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TMI Blog2005 (12) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... BC of the Act was served on the assessee on 5-6-1999 and the return in response to the same was filed in Form 2B on 22-7-1999 admitting the undisclosed income of Rs. 7,84,650. The Assessing Officer noticed complexity in the accounts and directed the assessee to get his accounts audited under section 142(2A) of the Act on 17-4-2000 and direction under section 142(2A) was served on the assessee on 20-4-2000. In this direction, the assessee was directed to get the audit report on or before 31-7-2000. The Commissioner of Income-tax, Coimbatore, appointed Shri T.S. Sankararaman, CA, Salem for auditing the books of account of the assessee in respect of block period 1-4-1988 to 1-7-1998 and the assessee failed to comply with the directions issued by the Assessing Officer under section 142(2A) of the Act and the block assessment was completed on 13-11-2000 under section 158BC read with section 144 of the Act. The assessee has raised the limitation issue before the CIT (Appeals) and argued that block assessment order dated 13-11-2000 is barred by limitation in view of the proviso to Explanation 1 to section 158BE of the Act. The CIT (Appeals) rejected the claim of the assessee that the bloc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ys is to be extended. Accordingly, the limitation in this case will expire on 13-11-2000, the date on which the assessment was framed by the Assessing Officer and further more as per the proviso to Explanation to section 158BE of the Act further extends the period to 60 days where the period remains for framing the block assessment less than 60 days, in this case there does not remain any day left for making the assessment, hence, extended period of 60 days will be taken into consideration. For clarity and convenience, we reproduce the relevant provisions of section 158BE of the Act which reads as under: "158BE. Time-limit for completion of block assessment.- (1) The order under section 158BC shall be passed- (b) within two years from the end of the month in which the last of the authorizations for search under section 132 or for requisition under section 132A, as the case may be, was executed in cases where a search is initiated or books of account or other documents or any assets are requisitioned on or after 1-1-1997. (2) The period of limitation for completion of block assessment in the case of the other person referred to in section 158BD shall be- (a) " (b) two ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such particulars as may be prescribed and such other particulars as the [Assessing] Officer may require. (2B)" (2C) Every report under sub-section (2A) shall be furnished by the assessee to the [Assessing] Officer within such period as may be specified by the [Assessing] Officer: Provided that the [Assessing] Officer may, on an application q made in this behalf by the assessee and for any good and sufficient reason, extend the said period by such further period or periods as he thinks fit; so, however, that the aggregate of the period originally fixed and the period or periods so extended shall not, in any case, exceed one hundred and eighty days from the date on which the direction under sub-section (2A) is received by the assessee." It is amply clear from the proviso to section 142(2C) of the Act that the period originally granted or extended period which should not exceed more than 180 days will be applicable to the assessee from the date on which direction under sub-section (2A) of section 142 is received by the assessee. In the present case, the assessee received the direction on 20-4-2000 and hence, the limitation will be counted from the date of service of direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 143(2) was issued by the Assessing Officer during the course of assessment proceedings." He further held that "In absence of any notice issued under section 143(2) of the Income-tax Act and in the interest of natural justice I consider it proper to set aside the block assessment order under section 158BC/144 of the Income-tax Act for the block period 1-4-1988 to 1-7-1998." The CIT (Appeals) has also directed the Assessing Officer to reframe the block assessment order afresh after proper service of notice under section 143(2) of the Act and after giving adequate opportunity of being heard. Aggrieved by the order of the CIT (Appeals), the assessee is in second appeal before the Tribunal. 8. Before us, the ld. Counsel for the assessee argued that the order of the CIT (Appeals) requires modification resulting in cancellation of block assessment. Further, he argued that setting aside of the block assessment order by the CIT (Appeals) does not extend the period within which notice under section 143(2) of the Act is to be served. He further argued that the provisions of section 158BC of the Act for block assessment have been enumerated and clause (b) of section 158BC clearly says tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the expression used in clause (b) to section 158BC is 'so far as may be' there. Here, to understand the meaning of expression 'so far as may be', we have to refer to the judgment of the Hon'ble Supreme Court in the case of Dr. Partap Singh v. Director of Enforcement [1985] 155 ITR 166. The Hon'ble Apex Court has very beautifully defined the expression "so far as may be" which means that those provisions may be generally followed to the extent possible and it was held as under: "Section 37(2) provides that 'the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under section 37(1)'. Reading the two sub-sections together, it merely means that the methodology prescribed for carrying out a search provided in section 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 submission that section 165(1) has been incorporated by pen and ink in section 37(2) has to be negatived in view of the positive language employed in the section that the provisions relating to searches shall so far as may be apply to searches under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and the proviso to this section empowers the Assessing Officer to issue notice within 12 months from the date of receipt of the return of income. If the time-limit of 12 months expires, then the Assessing Officer has no power to issue notice under section 143(2) of the Act and cannot complete the assessment under section 143(3) of the Act. In case of block assessment, there is no such provision for the assessee to file the block return in Form 2B voluntarily. Only he files the return after the receipt of notice under section 158BC of the Act where the procedure for completion of block assessment is prescribed. In a case where the Assessing Officer wants to complete the block assessment, in case, search has been conducted under section 132 of the Act or books of account, or other documents or assets are requisitioned under section 132A of the Act, then the Assessing Officer shall serve a notice to such a person requiring him to furnish a return within the time prescribed and not being less than 15 days and not more than 45 days. As far as the normal assessment is concerned, the Assessing Officer can process the return under section 143(1) of the Act or he can scrutinize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BC, which are to be applied to search cases. Further, if any deviation is necessary to carry out such procedural provisions then justification for the same will have to be offered by the revenue. Clause (b) of section 158BC is an enabling provision for making assessment of undisclosed income falling within the scope of section 158BB under Chapter XIV-B. Section 143(2) confers power on the Assessing Officer to proceed to make assessment of the total income of an assessee if he considers that it is necessary for expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner. The use of the word "if" by the Legislature clearly shows that the power to assess is optional and the Assessing Officer need not proceed to assess in each and every case. If he opts to exercise such powers then such exercise must be made within the period prescribed the proviso to this section. On the other hand, there is no such option available to the Assessing Officer under the provisions of Chapter XIV-B. According to section 158BC once a notice to file the return is issue under clause (a), the Assessing Officer is bound to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no provision under Chapter XIV-B for filing of voluntary return. The only provision under which such return can be filed is section 158BC. Therefore, assessment proceedings can be said to be validly initiated when the notice under section 158BC is issued. Once assessment proceedings are validly initiated by issuance of notice under section 158BC, then the Assessing Officer would have seisin over the case resulting in vesting of overall jurisdiction of the Assessing Officer. Accordingly, non-issuance of notice under section 143(2) would only be a case of deviation from a rule of law resulting in irregularity only which is curable, and not a nullity. Para 39.3 of Circular No. 717, dated August 14, 1995 [reported in [1995] 215 ITR (St.) 70, 95] provides 'the office shall proceed to determine the undisclosed income of the block period and the provisions of section 142, sub-sections (2) and (3) of section 143 and section 144 shall apply accordingly.' No circular can omit/delete/obliterate the words or expression used by the Legislature. Two Circulars No. 549, dated 31-10-1989, and Circular No. 554, dated 13-2-1990, which provide that notice under section 142 must be issued with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no substantial question of law arises for our consideration in these appeals. Accordingly, these appeals are dismissed." But while completing the block assessment in-built system is provided for filing of block return in section 158BC(a) of the Act and the provisions of section 158BC(b) laid down the manner as to how the provisions of section 142, sub-sections (2) and (3) of section 143 and section 144 of the Act shall, so far as may be, apply. The expression 'so far as may be' has literally been discussed in the case of Bhavnagar University v. Palitana Sugar Mill (P.) Ltd. AIR 2003 SC 511 and it has held as under: "It is true that section 21 of the Act imposes a statutory obligation on the part of the State and the appropriate authorities to revise the development plan and for the said purposes sections 9 to 20 'so far as may be' would be applicable thereto, but thereby the rights of the owners in terms of sub-section (2) of section 20 are not taken away. 36. The question, however, is as to whether only because the provision of section 20 has been referred to therein: would it mean that thereby the Legislature contemplated that the time of ten years specified by the Legislat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istinction. In CIT v. Mahaliram Ramjidas. It was said: 'The section, although it is part of a taxing Act, imposes no charge on the subject, and deals merely with the machinery of assessment. In interpreting provisions of this kind the rule is that that construction should be preferred which makes the machinery workable, ut res valeat potius quam pereat" Further, the Hon'ble Apex Court in the case of India United Mills v. CEPT [1955] 27 ITR 20 has pointed out with reference to another section: "That section is, it should be emphasized, not a charging section but a machinery section and a machinery section should be so construed as to effectuate the charging sections." It is pertinent to note that after considering all this legal position, the Hon'ble Supreme Court in Gursahai Saigal's case held that section 18A(6) might become workable in a case where no tax had been paid which provided that interest should be calculated "from the first day of January in the financial year in which the tax ought to have been paid." Thus, in the case of Gursahai Saigal the Hon'ble Apex Court had accepted as the correct legal position and the principle that sections of a taxing statute other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount to a curable irregularity and the assessment order cannot be declared as invalid, null and void. The Hon'ble Allahabad High Court has decided the issue which reads as under: "Section 31(3)(a) speaks of the power of the Appellate Assistant Commissioner to annul an assessment. That is a power to be exercised where the assessment proceeding is a nullity in the sense that the Income-tax Officer had no jurisdiction ab initio to take the proceeding. A proceeding is a nullity when the authority taking it has no jurisdiction either because of want of pecuniary jurisdiction or of territorial jurisdiction or of jurisdiction over the subject-matter of the proceeding. A proceeding is a nullity when the authority taking it has no power to have seisin over the case. The omission of the Income-tax Officer to issue a notice under section 23(2) does not affect the ab initio jurisdiction enjoyed by the Income-tax Officer in respect of the proceeding. The Income-tax Officer had seisin over the case, he had overall jurisdiction over the case and in that sense had power to initiate the proceeding. The omission to issue a notice under section 23(2) merely prevents the Income-tax Officer from mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has got ample opportunities to raise these specific grounds before the Assessing Officer at the time of completion of set aside assessment and at the time of appellate proceedings but the assessee, the reasons best known to him, refrained from raising these grounds. Even in the second round before the Tribunal, the assessee has not raised these grounds. As these grounds are on merits and the entire facts are to be investigated and the assessee has not given as to why these were not raised in regular course, we feel that there is no reasonable cause for admitting these additional grounds raised by the assessee on merits. Accordingly, these additional grounds are not admitted for adjudication. 17. The next issue in IT (SS) A No. 79/Mds./2004 relates to challenging of jurisdiction on issuance of warrant as it is sealed and signed by the Dy. Director of Inspection (Investigation Unit), Coimbatore. During the course of hearing, the ld. Counsel for the assessee produced a copy of Panchanama to show that warrant of authorisation under section 132 of the Act was issued by Dy. Director of Inspection (Investigation) Unit-Coimbatore and he argued that the same can be issued onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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