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TMI Blog2021 (4) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decisions cited answer this legal issue in favour of the revenue. Adherence to the principles of natural justice - The relevant sequence of dates and events is that a notice under Section 153C was issued on 25.10.2019 in regard to a search conducted in 2017. Unfortunately neither the affidavit filed in support of the writ petitions nor the impugned orders of assessment anywhere mention the date of search and it was only in the course of the submissions made orally that the date of search was noted by me as 07.11.2017. The limitation for completion of assessments would be the 31st of December, 2019. The impugned orders state that centralization of the assessments took place only on 24.09.2019 and pursuant to the centralization, notices under Section 153C were issued on 25.10.2019, leaving barely a period of a little over two months for completion of six search assessments. The notice under Section 153C called upon the petitioner to file returns within a period of 8 days from service of the notice and the returns have been filed on 07.12.2019, in all cases, beyond the period granted by the respondent. On the same date a questionnaire under Section 142(1) has been issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the matter, relating to alleged undisclosed income from quarrying operations and seigniorage fee. The respondent officer has, in making additions as aforesaid, simply ignored this request. The Investigating officer is thus, empowered to refer an issue to valuation even during the process of search. However, such report has to be put to the assessee and his full and complete response sought prior to using the same against him. This has not been done in the present case. Thus, while the reference to valuation is in order, the decision making process is flawed and in violation of the principles of natural justice. There is no explanation set forth in counter or at the time of hearing to explain why the assessment had been taken up for completion, at the very fag end of limitation and for this reason, I believe I would have been justified, had I annulled the assessments, as a second innings is not to be granted to the department, merely as a matter of rote. However, and solely as a matter of prudence, I set aside the assessments with a direction to the respondent to issue notices afresh, hear the petitioner and pass orders of assessments within a period of eight (8) weeks f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act is to be mandatorily issued prior to completion of an assessment in consequence of a notice under Section 153C and (ii) whether the provisions of natural justice have been satisfied in these cases. As regards the second set of writ petitions, in addition to the issues crystallized for batch one, an additional issue raised is as to whether the Assessing Authority was right in relying on a valuation report sought for and obtained by the investigating officer post proceedings for search. 6. I will advert to the above issues in seriatum. 7. On the question of issue of notice under Section 143(2) of the Act, the petitioner relies on the judgment of the Supreme Court in the case of Assistant Commissioner of Income Tax and another vs. Hotel Bluemoon (321 ITR 362). Assessments in that case had been framed under Section 158BD of the Act and had travelled in appeal to the High Court under Section 260A. One of the two substantial questions raised was whether on the facts and in circumstances of the case the issuance of notice under Section 143 (2) of the Income Tax Act, 1961 within the prescribed time-limit for the purpose of making the assessment under Section 143(3) of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the absence of specific reference to Section 143(2), the only stipulation being that the assessment be completed in line with the provisions of the Act, it would suffice that the assessment be completed in accordance with law and the principles of natural justice. This is, he says, the view that has been taken by the High Courts in the decisions relied upon by the revenue. 13. The provisions of Section 158BC (b) setting out the procedure for block assessment are extracted below: 'Procedure for block assessment. 158BC. Where any search has been conducted under section 132 of books of account, other documents or assets are requisitioned under Section 132A, in the case of any person, then, -- (a) ..... (b) the Assessing Officer shall proceed to determine the undisclosed income of the block period in the manner laid down in section 158BB and the provisions of section 142, sub-sections (2) and (3) of section 143 [section 144 and section 145] shall, so far as may be, apply;' 14. The provisions of Section 153A(1) (a) deal with assessment in cases of search or requisition and are extracted below: '[Assessment in case of search or requisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue Moon should be seen to come to the aid of a person, who had filed his return within the time stipulated in the statutory notice, and not one who had defaulted. 17. Both decisions, that of the Supreme Court in Blue Moon as well as this Court in Rangroopchand Chordia, are in the context of erstwhile Chapter-XIV B and neither decision comes to the aid of the petitioner in this case, since it would not answer the argument in relation to whether the issuance of notice under Section 143(2) was mandatory in the context of an assessment under Section 153A/C as well. 18. The Delhi High Court in Ashok Chaddha (supra) had framed a substantial question specifically on whether the issue of a notice under Section 143(2) was mandatory for finalisation of assessment under Section 153A. This case is thus on point as far as the present writ petition is concerned. The assessee therein relied on a slew of decisions of the Supreme Court and various High Courts for the proposition that notice under Section 143(2) was mandatory. However, the Bench, after an elaborate discussion negates the plea of the assessee, concluding that the issuance of notice was not mandatory in the case of an assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of notice under s. 143(2) of the Act. Learned counsel for the assessee places heavy reliance on the judgment of the Hon ble Supreme Court in Hotel Blue Moon (supra) wherein it was held that the where an assessment has to be completed under s. 143(3) r/w s. 158BC, notice under s. 143(2) must be issued and omission to do so cannot be a procedural irregularity and the same is not curable. It is to be noted that the above said judgment was in the context of s. 158BC. Clause (b) of s. 158BC expressly provides that the AO shall proceed to determine the undisclosed income of the block period in the manner laid down in s. 158BB and the provisions of s. 142, sub-ss (2) and (3) of s. 143, s. 144 and s. 145 shall, so far as may be, apply. This is not the position under s. 153A. The law laid down in Hotel Blue Moon, is thus not applicable to the facts of the present case. 10. The decision of Lunar Diamond Ltd. (supra), Vardhman Estates (supra) and Bhan Testiles (supra) relied upon by learned counsel for the assessee related to the requirement of service of notice upon the assessee within a prescribed time and thus not applicable to the present case. The case of Pawan Gupta (supra) rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B and s. 153 (since omitted w.e.f. 1st April,1989) to the assessment made under ss. 147 and 148 and thus cannot be said to be the decision laying down the law regarding mandatory issue of notice under s. 143(2). 13. The words so far as may be in cl. (a) of sub s. (1) of s. 153A could not be interpreted that the issue of notice under s. 143(2) was mandatory in case of assessment under s. 153A. The use of the words, so far as may be cannot be stretched to the extent of mandatory issue of notice under s. 143(2). As is noted, a specific notice was required to be issued under cl. (a) of sub-s. (1) of s. 153A calling upon the persons searched or requisitioned to file return. That being so, no further notice under s. 143(2) could be contemplated for assessment under s. 153A. 20. The Punjab Haryana High Court applies the same ratio in an identical challenge before it in the case of Tarsem Singla. 21. The Kerala High Court in Promy Kuriakose (supra) was also dealing with a statutory appeal wherein one of the substantial questions related specifically to the issue of whether a notice under Section 143(2) was mandatory and has to be issued in line with the procedure stipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all cases, beyond the period granted by the respondent. On the same date a questionnaire under Section 142(1) has been issued calling for various particulars in response to which the petitioner has filed replies dated 13.12.2019 furnishing some of the particulars sought. The impugned orders have come to be passed on 30.12.2019 without further reference to the petitioner. 27. In respect of batch-1, dealing with Assessment Years (AY) 2012-13, 2013-14, 2014-15 and 2017-18, the impugned assessments proceed on the basis that the petitioner has purchased certain immovable properties, which were not admitted in the petitioner s returns of income. The purchase cost has come to be added as undisclosed investment. The questionnaire issued notice under Section 142(1) called for various particulars such as a brief note on the activities carried out during the relevant year, a copy of computation of income, statement of gross profit, audited financials, details of movable and immovable assets, details of sundry debtors and creditors, bank statements and documentary evidences for remittance of statutory liabilities. 28. In its response, the petitioner has stated that all details of movabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han two views and not on the seized materials. 2) The assessee submits that, Sir, Your good office has gained jurisdiction over the assessee s file only on 24.09.2019 from assessee s earlier AO, Pudukottai. The assessee assumes that you gained jurisdiction after you were put in position of the seized materials, if any on 01.11.2019. Therefore the time limit for completion of assessment is 31.12.2020 and not 31.12.2019. Therefore the assessee request you not to be in haste and hurry for your notice u/s 153C was served on the assessee only on 01.11.2019 and to complete the assessment on 31.12.2019 will be legally untenable. The assessee will be thankful to you for your response on the jurisdiction and on the time limit for passing assessment order, so that the assessee will have the opportunity to exercise his legal rights on this genuine issue. Thanking you . . . . 31. The impugned order has come to be passed on 30.12.2019 without further reference to the petitioner. In this case as well, I am of the view that the assessments have certainly been completed in haste. When the search has been completed on 07.04.2017, there was no necessity to have waited till 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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