2012 (10) TMI 426 - HC - Income Tax

Whether notice under Section 158 BC cannot be treated as invalid in view of the provisions as contained in section 292B of the Act Held that - Intent and purport as provided under section 158 BC is to serve a notice on the assessee by providing a time of not less than 15 days and not more than 45 days - grant of extra time is without authority of law. It cannot validate an invalid notice - when the sum and substance of the notice issued to the assessee is not in conformity with the purpose of the Act, section 292B has no application - The waiver or the consent cannot override the provisions of statue. What is mandated cannot be diluted. - in favour of the assessee Whether section 240 of the Act is not applicable to Chapter XIV-B of the Act and therefore, the taxes paid pursuant to the return filed in the block assessment is liable to be refunded Held that - For Clause (b) of proviso to section 240 to apply, the taxes should have been paid by the assessee voluntarily - revenue cannot contend, that the refund adjusted is to be treated as tax paid, so as to deny the assessee the refund due, subsequently, due to annulment of assessment. Payment of taxes voluntarily is different from adjusting the refund without reference to the assessee - It cannot be held that the assessee has paid taxes and accordingly, in terms of proviso to section 240 to deny refund to the assessee - Commissioner of Income Tax (Appeals) exceeded his jurisdiction to deny the refund - in favour of the assessee Jurisdiction - refund Held that - Jurisdiction of the Appellate Authorities to adjudicate the issue of refund in the Appellate proceedings is consequential upon the validity of the assessment proceedings. Having recorded a finding by holding that the entire assessment proceedings are invalid, the question of the jurisdiction of the appellate authorities therefore would not arise for determination Whether Appellate Authorities should have directed the Assessing Officer to pass a fresh order of assessment in view of holding that the notice is invalid - revenue contended that if the notice was held to be invalid, the Assessing Officer should have been directed to pass a fresh order of assessment by complying with the limitation in terms of section 158BC Held that - Time to be granted in terms of section 158BC is mandatory. Having failed to comply with the same, granting another opportunity to the revenue is highly improper - period as specified in the Act requires to be strictly complied with. Therefore, the plea of the revenue for a direction to pass fresh orders of assessment after complying with the provisions of section 158BC requires to be rejected - in favour of the assessee

Issues Involved:
1. Validity of the notice issued under section 158BC of the Income-tax Act.
2. Applicability of section 292B to validate an invalid notice.
3. Applicability of section 240 to block assessment proceedings and the refund of taxes.
4. Jurisdiction of the Appellate Authorities to adjudicate the issue of refund.
5. Direction to the Assessing Officer to pass a fresh order of assessment after invalidating the notice.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 158BC:
The primary issue was whether the notice issued under section 158BC of the Act, which provided less than 15 days for the assessee to file the return, was valid. The court held that the notice was invalid because it did not comply with the statutory requirement of granting a minimum of 15 days. The notice, therefore, was deemed ab initio void, rendering the entire assessment proceedings without jurisdiction. The court emphasized that jurisdiction is conferred by statute and cannot be assumed through consent or waiver by the assessee.

2. Applicability of Section 292B:
The court examined whether section 292B could save the invalid notice. Section 292B states that a notice shall not be deemed invalid due to any mistake, defect, or omission if it is in substance and effect in conformity with the intent and purpose of the Act. The court concluded that the notice under section 158BC, which granted less than the mandatory 15 days, was not in conformity with the Act's intent and purpose. Therefore, section 292B could not be invoked to validate the notice.

3. Applicability of Section 240 and Refund of Taxes:
The court addressed whether section 240, which deals with the refund of taxes when an assessment is annulled, applied to block assessment proceedings under Chapter XIV-B. The court held that section 240 is applicable, and the taxes paid must be refunded. It was noted that the taxes were not paid voluntarily but were adjusted pursuant to a court order. Consequently, the Tribunal's decision to refund the taxes was upheld.

4. Jurisdiction of Appellate Authorities:
The court considered whether the Appellate Authorities had jurisdiction to adjudicate the issue of refund in appellate proceedings. Since the assessment proceedings were invalidated, the question of jurisdiction became academic. The court affirmed that once the assessment is annulled, the Appellate Authorities have the jurisdiction to address the refund issue as a consequential matter.

5. Direction for Fresh Assessment Order:
The revenue contended that a fresh assessment order should be directed after invalidating the notice. The court rejected this contention, stating that granting another opportunity to the revenue would be improper and against the statutory requirements. The court emphasized that the statutory time limits must be strictly adhered to, and violations cannot be rectified by remand orders.

Conclusion:
The court dismissed the appeals, answering all substantial questions of law in favor of the assessee and against the revenue. The invalid notice under section 158BC rendered the entire assessment proceedings void. Section 292B could not validate the notice, and section 240 was applicable for the refund of taxes. The Appellate Authorities had jurisdiction to adjudicate the refund issue, and no fresh assessment order was warranted.

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