HAS TAKEN THE MULTIPLE GROUNDS IN RESPE CT OF THE RELIEF GIVEN BY THE LD CIT(A). AS WHILE DECIDING THE ASSESSEES CR OSS OBJECTION WE HAVE IT (SS)A NO. 68/MUM/2004 & C.O. NO. 166/MUM/ 2007 10 CANCELLED THE ASSESSMENT ORDER ITSELF THE REVENUE S APPEAL ALSO DOES NOT SURVIVE AND THE SAME HAS TO BE DISMISSED. 9. IN THE RESULT THE REVENUES APPEAL IS DISMISSED AND THE ASSESSEES CROSS OBJECTION IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8TH DAY OF JANUARY 2010. SD/- SD/- (PRAMOD KUMAR) (R.S.PADVEKAR) ACCOUNTANT MEMBER JUDICIA L MEMBER MUMBAI ON THIS 8TH DAY OF JANUARY 2010. :US COPY TO: 1. APPELLANT 2. RESPONDENT 3.THE CIT(A)- XVII MUMBAI 4.THE CIT MUMBAI CITY XVI MUMBAI 5.THE DR B BENCH MUMBAI 6.GUARD FILE BY ORDER TRUE COPY ASSTT..REGISTRAR ITAT MUMBAI. IT (SS)A NO. 68/MUM/2004 & C.O. NO. 166/MUM/ 2007 11 US DATE INITIALS 1. DRAFT DICTATED ON 6/1/10 --------------- SR.P.S. 2. DRAFT PLACED BEFORE AUTHORITY 6/1/10 --------- ----- SR.P.S. 3. DRAFT PROPOSED & PLACED ----------- ---------- --- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED ----------- ----------- -- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO ----------- ------------ - SR.P.S. THE SR. P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON --------- ----------- -- SR.P.S. 7. FILE SENT TO THE BENCH CLERK --------- --------- ---- SR.P.S. 8. DATE ON WHICH FILE GOES TO THE ------- --------- ---- 9. DATE OF DISPATCH OF ORDER --------- --------- ----