9911796707
TMI Blog2001 (2) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... not file any return in response to the said notice. Assessing Officer proceeded to frame the assessment and in this process issued questionnaire on various dates, which are not responded. Assessee in April, 1997 filed a writ petition before the Madras High Court seeking the intervention of the Court to quash the Notification dated 9-9-1996 issued under section 127(1) of the Act by Commissioner of Income-tax - V of Tamil Nadu by which the jurisdiction of assessment was given over to ACIT - Cen. Circ. II(6), Chennai from ACIT (Inv.)-II, Trichy. High Court of Madras vide its order dated 4-9-1997 had noted that the Notification issued on 9-9-1996 was without compliance of the mandatory requirement of the section 127 of the Act. High Court accordingly granted interim stay of all assessment proceedings by ACIT II(6), Chennai. High Court further permitted the Department to issue a fresh Notification by following the prescribed procedure, give opportunity to the assessee and pass orders accordingly. High Court also directed the Department to submit its report to the High Court after passing of the orders. In pursuance to the directions of the High Court, the new Commissionerate create ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the stay Assessing Officer would get 28 days that expires on 4-12-1998. Assessing Officer called upon the assessee to place his submissions to the various points noted by him vide his letter of inquiry dated 24-11-1998 in response to which the representative of the assessee attended on 27-11-1998 and prayed for inspection of the seized material and Assessing Officer had granted the permission to peruse the seized records. Assessing Officer noted that on 1-12-1998 a letter from the office of M/s. K. Ravi Co. was filed without enclosing the authority in its favour and accordingly ignored the said letter. Assessing Officer accordingly concluded the assessment with reference to the provisions of section 144 of the Act and estimated the undisclosed income at Rs. 2,44,91,270. 3. The assessee has thus come up in appeal before us and has raised the issue of the assessment being barred by time requiring its quashing and the additions being made without adequate opportunity that included both substantive and protective additions. The assessee in its grounds of appeal had raised several argumentative grounds challenging the validity of the assessment. The assessee through his learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this is a clear indication that it was only after the issue of the fresh Notification that the Assessing Officer has jurisdiction over the case and therefore, it must be held that the issue of the Notification in 1996 and all that followed it are illegal and deserve to be quashed. He pleaded that the search was on 24-9-1996 and in accordance with the provisions of section 158BE(1)(a) of the Act, the Assessing Officer would get one year to frame the assessment and in a normal course by 30-9-1997 Assessing Officer must have made the assessment and despite the intervention by the High Court and granting stay on 2-9-1997, the time available to frame the assessment expired on 30-9-1997. He accordingly insisted that the assessment framed on 3-12-1998 was beyond time and must be quashed. He submitted that the Notification issued in 1996 suffered from basic legal infirmity and after this was redressed a fresh Notification became a necessity and this clearly shows that the Assessing Officer who completed the assessment got the jurisdiction only from 16-4-1998 by which time the time for framing of the assessment had already expired. The grievance of the assessee being satisfied under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was clearly prejudiced and biased with the assessee because of his sister Ms. Sasikala Natarajan had a close relationship with Ms. J. Jayalalitha. He also contended that the Assessing Officer had treated the letter from the office of the counsel as without any authorizations in his favour, which is contradictory because the record of the Department would show that he had given all the replies. He accordingly contended that Assessing Officer had deliberately rejected his contentions and replies only to give strength to his ex parte assessment. He submitted that search must reveal undisclosed income and that alone he could include in the assessment but, he had included certain items on protective basis which action is also an indication of the bias towards the assessee. He contended that the ex parte assessment made of undisclosed income some of which are on protective basis also shows that Assessing Officer was not sure of what to do and this is a clear indication of lack of application of mind. He pleaded all these aspects are highlighted by him only to drive the points that support the claim of the appellant that the assessment is bad in all aspects of law and deserve to be quash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer of jurisdiction from Trichy to Chennai has also been perused. The authorities under the Act are clearly mentioned under the Act along with their powers, duties and responsibilities. The sections 116 to 129 cover the various aspects on the authorities under the Act starting from the description of the income-tax authorities, their appointment, control to be exercised on such authorities, instructions that could be issued to subordinate authorities, their jurisdiction, jurisdiction of Assessing Officers, power to transfer cases, functions of inspectors, change of incumbent of an office. The officer who is appointed under the Act to hold an office is clothed with the responsibility of implementing the Act to the extent he is so authorized by his appointment. The official acts of such person or official are recognized as valid on grounds of public policy. This is because the official has been appointed in the implementation of a statute that governs the entire nation and covers every citizen in India. The official when he carries out his official duties he is stated as performing his obligations under the Act and hence, his official actions carry the stamp of valid on grounds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the assessment framed on 3-12-1998 was barred by time; and (e) the present assessment was framed without the mandatory compliance of the issue of notice and hence, is bad and must be struck down. In regard to the claim of assessment being barred by time consequent to stay of proceedings by the High Court leaving 28 days only for completion, we have only to observe that the conferment of jurisdiction on the Assessing Officer vide Notification of 1996 was found to contain a procedural defect of non-affording of opportunity to the assessee. High Court had not and perhaps could not have held that the Assessing Officer who had initiated the assessment proceedings had no jurisdiction because, he was performing in accordance with the instructions under the Act and these are governed by public policy. It was never the case of the assessee that the transfer of his case to the present Assessing Officer was mala fide and hence, his actions till such time they were stayed are valid actions. The connected issue is that the assessment that normally should have been concluded by 30-9-1997 but concluded on 3-12-1998 was barred by time has to be considered in the totality of other is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfied. We had observed earlier that the action of Assessing Officer till it was stayed by the High Court being in accordance with law and valid on grounds of public policy. The subsequent Notification only corrected the error and it reinstated the jurisdiction on the same Assessing Officer. Assessing Officer therefore is only continuing the proceedings from the point where he was asked to stop by the High Court and therefore, he could not be called upon to issue a notice under section 158BC of the Act. We may also observe that the lawmaker in their wisdom had appreciated the issues that was carried in litigation especially matters concerning issue of notices and had put an end to this plea by a provision that was introduced with effect from 1-4-1998. The said provision reads as under: The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred. The above section makes it clear that even where a case is transferred from one officer to another in the middle of the proceeding, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his mother-in-law Mrs. Sumathi and Assessing Officer had noted that the statement of Mrs. Sumathi was recorded on 3 -10-1998 and that she owned all of it. She had stated that some she carried when she was married and 300 sovereigns were purchased after marriage. Assessing Officer rejected her statement because she did not adduce evidence in support of her claim and the sources of income for its acquisition and included the total value of Rs. 43,47,182 as undisclosed income of the assessee. Valuable articles like Fridge, TV and other electronic items were also added to the undisclosed income because of lack of evidence. A deposit of Rs. 10 lakhs was found made in the name of Ms. Subashree, niece of the assessee and it was stated by Ms. Subashree that assessee deposited the amount with Sri Ram Chit Fund in her name on her marriage. Because of lack of any evidence this was added as undisclosed income on a protective basis. Funeral expense on the deceased mother too was added as undisclosed income. Certain loose sheets that were found during search had indicated payment to the extent of Rs. 50,43,875 to which the assessee had stated that it did not pertain to him. Assessing Officer n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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