2012 (7) TMI 733 - HC - Income Tax

Notice u/s 158BD - non-mentioning of the block period in the notice - curable defect - recording of satisfaction - Whether the respondent could have issued a notice under Section 158BD of the Income Tax Act, 1961 without following the procedure prescribed under Section 158BC of the Income Tax Act, 1961 and without conducting a search on the appellant under Section 132 of the Income Tax Act, 1961? Held that - when the assessee had acted on the notice and filed the return knowing fully well the period of block assessment, yet considering the fact the notice issued under Section 158BD is only procedural and not related to assumption of jurisdiction, it is not open to the assessee to contend that the assessment was not valid. Notice u/s 159BD on third person without conducing search - held that - Assessing Officer has proceeded under Section 158BC against such other person. As far as this aspect is concerned, on going through the file, we find that there is no difficulty in holding that there is compliance of the provisions of the Act. Non mentioning of block period in the notice - held that - Thus, when the assessee received the notice issued on 5.8.99, the assessee had no doubt as to the nature of proceedings initiated, the purpose of the said proceedings and the block period for which proceedings were initiated. In the circumstances, it is too late for the assessee to contend that non mentioning of the block period would defeat the assessment proceedings. Recording / Retraction of statement - held that - It may be seen that the assessee is stated to have written a letter on 12.6.2003 and 26.6.2003 and it is relevant to point out that the so called retraction came to be made only in the letter dated 26.6.2003, which clearly shows that it is merely an after thought to say that he made the statement under threat or coercion. Consequently, this ground fails. - Decided against the assessee.

Issues Involved:
1. Validity of notice issued under Sec.158BD of the Income Tax Act, 1961 without mentioning the block period.
2. Whether non-mentioning of the block period in the notice is a curable defect.
3. Applicability of Order 18 Rules 5 and 9 of the Code of Civil Procedure and Section 164 Cr.P.C. while recording a confessional statement under Sec.131 of the Income Tax Act, 1961.
4. Validity of assessment order based solely on a statement under Sec.131 without corroborative material.
5. Validity of notice under Section 158BD without the Assessing Officer recording satisfaction that the alleged undisclosed income belonged to the appellant.
6. Validity of notice under Section 158BD without following the procedure prescribed under Section 158BC and without conducting a search under Section 132.

Detailed Analysis:

1. Validity of Notice Issued Under Sec.158BD Without Mentioning the Block Period:
The court examined whether the notice issued under Sec.158BD is sustainable if it does not mention the block period. The Tribunal pointed out that the appellant had participated in the assessment proceedings knowing fully well the block period and the details of undisclosed income. Therefore, the non-mentioning of the block period in the notice would not vitiate the assessment proceedings. The court rejected the appellant's contention, noting that the appellant had no doubt about the nature of the proceedings initiated or the block period for which the proceedings were initiated.

2. Non-Mentioning of the Block Period as a Curable Defect:
The court referenced decisions such as Sakthivel Bankers v. Asst. Commissioner and Shirish Madhukar Dalvi v. Asst. CIT, which held that non-mentioning of the block period would not defeat the assessment. The court emphasized that the appellant had acted on the notice and filed the return knowing the block period, and the notice issued under Sec.158BD is procedural and not related to the assumption of jurisdiction.

3. Applicability of Order 18 Rules 5 and 9 of the Code of Civil Procedure and Section 164 Cr.P.C.:
The appellant contended that the statement recorded was not in conformity with these provisions. The Tribunal held that income tax proceedings do not convert into regular civil or criminal proceedings, and thus strict adherence to these provisions was not warranted. The Tribunal found that the statement was recorded in the presence of the Deputy Director of Income Tax, and there was no violation of the provisions.

4. Validity of Assessment Order Based on Statement Under Sec.131:
The court examined whether an assessment order could be passed merely upon a statement under Sec.131 without corroborative material. The Tribunal pointed out that the assessment was based on materials and information available on record, together with the statement made under Sec.131. The court noted that the material seized from other premises and the consistency in the appellant's answers supported the assessment.

5. Validity of Notice Under Section 158BD Without Recording Satisfaction:
The court reviewed whether a notice under Section 158BD is valid if the Assessing Officer did not record satisfaction that the alleged undisclosed income belonged to the appellant. The court found that there was compliance with the provisions of the Act, as the conditions required under Section 158BD were fulfilled before proceeding with the block assessment.

6. Validity of Notice Under Section 158BD Without Following Procedure Under Section 158BC:
The appellant argued that the respondent could not issue a notice under Section 158BD without following the procedure prescribed under Section 158BC and without conducting a search under Section 132. The court found that the appellant participated in the enquiry and filed the return after ascertaining the block period, thus validating the notice and subsequent proceedings.

Conclusion:
The court confirmed the order of the Tribunal, rejecting the appellant's contentions on all issues. The Tax Case (Appeal) was dismissed, and the assessment based on the materials seized and the statement under Sec.131 was upheld. The court emphasized that procedural lapses, such as non-mentioning of the block period, did not vitiate the assessment proceedings, especially when the appellant had participated fully and was aware of the details.

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