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TMI Blog2014 (9) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... return within 15 days is contrary to the mandatory condition as provided u/s.158BC – the notice is invalid in view of the decisions of Supreme Court in Assistant Commissioner of Income Tax & Anr. Versus M/s. Hotel Blue Moon [2010 (2) TMI 1 - SUPREME COURT OF INDIA] – also, the assessment framed by the AO based on the invalid notice is void and liable to be set aside – Decided in favour of assessee. Admission of additional ground - Taxes paid should be refunded or not - Held that:- The additional ground even though stated to be legal ground, could not be admitted as it involves examination of facts - assessee himself has declared incomes in the block assessment - whether assessee has paid taxes or not require examination as nothing is available on record nor assessee placed any submissions in this regard whether taxes have been paid by him or collected by the Revenue – relying upon CIT vs Shelly Products and another [2003 (5) TMI 4 - SUPREME Court] - admitted tax should not be refunded – Decided against assessee. - IT(SS)A.No.26/Hyd/2009 - - - Dated:- 3-9-2014 - SHRI B. RAMAKOTAIAH AND SMT. ASHA VIJAYARAGHAVAN, JJ. For the Appellant : Mr. C.P. Ramaswamy For the Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 79450 1995-96 600000 ROI not filed 1996-97 6000000 ROI not filed 1.4.96 to 13.11.19 96 1106970 14970 Total 33,71,877 3,79,877 Total undisclosed income for the period = [ { (A) (C) } + {(D)-(b) } ] = ₹ 29,92,000/- 2.1. The original block assessment was completed by the then ACIT, Circle 6(4) on 17.04.1998 determining the undisclosed income issue-wise as under : i. Undisclosed investment in jewellery ₹ 3,66,491/- ii. Undisclosed investment in shares, income from share dealing undisclosed dividend ₹ 7,48,310/- iii. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO issued notice u/s.158BC on 27-08-97 directing the assessee to file the return for block period within 15 days whereas the requirement u/s.158BC is the notice requiring the assessee to furnish the block return within such time not being less than 15 days but not more than 45 days. Thus, the Ld. AR of the assessee has submitted that the notice issued u/s.158BC is invalid as the AO has not given the minimum period of time for filing the return of income. Consequently, the AO has no jurisdiction to proceed with the assessment proceedings u/s.158BC. In support of his contention, he has referred the Circular No.717 dated 14.08.1995 and submitted that the CBDT has made it clear that the AO shall serve a notice on such person requiring him to furnish a return within such period not less than 15 days. The Ld. AR further contended that the notice u/s.158BC is foundation for initiating the proceedings and if the notice is invalid then the assessment itself is bad in law. He has relied upon the decision of Hon ble Supreme Court in the case of ACIT vs. Hotel Blue Moon 321 ITR 362 and submitted that the Hon ble Supreme Court has dealt with an identical issue and held that the notice u/s.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that even if there is a defect in the notice the same is curable defect which has been cured when the return of income filed by the assessee beyond the period of limitation was processed by the AO. The Ld. AR relied upon the decision of Hon ble Bombay High Court in the case of Shirish Madhukar Dalvi vs. ACIT 287 ITR 242 and submitted that the Hon ble High Court has held that the A.O. did not give 15 days clear notice, however, it did not cause any prejudice to the assessee as the assessee was served with another notice. The Ld. DR has further submitted assessee duly participated in the assessment proceedings, then as per the provisions of sec.292B the assessee is not permitted to raise such objection subsequently. He has further submitted that the time period mentioned within 15 days means and includes 15th day. He has also relied upon the decision of Special Bench of this Tribunal in case of CIT vs. Niranjan Lal Verma 180 Taxman 74. In rebuttal, the Ld. AR of the assessee submitted that the decision of Hon ble Bombay High Court in the case of Shirish Madhukar Dalvi (supra) is not applicable in the facts of the present case as there was a second notice in the said case and fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing block assessment: The Assessing Officer shall serve a notice on such person requiring him to furnish within such time, not being less than 15 days, as may be specified in the notice, a return in the prescribed form and verified in the same manner as a return under clause (i) of subsection (1) of section 142 setting forth his total income including undisclosed income for the block period. The officer shall proceed to determine the undisclosed income of the block period and provisions of section 142, sub-sections (2) and (3) of section 143 and section 144 shall apply accordingly. The Assessing Officer shall not be required to issue any notice under section 148 for the purpose of proceedings under this chapter. Though the block period can be extended upto 10 years in the case where the assessee has not disclosed undisclosed income in anyone or more of the previous years in the block periods and the Assessing Officer also does not find any material indicating undisclosed income in any one or more of the previous years comprised in the block period, it will not be necessary to do the exercise of computing the undisclosed income for the relevant years and the exercise may be limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer to assess the undisclosed income in accordance with Chapter XIV-B. Section 158 BA(2) is a charging section, 158BB provides for computation of undisclosed income for the block period and 158 BC provides for procedure for block assessment. Therefore, a notice under Section 158 BC provides for a procedure to be adopted for block assessment. Under this procedure envisaged, the Assessing Officer shall serve a notice requiring the assessee to furnish his return within such time not being less than 15 days but not more than 45 days as specified in the notice. Therefore, the time to be granted to the assessee in terms of Section 158 BC is a minimum of 15 days and a maximum of 45 days. If the said period of time is not granted, the notice is invalid rendering the entire proceedings as without jurisdiction. Admittedly in this case, the notice under Section 158BC calls upon the assessee to submit its return of income within a period of 15 days . Within a period of 15 days is less than 15 days. Therefore, the mandatory period of time as stipulated under Section 158 BC has not been complied with. The notice therefore is invalid. An invalid notice cannot confer any jurisdiction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 292B of the Act. 11. It is clear from the facts of the said case that when the subsequent notice was issued then the alleged defective notice did not cause any prejudice to the assessee. Therefore, the said decision is not applicable in the facts of the present case where the only notice issued u/s.158BC was contrary to the provisions of sec.158BC. 12. As regards the Special Bench decision in case of Navin Verma vs. ACIT 100 ITD 73, the said decision has been considered by the Hon ble Punjab Haryana High Court in the case of Niranjan Lal Verma (supra) wherein the Counsel for the assessee gave up the objection raised before the Tribunal regarding invalidity of the notice issued u/s.158BD. Therefore, no finding has been given by Hon ble Punjab Haryana High Court on the issue of validity of notice. 13. Learned D.R. relied on the decision of CIT vs. Naveen Varma 346 ITR 100 P H High Court wherein the Hon ble High Court has held that ITAT erred in concluding that failure to give notice of 15 days will vitiate the assessment itself without considering the prejudice to the assessee. It was further held that total absence of notice may be on a different footing and if no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and another 261 ITR 367 held that admitted tax should not be refunded. It was held that - Failure or inability to frame another assessment after the earlier assessment is set aside or nullified in appropriate proceedings does not entitle the assessee to claim refund of advance tax and tax paid on self-assessment, because to that extent the assessee has admitted his liability to pay tax in accordance with the law. If the assessing authority, on an earlier assessment made being set aside or nullified in appropriate proceedings, cannot make a fresh assessment, it amounts to deemed acceptance of the return of income furnished by the assessee. In such a case the assessing authority is denuded of its authority to verify the correctness and completeness of the return, which authority it has while framing a regular assessment. The assessing authority must accept the return as furnished and cannot in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return furnished by the assessee, it must refund to the assessee any tax paid by the assessee in excess of the liability incurred by him on the basis of the income disclosed. 16.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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