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TMI Blog1992 (11) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's advocate. On the basis of a petition dated 15-9-1984 filed by the assessee's advocate, the exparte assessment was cancelled under section 146 on 24-9-1984 and the fresh assessment was completed on 27-3-1987 making certain additions and disallowances as follows : 1 . Inclusion of income from foreign liquor shop and interest on kist advance Rs. 25,815 2. Addition to net income from Poliathode Toddy Shop Rs. 33,800 3. Disallowance of car and traveling expenses--personal--over and above Rs. 3,650--added back in the Memo of Total income Rs. 9, 600 4. So-called profit on unaccounted sale of cashew kernels Rs. 2,52,292 5. Addition to value of closing stock Rs. 48,960 6. Disallowance out of Bonus Rs. 1,83,178 7. Addition made under other sources--so-called unaccounted investment in raw cashewnuts Rs. 19,79,030 8. Disallowance of claim under section 35B Rs. 52,369 9. So-called unaccounted purchases—of Tin Sheets, and Addition under other sources Rs. 8,156 Thus against the income initially assessed under section 144 at Rs. 2,16,336 the income that was finally determined upon cancellation of the ex parte assessment came to Rs. 23,28,394. The assessee appealed against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of the assessee itself, Ground No. 2 is only a legal argument and not a ground as such. The omission to raise this ground earlier is not on account of any wilful negligence or default. Permission may therefore be granted." A third set of additional grounds were presented on 2-1-1992 as follows : " 1. As the assessment under section 144 has not been set aside the assessment now challenged is beyond time and without jurisdiction. 2. The Income-tax Officer should have followed section 144B proceedings. Having not done it he has no authority to make an addition in excess of Rs. 1,00,000. 3. In an assessment done under section 143 after section 144 is set aside the income assessed should not exceed section 144 assessment figures. These are only questions of law on admitted facts. The omission to raise it earlier is not wilful." These grounds were not raised before the CIT (Appeals) and they are for the first time raised before the Tribunal. 4. Sri C.K. Nair, the learned counsel for the assessee submitted that the assessee was not aware of the fact that there was an exparte assessment which was later on cancelled by the Income-tax Officer at the instance of his Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinued to have such misapprehensions after the receipt of the impugned assessment order in which the passing of the ex parte assessment order, the reopening of the assessment under section 146 and cancellation of the ex parte assessment order were all referred to. Therefore, at least before the CIT (Appeals) the assessee should have challenged the proceedings. This he did not do. Further, the assessee had not objected to the impugned assessment proceedings in the grounds of appeal before the Tribunal. Right through the assessee was only aggrieved against the additions and disallowances. Therefore, it does not lie in the hands of the assessee to turn round at this stage of the proceedings and challenge the jurisdiction of the Income-tax officer or question the legality of reopening of the assessment under section 146 of the Income-tax Act. Hence the additional grounds, first, second and third or all put together should not be entertained. 6. We have thus heard rival submissions and perused the records. There is a challenge to the jurisdiction of the Income-tax Officer in having acted on the petition preferred by an Advocate by reopening the assessment which has resulted in the canc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etail. This was denied and assessment is completed. It is submitted that there were two raids on my business premises and most of the books were and are with the income-tax authorities. I could produce the details called for 1981-82 only after copying down the books kept under your custody. Hence the delay in submitting the details. At present I have started copying and hence I may be granted an opportunity to produce the details in the name of fairness and justice. Yours faithfully, Sd/- Quilon, for N. Krishnan." 15-9-1984. (iii) It is pertinent to point out that even though the petition is drafted in the name of N. Krishnan, the assessee, it has been signed only by Sri B. Gopalakrishnan, the Advocate for the assessee. (iv) On the basis of the above representation by the Advocate, the Income-tax Officer reopened the assessment under section 146 of the IT Act on 24-9-1984 cancelling the ex parte assessment dated 12-9-1984 giving rise to the impugned proceedings. From the facts narrated above, which are not in dispute, the question that is being agitated before us is can the Income-tax Officer invoke the provisions of section 146 on the basis of a petition preferred by the Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union Bank of India [1992] 1 SC 31. 9. Sri Abraham, the learned senior departmental representative contended that the assessee by his letter dated 18-8-1984 had sought for adjournment in order to enable him to file certain details. As he did not file the details and as there was non-compliance with the notices issued by the Income-tax Officer, an ex parte assessment was made on 12-9-1984. Thereupon, the Advocate who had a valid Vakalat in his favour had represented to the Income-tax Officer requesting him to reopen the assessment under section 146. Then, in the reopened assessment proceedings, the assessee had participated by furnishing details and offering explanations. Therefore, the assessee cannot now contend that the proceedings in which he had participated are all non est proceedings and are not binding on him. 10. Section 146 of the IT Act is only a procedural section. No question of jurisdiction is in-built in that section. Therefore, even if the provisions of section 146 are held to have been invoked incorrectly, at best it was only a supervening illegality which can be cured. That will not make the proceedings totally bad or non est in the eye of law. Adverting to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see for reopenment of the assessment. In the case cited supra, after the completion of assessment under section 144, the firm filed a return for the assessment year and a request in writing for setting aside the assessment typed at the end of its profit and loss account was annexed to its return. At the end of the profit and loss statement there was a single signature by the managing partner of the assessee-firm. This prayer was rejected on the ground that there was no proper application under section 146. The Karnataka High Court held that there was substantial compliance with the requirements of section 146 of the Income-tax Act, inasmuch as, there was a prayer to set aside the best judgment assessment for the reasons given in writing and, therefore, the Income-tax Officer should have disposed of that application on merits. The learned senior departmental representative relies on this very case stating that as there was an application by the assessee's advocate there was substantial compliance. We are unable to appreciate his stand. In the Karnataka case, there was a prayer of the assessee for reopenment of the assessment under section 146 and that prayer was contained in a state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal or assessment proceedings. Thus, the Vakkalath is specifically intended to enable the Advocate to appear for and conduct the proceedings. It did not authorise the Advocate to initiate the proceedings. There is no specific authorisation in the Vakkalath in this behalf. The authorisation is limited only to his appearance on behalf of the assessee in order to conduct the proceedings. Therefore, the Advocate was not authorised or empowered to sign the petition praying for reopenment of the assessment under section 146 of the Income-tax Act for or on behalf of the assessee. Therefore the application or petition signed by the Advocate who was not authorised to do so should be held to be an invalid application as it is non est in the eye of law. It is only on a valid application, the Income-tax Officer would be clothed with the jurisdiction to reopen the assessment under section 146. He cannot act on a petition from a stranger which is the case before us, though he is an Advocate authorised to conduct the case before the Income-tax Officer once it is initiated. Therefore, the basic requirement for clutching at the jurisdiction under section 146 is conspicuous by its absence in this c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resulting assessment proceedings cannot be sustained. 14. Both the counsels relied on the decision of the Supreme Court in the case of Byram Pestonji Gariwala. We have gone through decision of the Apex Court. In that case, the notice issued under Order 21 Rule 22 was personally served on the defendant, but he did not appear or show cause why the decree should not be executed. The notice was accordingly made absolute and leave was granted to the plaintiff to execute the decree. The decree passed by the High Court in terms of the compromise was a valid decree. It remained unchallenged. The appellant never raised any doubt as to its validity or genuineness. He had no case that the decree was vitiated by fraud or misrepresentation or his counsel lacked authority to enter into a compromise on his behalf. Nevertheless, after six years he questioned its validity by means of chamber summons. This was an unsuccessful challenge by reason of delay, estoppel or resjudicata, and was rightly so held by the High Court. Dealing with the case, the Hon'ble Supreme Court held at para 30 and para 37 as follows :-- "30. There is no reason to assume that the Legislature intended to curtail the implied ..... 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