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TMI Blog2017 (10) TMI 1009X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the legal principles in Manish Maheshwari about section 158 BD, we may obviate any reference to Panchajanyam, whose holding turns on its own facts. The upshot of the discussion is that the assessment order, dt.28.07.2005, is vitiated. The statutory requirement for completing the block assessment under section 158BE(2)(b) is “two years from the end of the month in which the notice under this Chapter was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after the 1st day of January 1997.” Determining the limitation under section 158BE (2)(b) of the Act, the Madras High Court in Commissioner of Income Tax vs. K.M. Ganesan [2009 (11) TMI 572 - Madras High Court] has held that if the notice is given first under section 158BC and then correctly given under section 158BD, the limitation runs from the date of first notice. Here, the search under section 132 of the Act was conducted on 04.11.2000; the notice under section 158BC was issued on o8.06.2001. The proceedings were concluded on 28.07.2005, when the Assessing Officer passed the order. The notice under section 158BC of the Act, as is seen, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essed' by Premkumar. 6. Here, we must observe that, more than merits, the jurisdictional, procedural, and technical issues have weighed heavily with the Tribunal in its deciding the second appeal. And we cannot take exception to the Tribunal's approach for "the life of the law has not been logic; it has been experience." In expropriatory proceedings, as with the penal ones, technicalities matter as much as the substantial justice counts. So, we touch on the facts to the extent they are necessary to dispose of this appeal. The Search: 7. Both the Department and the CBI on 4 November 2000 conducted simultaneous, if not joint, search at Premkumar's residence. "On the basis of the material found during search, such as duplicate copies of documents relating to the land transactions, various passbooks, diaries, list of documents and bank locker keys seized by the CBI and evidence gathered subsequently," the Department initiated proceedings under section 158 BC of the Act. Put on notice, Premkumar declared an undisclosed income of ₹ 10,69,094/- 8. The matter remanded, having been put on notice, Premkumar once again filed his objections on 14 January 2005. He requested Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whom are individual assessees (B) About the Income: 17. All the records were seized only by the CBI, not the Department. The ""Binani Zinc Diary"" received from the CBI should not have been taken as evidence for the "block assessment." 18. The Department found no material to hold that the assessee had any professional income by way of MACT cases. And, in fact, all these materials were gathered after the search; it was through independent "survey action" u/s. 133A of the Act. 19. The Assessing Officer has established no undisclosed income, and that undisclosed income is not related to the person searched; instead, it belonged to the person other than the person searched. Even the Panchnama, dated 26-3-2000, relates to the lands purchased; and it has nothing to do with the assessee"s professional fees. The Assessing Officer did not on his own initiated section158BD assessment; rather he acted on the the Appellate Commissioner"s directive. Submissions: 20. Sri P. K. Ravindranatha Menon, the learned Senior Counsel for the Revenue, has submitted that the Assessing Officer has taken an informed decision to assess Premkumar under section 158 BD; a mere direction from the Appellate C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under a particular provision-Sri Mather submits that once an authority lacks power, the order renders itself a nullity, and it needs no challenge. 27. Sri Mather has diligently cited numerous decisions, but we will refer to those that are necessary for our purpose. Substantial Questions of Law: 28. The Department framed these substantial questions of law: 1. Is the Tribunal right in holding that AO"s statement that certain materials unearthed in the search has pointed to the undisclosed income? 2. Has the AO undertook section158BD assessment on the appellate authority"s direction, rather than of his own volition? 3. Has not the AO acted on certain "admitted facts"? 4. Ought not the assessee to have challenged the appellate authority"s remanding the matter? 5. Has not the AO computed the undisclosed income based on the statements under Section 132(4) of the Act and on further enquiries through survey under Section 133A? Findings: The Scope of Appeal & The Powers of Appellate Authority: 29. Section 251 of the Act spells out the powers of the Commissioner (Appeals). Before the amendment by Finance (No. 2) Act, 2014, the provision read: 251. Powers of the [* * *] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer to inquire and report the result to him. After receiving the Assessing Officers" enquiry report, the authority can rely on it or gather additional facts or evidence. 32. Sri Mather argues that the Appellate Commissioner has been stripped of the power to remand and remit not to protect an assessee"s interests but to avoid prolonged assessment proceedings, which, in fact, serves a public purpose. 33. The assessee contends that the remand is beyond the Appellate Commissioner"s powers, and his direction to the primary authority to consider a matter under a particular provision is much worse-indefensible. On the contrary, the Revenue asserts that Premkumar first raised an objection that section 158BC had no application. This defence merited the Appellate Commissioner"s acceptance; it led to the remand. Absent any challenge to the order of remand, the order"s impact cannot be wished away: Premkumar cannot hunt with the hound and run with the hare; he should choose either. 34. A waiver is an intentional relinquishment of a known right, but obviously an objection to jurisdiction, lays down the Supreme Court Dhirendra Nath Gorai v. Sudhir Chandra Ghosh, AIR 1964 SC 1300, canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to forfeit a lease or to rescind a contract of sale for wrongful repudiation or breach of condition. This is also sometimes described as "election" rather than "waiver". 38. Onkarmal goes on to observe that there can be no waiver of a statutory requirement or provision which goes to the jurisdiction, of assessment. The origin of the assessment is either an assessee filing a return as contemplated in the Act or an assessee being called upon to file a return as contemplated in the Act. Onkarmal postulates that revenue statutes are based on public policy; revenue statutes protect the public on the one hand and confer power on the State on the other. 39. Onkarmal¸ per M. Hameedullah Beg, J. (as his Lordship then was), holds that the waiver, even where both sides have agreed to waive the operation of a statutory provision, cannot extend to a case in which the effect may be either to oust the jurisdiction conferred by statute or to confer a jurisdiction which, according to the statute, is not there. 40. In Commissioner of Income Tax v. Jolly Fantasy World Ltd. [2015] 373 ITR 530 (Guj), a Division Bench of the Gujarat High Court, relying on the above two judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lcutta High Court has held that it is not open to a party to make a grievance about applying a rule unless he comes up with appropriate proceedings to have the rule"s applicability property tested. Once the person acts at his own peril by not contesting a particular directive, he cannot urge in the proceedings under Article 226 of the Constitution all the questions which he could have raised in a reference, for the jurisdiction exercised by the court under Article 226 is limited. 47. All the above precedents examined, we reckon that the holding of Dhirendra Nath, Onkarmal, and Bhopal Sugar Industries is unmistakable. Under the amended section 251 of the Act, the Appellate Commissioner may confirm, reduce, enhance, or annul the assessment. But he cannot refer the case back to the Assessing Officer for making a fresh assessment; nor can he direct the Officer to decide in accordance with his directions. Records and Satisfaction under Section 158 BD of the Act: 48. Section 158 BD mandates that the Assessing Officer must be "satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under Section 132." Here, meticulous and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prises with approval, another Division Bench of the Supreme Court in Manish Maheshwari v. CIT (2007) 3 SCC 794 has held that section 158-BD provides for taking recourse to a block assessment in terms of Section 158-BC regarding any other person, the conditions precedent for that are: (i) satisfaction must be recorded by the assessing officer that any undisclosed income belongs to any person, other than the person regarding whom search was made under Section 132 of the Act; (ii) the books of accounts or other documents or assets seized or requisitioned had been handed over to the assessing officer having jurisdiction over such other person; and (iii) the assessing officer has proceeded under Section 158-BC against such other person. 52. Because of the authoritative assertion of the legal principles in Manish Maheshwari about section 158 BD, we may obviate any reference to Panchajanyam, whose holding turns on its own facts. 53. The upshot of the discussion is that the assessment order, dt.28.07.2005, is vitiated. Limitation: 54. The statutory requirement for completing the block assessment under section 158BE(2)(b) is "two years from the end of the month in which the notice unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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