Knowledgebible.com

Sh. H. S. Sidhu And Sh. B. P. Jain,JJ. For the Appellant Sh. Ravish Sud, Advocate For the Respondent Sh. Mahavir Singh, Sr. DR ORDER Per Bench These two appeals of the assessee arise from two different orders of the CIT(A), Jalandhar, each dated 18.03.2010 for the assessment years 2000-01 and 2001-02. 2. The assessee has raised following grounds in ITA No.225(Asr)/2010 for the A.Y. 2000-01 1. That the order of the CIT(A) is against the law and facts of the case. 2. That the CIT(A) had gravely erred in law in filing to appreciate that the A.O. had wrongly assumed jurisdiction and initiated proceedings u/s 147 of the Act in the hands of the assessee. 3. That the CIT(A) had gravely erred in law in filing to appreciate the facts of the case in light of the settled position of law and therein grossly erred in sustaining the addition of Rs.4,05,000/- made by the A.O. in the hands of the assessee. 4. That the ld. CIT(A) brushing aside the material available on record as well as the duly substantiated submissions of the assessee, therein most arbitrarily drew adverse inferences in the hands of the assessee and sustained the addition of Rs.4,05,000/- in the hands of the assessee. 5. That without prejudice to the aforesaid even otherwise the CIT(A) gravely erred in law and facts of the case and failed to appreciate that no addition as regards the impugned deposit aggregating to an amount of Rs.4,05,000/- in the Current account of the assessees bank account made by the AO u/s 69A of the Act could not sustained in the eyes of law. 6. That without prejudice to the aforesaid even otherwise the CIT(A) misconceived the facts of the case and failed to appreciate that even in light of the contentions of the AO, the addition of Rs.4,05,000/- so made by the latter could not be sustained in the hands of the assessee as such. 7. That the CIT(A) acting in gross violation of the Principles of Natural Justice and Principle of equity and fairness, had sustained the assessment framed by the AO, not on the basis of any concrete material made available on record, but rather by resorting to mere assumptions, presumptions and surmises. 8. Any other ground of appeal as may be allowed to be raised at the time of hearing of the appeal. 3. The assessee has raised following grounds in ITA No.226(Asr)/2010 for the A.Y. 2001-02 1. That the order of the CIT(A) is against the law and facts of the case. 2 That the CIT(A) had gravely erred in law in filing to appreciate that the A.O. had wrongly assumed jurisdiction and initiated proceedings u/s 147 of the Act in the hands of the assessee. 3 That the CIT(A) had gravely erred in law in filing to appreciate the facts of the case in light of the settled position of law and therein grossly erred in sustaining the addition of Rs.1,27,75,000/-made by the A.O. in the hands of the assessee. 4 That the ld. CIT(A) brushing aside the material available on record as well as the duly substantiated submissions of the assessee, therein most arbitrarily drew adverse inferences in the hands of the assessee and sustained the addition of Rs.1,27,75,000/- in the hands of the assessee. 5 That without prejudice to the aforesaid even otherwise the CIT(A) gravely erred in law and facts of the case and failed to appreciate that no addition as regards the impugned deposit aggregating to an amount of Rs.1,27,75,000/- in the Current account of the assessees bank account made by the AO u/s 69A of the Act could not sustained in the eyes of law. 6 That without prejudice to the aforesaid even otherwise the CIT(A) misconceived the facts of the case and failed to appreciate that even in light of the contentions of the AO, the addition of Rs.1,27,75,000/- so made by the latter could not be sustained in the hands of the assessee as such. 7 That the CIT(A) acting in gross violation of the Principles of Natural Justice and Principle of equity and fairness, had sustained the assessment framed by the AO, not on the basis of any concrete material made available on record, but rather by resorting to mere assumptions, presumptions and surmises. 8 Any other ground of appeal as may be allowed to be raised at the time of hearing of the appeal. 4. The assessee has raised following additional grounds of appeal in both the years, which are reproduced as under 1. That the A.O. has grossly erred in law and facts of the case in assuming jurisdiction and framing assessment u/ss. 148/143(3) of the Income Tax Act, 1961 without obtaining the sanction of the appropriate authority as contemplated u/s 151(2) while issuing Notice u/s 148 of the Act. 2. That the A.O. has gravely erred in law and facts of the case by framing assessment u/ss. 148/143(3) of the Income Tax Act, 1961 without issuing a notice u/s 143(2) of the Act. 5. The Ld. counsel for the assessee, Mr. Ravish Sud, Advocate submitted that the grounds of appeal involved purely a question of law on the basis of facts available on record and therefore, in view of the decision of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (1998) 229 ITR 383(SC), additional grounds of appeal be admitted for adjudication. 6. The Ld. JCIT(DR), Mr. Mahavir Singh, on the other hand objected to the raising of the said grounds since these grounds were not taken at the commencement of the assessment proceedings. 7. We have heard the rival contentions and perused the facts of the case. The grounds before us in the form of additional grounds are legal grounds and therefore, the same are admitted in view of the decision of Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT (supra) for both the years in the appeals before us. 8. Now, we take up the appeal of the assessee for the assessment year 2001-02 in ITA No.226(Asr)/2010 on legal grounds as well as on merits and our decision hereinbelow shall be identically applicable in the assessment year 2000-01 in the present appeal before us. Since the facts in both the years i.e. 2001-02 and 2000-01 are identical and therefore, our decision in the assessment year 2001-02 hereinbelow shall be identically applicable in the legal grounds as well as on merits for the assessment year 2000-01. 9. ITA No.226(Asr)/2010 - Assessment year 2001-02 Grounds No.1 and 8 are general in nature and therefore, do not require any adjudication. 10. The brief facts of the case are as per AO s order, which for the sake of convenience is reproduced as under The Income Tax Proceedings were initiated by the issue of notice dated 29.03.2007 u/s 148 read with section 147 served upon the assessee on 30.03.2007. The assessee filed return of income on 10.12.2007 at Rs.48000/- under the Head Income from Salary only. As the proceedings u/s 147 were initiated on receipt of information from the Anti Smuggling Wing of Customs Department, Amritsar wherein they have come to the conclusion that a Benami Firm in the name of M/s. Meghna Impex was floated by one Sh. Satbir Singh as its proprietor. A Bank a/c was also opened (current a/c no. 681) in the name of the firm M/s. Megham Impex with Oriental Bank of Commerce, Garha Road, Jalandhar and also with State Bank of Bikaner and Jaipur, Add Bastian, Jalandhar. The firm was ostensibly engaged in the export of Hand tools and Auto parts. The firm availed DEPB benefits in a fraudulent manner by forging Bank certificate of export and realization. The inquiries conducted by the Customs Department revealed that the export proceeds were arranged through Hawala Channels i.e. Money was carried from India to Dubai and remitted back into the Bank a/c of M/s. Meghna Impex with Oriental Bank of Commerce, Garha Road, Jalandhar as the export proceeds. As per statement of Sh. Satbir Singh before the Anti Smuggling Wing of the Customs Department, Amritsar some Bank cheque books of both the banks i.e. Oriental Bank of Commerce, Garha Road, Jalandhar and State Bank of Bikaner and Jaipur, Adda Bastian, Jalandhar were got signed from him by Sh. Gutrkirpal Singh and Sh. Ashok Kumar of ATM International Jalandhar as the whole show was arranged by the assessee alongwith Sh. Ashok Kumar of ATM International. A perusal of current a/c no.681 with Oriental Bank of Commerce, Garha Road, Jalandhar of M/s. Meghna Impex (placed on filed) reveals that an amount of Rs.1,27,75,000/- has come into the Bank a/c No.328 of M/s. Supreme Industries, Jalandhar through clearing with State Bank of Bikaner and Jaipur, Adda Bastian, Jalandhar. This firm M/s. Supreme Industries, Jalandhar is the proprietary concern of Sh. Gurkirpal Singh. During the course of assessment proceedings in the case of Sh. Satbir Singh, prop M/s. Meghna Impex statement of Sh.Satbir Singh the prop. Was also recorded by the ITO III(2), Jalandhar wherein he reiterated the facts regarding his signing the blank cheque books of both the banks and giving these cheques to the assessee and his associate Sh. Ashok Kumar who managed the show. He was simply a paid employee of the office of Sh. Pavitar Singh CA. The ITO III(2), Jalandhar intimated during the course of assessment proceedings in the case of Meghna Impex that money had been withdrawn from the Bank account of Meghna Impex with Oriental Bank of Commerece and transferred to bank account No.328 of M/s. Supreme Industries. The detail of these transactions is given as under S.No. Date of debit in current a/c No.681(OBC of Meghna Impex Date of credit in a/c No.328 (SBB) of Supreme Industries Amount 1. 03.06.2000 03.06.2000 1,250,000 2. 07.06.2000 07./06.2000 1,300,000 3. 14.06.2000 14.06.2000 800,000 4. 17.06.2000 17.06.2000 1,400,000 5. 29.06.2000 29.06.2000 800,000 6. 11.07.2000 11.07.2000 500,000 7. 12.07.2000 12.07.2000 600,000 8. 18.07.2000 18.07.2000 400,000 9. 22.07.2000 22.07.2000 600.000 10. 03.08.2000 03.08.2000 1,150,000 11. 05.08.2000 05.08.2000 1,100,000 12. 10.08.2000 10.08.2000 13. 18.08.2000 18.08.2000 900,000 14. 28.08.2000 28.08.2000 575,000 Total 12,775,000 During the course of assessment proceedings Sh. Ashwani Rnadev,CA the counsel for the assessee filed legal objections to the proceedings u/s 147 as under 1. That the examination of reasons recorded reveals that inferences have been drawn based on the investigation made by the Third party i.e. Customs Authority and no Independent inquiries have been made by the Income Tax Department. 2. That even as per the information from the Customs Authority Meghna Impex was the proprietory concern of Sh.Satbir Singh and not the assessee. As such assessment should have been framed in the case of Sh. Satbir Singh and not in the case of the assessee. 3. That the reasons have been recorded on the basis of statement of Sh.Ashok Kumar and also of the statement of Sh. Vijay Madan, Customs Agent. Later on Sh.Ashok Kumar and Sh. Vijay Madan retracted from their statement before the ACIT, Circle-II, Jalandhar. As such the statement before the Customs Department has no evidentiary value. 4. As regards the transfer of funds to the bank account of the assessee and subsequent withdrawals thereof, the assessee has already filed the complaint with the Police Station regarding the theft of his cheque books of M/s. Supreme Industries, Basti Sheikh, Jalandhar with State Bank of Bikaner and Jaipur, Adda Bastian, Jalandhar. 5. That the stolen cheque books of the assessee was misused by some body else and not the assessee. 6. That even after the period of six years the Customs Department has not made any assessment against the assessee. 7. The deposit of Rs.1,27,75,000/- should be assessed in the hands of partnership firm or AOP and not in the hand of the assessee. These objections of the assessee were disposed off by this office as under 1. It is incorrect to say that the proceedings u/s 147 have been initiated merely on the basis of information form the Customs Authority . Statement of Sh.Satbir Singh so called prop. Of M/s. Meghna Impex was recorded on 21.5.2002 by the ITO -III(20, Jalandhar. While replying to Q.No.8 Sh.Satbir Singh so called prop. Of M/s. Meghna Impex stated that Sh. Gurkirpal Singh was also doing the business with Sh. Ashok Kumar. Sh. Gurkirpal Singh also got signed some blank cheque from me of State Bank of Bikaner and Jaipur as he was running his accounts with his bank. Again in answer to Q.No.10 he deposed that both Sh. Ashok Kumar and Sh. Gurkirpal Singh were doing withdrawals and deposits in the State Bank of Bikaner and Jaipur account. They can tell about the transactions in these accounts. Statement of Sh.Satbir Singh so called prop. of Meghna Impex was also recorded by the Income Tax Officer, Ward III(2), Jalandhar on 31.5.2002 which Sh.Satbir Singh admitted that Sh. Ashok Kumar of ATM International and Sh.Gurkirpal Singh were close friends. The entire transactions in the bank account of M/s. Meghna Impex (CA No.681) with Oriental Bank of Commerce, Garha Road, Jalandhar were made by these two persons. Only Sh.Gurkirpal Singh and Ashok Kumar can tell about the source of deposits and withdrawals in the bank accounts. 2. Sh.Satbir Singh as per the inquiries and findings of the Customs Department as well as Income Tax Department was a poor fellow to engage in this big business. He could not run any export business. He was simply a paid employee of Sh.Pavitar Singh, CA in whose office these two persons i.e. Sh. Ashok Kumar and Sh. Gurkirpal Singh met him ( being the clients of Sh.Pavitar Singh CA) and advised him to open a bank account because it was necessary to get Import Export Licence. He agreed to open a bank account in the name of concern and sign the documents as asked by these two persons because he was convinced by Sh. Ashok Kumar that he will be sent abroad in Europe side and the entries in account will be beneficial to get visa etc. Under these circumstances protective asset was made in the hands of Sh.Satbir Sigh and inquiries were directed against these persons who were real beneficiaries as such the proceedings u/s 147. 3. Although Sh. Ashok Kumar and Vijay Madan, retracted from their statements yet assessment has been made in the hands of Sh. Ashok Kumar c/o ATM International by the ACIT, Cir,.II, Jalandhar. Although the CIT(A) deleted the addition yet the Revenue has not accepted the decision of CIT(A). The revenue is before the Hon ble ITAT, Amritsar. 4 When the Police Department has not been able to solve the problem of theft of cheque book of Sh.Gurkirpal Sigh in a long span of about 7 years and find out the culprit how can the Income Tax Deptt. Can take cognizance of such a complaint which still awaits decision when a period of more than six years has elapsed. 5. The Department has not device like metal detector to trace out the culprit i.e. the alleged misuser of the cheque book and assess the income in his hands The funds have traveled from the bank account of M/s. Megan Impex with the Oriental Bank of Commerce to your account with State Bank of Bikaner and Jaipur, Jalandhar. As such you are answerable to explain the source of these deposits amounting to Rs.1,27,75,000/-. 6. It states to Customs Department. Hence no comments. 7. The share of benefit/profit enjoyed by Sh. Ashok Kumar has been assessed in his hands by the ACIT, Cir.II, Jalandhar. This amount of Rs. 1,27,75,000/- has gone into your bank a/c and you are individually responsible to explain the same. As no explanation regarding this deposit in your account has been furnished by you, it is to be assessed in your hands as your income in you individual capacity. M/s. Supreme Inds. Is your proprietory concern. There is no question of AOP/Partnership firm. As such reasons have been recorded with proper application of mind. The proceedings u/s 147 had been initiated validly as stated supra and during the course of asstt. Proceedings the assessee has not furnished any satisfactory reply to the source of deposits in his bank a/c No.328 with State Bank of Bikaner and Jaipur, Adda Bastian, Jalandhar amounting to Rs.1,27,75,000/- and the reason why this amount of Rs.1,27,75,000/- was transferred by M/s. Meghna Impex to the account of the assessee has not been explained. The assessee during the proceedings stated that his cheque books was stolen and he had lodged a complaint with the Police Station in this regard. This contention of the assessee is not relevant to the source of credit entry of Rs.1,27,75,000/- in his bank account. In the absence of any satisfactory reply filed by the assessee during the course of asstt. Proceedings regarding source of deposit in his bank a/c with State Bank of Bikaner and Jaipur, Adda Bastian, Jalandhar, I hold that deposit of Rs.1,27,75,000/- during the financial year 2000-01 relevant to assessment year 2001-02 as mentioned supra represents assessee s income from undisclosed sources under the provisions of section 69A of I.T. Act, 1961 and is assessed as such. 11. Before the ld. CIT(A), the assessee raised following two grounds of appeal which are reproduced hereunder 1. That the order of Ld. AO dated 31.12.2007 is against the law and facts of the case. Ld. A.O. wrongly issued notice u/s 148. 2. That Ld. A.O. has wrongly made an addition of Rs.1,27,75,000/- on account of deposit on different dates in current account of M/s. Meghan Impex with State Bank of Bikaner and Jaipur, Basti Add, Jalandhar. 12. The Ld. CIT(A) vide page 12 and 13 of his order in para 2 and 2.1 rejected the legal grounds, which for the sake of clarity is reproduced as under 2. I have considered the submissions of the appellant carefully. Perusal of the assessment records of the assessee and the reason recorded for issue of notice u/s 148 reveal that information was received from the Commissioner of Customs, Amritsar that M/s. Meghna Impex, 7 Sehdev Market, Jalandhar has claimed DEPB benefits by showing exports of Timing/crank shafts though only hand tools had been exported. Further, even though money was not actually received in respect of several export bills, bank certificates had been forged to show realization to claim DEPB benefits of Rs.1.85 crores, which had been sold to others. It was stated that M/s. Meghna Impex had been floated in the name of Sh. Satbir Singh, an employee of Sh. Pavitar Singh, CA by Sh. Ashok Kumar alias Luck of M/s. ATM International. Sh. Gurkirpal Singh of M/s. Supreme Industries and Sh. Pavitar Singh, CA. It was also informed that Sh. Satbir Singh had stated before the Customs Authorities that the real beneficiaries were Sh. Ashok Kumar and Sh. Gurkirpal Singh. Substantial money to the tune of Rs.1.08 crores was said to have been transferred from the bank account of M/s. Meghna Impex to the bank account of M/s. Supreme Inds. This was said to have been managed by obtaining blank signed cheques of M/s. Meghna Impex from Sh. Sabir Singh and withdrawing money from the account of M/s. Meghna Impex. Sh. Ashok Kumar had stated before the Customs Authorities that export proceeds were arranged through Hawala channels from India to Dubai and remitted back into the account of Meghna Impex as export proceeds. The bills were over-invoiced to get such remittance back into India. The money was withdrawn from the account of M/s. Meghna Impex and these were given to the Hawala Operator in India. Based on this information, the AO found the belief that the money transferred from the bank account of Meghna Export to the bank account of Supreme Inds. Prop. Sh. Gurrkirpal Singh represented his income which had escaped assessment. 2.1. On a consideration of the reasons recorded, I am of the view that the AO had prima facie material to believe that income of the assessee had escaped assessment for the relevant assessment years. Ground No.1 of appeal is, therefore, rejected. 13. As regards the addition of Rs.1,27,75,000/-, the Ld. AR appearing on behalf of the assessee filed written submissions which are reproduced at pages 4 to 8 of his order in para 1.5 which were forwarded to the A.O. for his comments and the A.O. submitted the comments which are available in para 1.6 and the counter comments and the rejoinder etc. which are available in para 1.7 to 1.9 of CIT(A) s order. The Ld. CIT(A) ultimately vide paras 2.2 to 2.9 rejected all the pleadings made by the authorized representative appearing on behalf of the assessee and confirmed the action of the Assessing Officer and dismissed the grounds of appeal raised before him. 14. The Ld. counsel for the assessee, Mr. Ravish Sud, Advocate, argued with regard to the additional ground No.1 that the A.O. does not assume jurisdiction without complying with the statutory requirement of obtaining the approval/sanction of the appropriate authority as contemplated u/s 151(2) of the Act prior to the issue of the impugned notice u/s 148 of the Act. In this regard, he relied upon the decision of various courts of law. 14.1. As regards additional ground No.2, the ld. counsel for the assessee, Mr. Ravish Sud, CA argued that no notice u/s 143(2) of the Act has been issued and the AO is erred in law in framing the assessment u/s 147/143(3). Reliance was placed on the decision of Hon ble Supreme Court in the case of ACIT vs. Hotel Blue Moon (2010) 321 ITR 362 and other decisions where the said decision of Hon ble Supreme Court has been followed. 15. The Ld. JCIT(DR), Mr. Mahavir Singh, on the other hand, at the outset placed report of the A.O. and the permission/approval of the competent authority taken before recording reasons which are dated 29.03.2007. He further argued that the ld. counsel for the assessee should avoid taking such grounds without consulting the record of the assessment. 15.1 As regards ground No.2, the Ld. DR argued that the assessee has not raised any objection with regard to the issuance of notice u/s 143(2) of the Act at the commencement of the assessment proceedings, since the jurisdiction is determinable at the commencement of the proceedings and not at the conclusion of the said proceedings. He relied upon the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Ram Narain Bansal dated 13th July, 2011 (2011) 202 Taxman 213 where it has been decided that the assessee having participated in the reassessment proceedings upto its conclusion without raising any objection about issue and service of notice u/s 143(2), the ld. CIT(A) and the Tribunal were not justified in holding assessment invalid on that score. In the present case, the assessee having participated in the reassessment proceedings without raising any objection with regard to non-issuance of notice u/s 143(2) of the Act and therefore, such objection cannot be raised before the Tribunal and the same is liable to be dismissed. 16. We have heard the rival contentions with regard to the legal issue and perused the facts of the case. As regards the additional ground No.1, the ground taken by the assessee was that notice u/s 148 cannot be issued without obtaining sanction of the appropriate authority as contemplated u/s 151(2) of the Act. The Ld. DR has placed on record the said sanction and has strongly objected to that the assessee should not take such ground without consulting the assessment record. On perusal of the sanction taken u/s 151(2) of the Act before issuance of notice u/s 148, we are of the view that the ground has been taken by the assessee without consulting the assessment record, which in fact, should not have been taken. In any case, there is no violation as contemplated u/s 151(2) of the Act and the additional ground No.1, so raised is dismissed. 17. As regards additional ground No.2 , where the assessee has alleged that the A.O. has erred in law and facts of the case by framing assessment u/s 148/143(3) of the Act without issuing a notice u/s 143(2) of the Act. The Ld. counsel for the assessee has relied upon the decision in the case of ACIT vs. Hotel Blue Moon (201) 321 ITR 362 (SC) and other decisions in this regard. 17.1. The assessee through his counsel Sh. Ashwani Rnadev,CA has attended the assessment proceedings from time to time i.e. since commencement till the conclusion of the assessment proceedings which facts are available in the assessment record and the assessment order reproduced hereinabove. 17.2 As regards the arguments of the ld. counsel for the assessee that reassessment is nullity that there being a jurisdictional defect in continuation of proceedings, we are of the view that the word jurisdiction does not have a fixed meaning and in one sense it means an entitlement to enter upon the enquiry in question and in wider sense it implies right to conduct enquiry into the matter in lawful manner. 17.3 In the aforesaid context, there is no argument on behalf of the assessee as to what nature of challenge is being made to the proceedings i.e. on the assumption of jurisdiction/ or application thereof and further to state that no pleadings have been raised of whatsoever kind which addresses the point that the AO do not have any right to conduct enquiry. 17.4. The another issue which leads to be considered is the challenge to the jurisdiction is determinable at the commencement and not at the conclusion of the proceedings and this aspect has been very clearly noticed by the Hon ble Supreme Court in the case of M.L. Sethi vs. R.P. Kapur reported in (1972) 2 SCC 427 in para 12 at pages 434 and 435 which for the sake of convenience is reproduced as under The jurisdiction is a verbal coat of many colours Jurisdiction originally seems to have had the meaning which Lord Reid ascribed to it in Anisminic Ltd. v. Foreign Compensation omission, namely, the entitlement to enter upon the enquiry in question . If there was an entitlement to enter upon an enquiry into the question, been any subsequent error could only be regarded as an error within the jurisdiction. The best known formulation of this theory is that made by Lord Darman in R. v. Bolton. He said that the question of jurisdiction is determinable at the commencement, not at the conclusion of the enquiry. In Anisminic Ltd. case (supra), Lord Reid said But there are many cases where, although the tribunal had jurisdiction to enter on the enquiry it has done or failed to do something in the course of the enquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the enquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive. In the same case, Lord Pearce said Lack of jurisdiction may arise in various ways. There may be an absence of those formalities or. things which are conditions precedent to the tribunal having any jurisdiction to embark on an ,enquiry. Or the tribunal may at the end make an order that it has no jurisdiction to make. Or, in the intervening stage while engaged on a proper enquiry, the tribunal may depart from the rules of natural justice or it may ask itself the wrong questions or it may take into account matters which it was not directed to take into account. Thereby it would step outside its jurisdiction. It would turn its inquiry into something not directed by Parliament and fail to make the inquiry which the Parliament did direct. Any of these things would cause its purported decision to be a nullity. The dicta of the majority of the House of Lords in the above case would show the extent to which lack and excess of jurisdiction have been assimilated or, in other words, the extent to which we have moved away from the traditional concept of jurisdiction . The effect of the dicta in that case is to reduce the difference between jurisdictional error and error of law within jurisdiction almost to vanishing point. The practical effect of the decision is that any error of law can be reckoned as jurisdictional. This comes perilously close to saying that there is jurisdiction it the decision is right in law but none if it is wrong. Almost any misconstruction of a statute can be represented as basing their decision on a matter with which they have no right to deal , imposing an unwarranted condition or addressing themselves to a wrong question . The majority opinion in the, case leaves a Court or Tribunal with virtually no margin of legal error. Whether there is excess of jurisdiction or merely error within jurisdiction can be determined only by construing the empowering statute, which will, give little guidance. It is really a question of how much latitude the Court is prepared to allow. in the end it can only be a value judgment (see H.W.R. Wade, Constitutional and Administrative Aspects of the Anismanic case , Law Quarterly Review, Vol. 85, 1969, p. 198). Why is it that a wrong decision on a question of limitation or res judicata was treated as a jurisdictional error and liable to be interfered with in revision ? It is a it difficult to understand how an erroneous decision on a question of limitation or res judicata would oust the jurisdiction of the Court in the primitive sense of the term and render the decision or a decree embodying the decision a nullity liable to collateral attack. The reason can only be that the error of law was considered as vital by the Court. And there is no yardstick to determine the magnitude of the error other than the opinion of the Court. 17.5. The aforesaid principle of law with greatest respect we are bound to follow. 17.6. Even as per records before us, it has been noticed that the assessee has been diligent in pursuing the remedy available through attending to the case proceedings before the AO and it is a settled law that objection regarding jurisdiction be raised at the earlier possible opportunity. Thus, there is no reason for coming forward for the assessee waiting for such long for raising said objection (legal ground) after completion of reassessment. Another issue to be addressed is that challenge is not to the continuation of proceedings by the A.O. whereas the purpose of issuance notice u/s 143(2) of the Act cannot be lost sight and we are supported by the principle of law as noticed in the case of Dhirendra Nath Goari ( In CA No.85 of 1961), Subal Chandra Nath Saha And Others ( In CA No.86 of 1961) vs. Sudhir Chandra Ghosh And Others (1964) 6 SCR 1001 AIR 1964 SC 1300. In para-7 where the difference between a nullity and an irregularity has been noticed, which has been extracted hereinbelow Even then, the question arises whether an act done in breach of the mandatory provision is per force a nullity. In Ashutosh Sikdar v. Behari Lal Kirtania(1), Mookerjee, J., after referring to Macnamara on Nullity and Irregular ties , observed no hard and fast line can be drawn between a nullity and an irregularity but this much is clear, that an irregularity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is a proceeding that is taken without any foundation for it, or is so essentially defective as to be of no avail or effect whatever, or is void and incapable of being validated. Whether a provision falls under one category or the other is not easy of discernment, but in the ultimate analysis it depends upon the nature, scope and object of a particular provision. A workable test has been laid down by Justice Coleridge in Holmes v. Russell(2), which reads It is difficult sometimes to distinguish between an irregularity and a nullity but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection if he can waive it, it amounts to an irregularity if he cannot, it is anullity. A waiver is an intentional relinquishment of a known right but obviously an objection to jurisdiction cannot be waived, for consent cannot give a court jurisdiction where there is none. Even if there is inherent jurisdiction, certain provisions cannot be waived. Maxwell in his book On the (1) (1908) I.L.R. 35 Cal. 61, 72. (2) 1841 9 Dowl. 487. 1012. Interpretation of Statutes , 11th Edn., at p. 375, describes the rule thus Another maxim which sanctions the non- observance of a statutory provision is that cuilibet licet renuntiare juri pro se introducto. Everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy. The same rule is restated in Craies on Statute Law , 6th Edn., at p. 269, thus As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court. 17.7 Having noticed material facts, we consider it appropriate with great respect in accordance with the principle of law that at the most the present kind of grievance is merely an error within jurisdiction , which can be determined only by construing the empowering statute, which will give guidance on the subject and in the present case. Further we are supported by the decision of ACIT vs. Hotel Blue Moon decided by the Hon ble Supreme Court reported in (2010) 321 ITR 362 dated 2nd Feb., 2010. Thus, the purpose is to give opportunity to the assessee for bringing to the knowledge the proceedings being undertaken in accordance with law which too has been done by the A.O. The relevant part of the decision in the case of ACIT and Anr. Vs. Hotel Blue Moon reported in (2010) 321 ITR 362 (SC) in para 15 is reproduced as under But s. 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 s. 143(2). However, if an assessment is to be completed under s. 143(3) r/w s. 158BC, notice under s. 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 s. 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under s. 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the s. 158BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the AO 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 AO. 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 AO, if for any reason, repudiates the return filed by the assessee in response to notice under s. 158BC(a), the AO must necessarily issue notice under s. 143(2) of the Act within the time prescribed in the proviso to s. 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of s. 158BC(b) it has done so specifically. Thus, when s. 158BC(b) specifically refers to sic-s. 143(2) applicability of the proviso thereto cannot be excluded. We may also notice here itself that the clarification given by CBDT in its Circular No. 717. dt. 14th Aug.. 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-s. (2) of s. 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 s. 158BC. the provisions of s. 142 and sub-ss. (2) and (3) of s. 143 arc applicable and no assessment could be made without issuing notice under s. 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 s. 153BC(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. Partap Singh s case (supra). In this case, the Court has observed that s. 37(2) provides that the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under s. 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in s. 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 v. Jaiswal Industries 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. 18 We may refer to the judgment of Hon ble Jurisdictional High Court of Punjab and Haryana which is binding in nature titled as CIT vs Ram Narain Bansal reported in ITA No.814 of 2010 dated 13th July, 213 reported in 202 Taxman 213 (placed on record) pertaining to assessment year 2002-03 wherein the question falling consideration is the same as raised before this Bench in the present appeal, which is extracted hereinbelow Whether on the facts and circumstances of the case, the Tribunal was right in law in concurring with the finding of CIT (A) in holding the assessment bad in law, made pursuant to the issue of notice u/s 148 without appreciating that no prejudice was caused to the assessee by non-issuance of notice u/s 143(2), particularly, when the assessee was participating in the assessment proceeding without objecting to the assessment proceedings on this account at the assessment stage? 19. The Hon ble High Court noticing the provisions of law has answered the question against the assessee and in favour of the revenue with the direction of remanding the matter to the Tribunal for decision on merit afresh in accordance with law. The relevant portion of the judgment of the Hon ble Punjab and Haryana High Court in the case of CIT vs. Ram Narain Bansal (supra) is reproduced hereinbelow for the sake of convenience as under 9. Learned counsel for the Revenue submitted that notice under Section 148 of the Act was issued to the assessee which was duly served. In pursuance to the said notice, the assessee appeared before the assessing authority and participated in the re-assessment proceedings on 30.11.2007, 6.12.2007, 12.12.2007, 13.12.2007, 18.12.2007, 24.12.2007, 27.12.2007, 28.12.2007 and 31.12.2007 and also cross-examined the witnesses who were summoned and their statements were recorded. The counsel drew support from a judgment of the Kerala High Court in K.J. Thomas vs. CIT (2008) 301 ITR 301 to submit that non-service of notice under Section 143 (2) of the Act was not fatal to re-assessment proceedings. Reference was made to Section 292 of the Act and according to the counsel the said provisions were applicable to all pending proceedings. Reliance was also placed on a judgment of this Court in Commissioner of Income Tax, Bathinda v. M/s Panchvati Motors (P) Ltd. (ITA 292 of 2008) decided on 3.5.2011. 10. We find considerable force in the submission of the learned counsel. The Kerala High Court in K.J.Thomas s case (supra), while considering similar issue, had held as under The procedure under S. 143(2) of the Act is to ensure that an adverse order is issued only after proper opportunity is given to the assessee. In this case, it is conceded that the assessee got opportunity to file reply and detailed reply was in fact filed and reassessment notice and final order were also issued within the time- limit prescribed under the Act. 11. Further, this Court in M/s Panchwati Motor (P) Ltd. s case (supra) while examining the scope of Section 292 BBof the Act and its applicability had noted as under Section 292BB of the Act was inserted by Finance Act, 2008 w.e.f. 1.4.2008. It reads thus - 292BB Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of the Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was - a) not served upon him or b) not served upon him in time or c) served upon him in an improper manner. Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. A presumption has been raised under the said provision relating to service of notice upon the assessee in respect of assessment or reassessment proceedings. According to this provision, where an assessee appears in any proceedings or cooperates in any enquiry relating to assessment or reassessment proceedings, it shall be presumed that the assessee has been validly served and it shall not be open to the assessee to object that the notice was not served upon him or was not served in time or was served upon him in an improper manner. However, an exception to the aforesaid presumption has been made in a case where such objection has been raised before completion of assessment or reassessment. The provision has been made effective from 1.4.2008 and therefore, shall apply to all pending proceedings. The Central Board of Direct Taxes issued the circular No.1 of 2009 dated 27 March, 2009 (2009) 310 ITR (St.) 42 giving explanatory notes on the provisions relating to direct taxes contained in Finance Act, 2008. Clause 42.7 (at page 86 of the report) is relevant which relates to applicability of t................Income Tax - Case Law

More...