VASHDEV G ADNANI, MUMBAI V. ACIT 19(1), MUMBAI

ITA 2322/MUM/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7391 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2005-2006
• Appeal Filed On: 07-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; Principle of natural justice; Validity of assessment; Block assessment; Revised return; Documents seized
• Section: 143(3); 153A; 234B; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2322/MUM/2014 ASSESSMENT YEAR : 2005-06 VASHDEV G ADNANI, G-4, SEA CREST, 2 ND FLOOR, SEVEN BUNGLOWS GARDENS, ANDHERI (W), MUMBAI 400 061. PAN ABAPA7414M VS. ACIT 19(1) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRAKASH PANDIT RESPONDENT BY : SHRI SAURABH KUMAR RAI DATE OF HEARING : 13 .0 4 .201 8 DATE OF PRONOUNCEMENT : 18 .05.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSE E AGAINST THE IMPUGNED ORDER DATED 31.01.2014, PASSED BY THE CIT( A)- 30, MUMBAI, FOR THE ASSESSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: I) ON THE FACT & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T.(A) ERRED IN PASSING EXPARTE ORDE R DISMISSING THE APPEAL AFTER REJECTING THE REQUEST FOR ADJOURNMENT OF THE HEARING TILL THE HONOURABLE I.T.A.T. DECIDES THE APPEALS ON INVOLVING SIMILAR GROUNDS OF APPEALS FOR ASSESSMENT YEARS 1999-2000, 2000-2001, 2003-2004 AND 2004-2005, PENDING BEFORE THE HONOURA BLE I.T.A.T. II) ON THE FACTS & IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE ADDIT ION OF RS.2,10,30,089, BEING THE VALUE OF FOREIGN EXCHANGE ALLEGEDLY ITA NO.2322/MUM/2014 VASHDEV G ADNANI 2 BROUGHT INTO INDIA BY THE APPELLANT ON VISITS TO IN DIA, IN THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR IN APPEAL, AS PER THE CDF FORM, COPIES OF WHICH WERE OBTAINED FROM TH E DRI'S OFFICE. THE APPELLANT USED TO TAKE BACK HIS FOREIGN EXCHANG E BROUGHT BY HIM VISITING TO INDIA, ON RETURN TO HONG-KONG, WHER E HE WAS PERMANENTLY RESIDING. THIS FACT HAS BEEN IGNORED BY THE ASSESSING OFFICER, AND THE C.I.T. (A) WHILE CONFIRMING THE AD DITION OF RS.2,10,30,089 RELYING UPON THE APPELLATE ORDER OF THE C.I.T. (A) FOR OTHER YEARS WHICH ARE IN APPEAL BEFORE THE I.T. A.T. III) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T. (A) ERRED IN CONFIRMING THE FIND INGS OF THE ASSESSING OFFICER THAT THE CASH DEPOSITS OF RS. 14, 78,072 IN THE PUNJAB AND MAHARASHTRA CO-OP. BANK LTD., IN THE NAM E OF MR. SUBODH THAKUR, AS BENAMI HOLDINGS OF THE APPELLANT AND, THEREFORE, THE SAID AMOUNT OF RS. 14,78,072 IS ASSESSABLE IN THE HANDS OF THE APPELLANT AS UNEXPLAINED CASH CREDIT. IV) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T. (A) ERRED IN DISALLOWING A SUM O F RS. 1,01,553 AS INTEREST PAYABLE ON THE LOAN OF RS. 12,51,395 FROM HIS WIFE, ON THE GROUND THAT THE APPELLANT'S WIFE DID NOT SHOW THE I NTEREST INCOME OF RS. 1,01,553 IN HER INCOME TAX RETURN FOR THE AY: 2 005-2006. V) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T. (A) ERRED IN DISALLOWING 15% EXP ENSES OUT OF MOTOR CAR EXPENSES, TELEPHONE EXPENSES AND ELECTRON IC EQUIPMENTS DEPRECIATION. VI) ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN LEVYING INTEREST UNDER SECT ION 234B & C OF THE INCOME TAX ACT, 1961. FURTHER, THE ASSESSEE VIDE APPLICATION DATED 25.05. 2016 HAS FILED AN APPLICATION FOR THE ADMISSION OF THE FOLLOWING ADDI TIONAL GROUNDS OF APPEAL. I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW; THE ASSESSMENT ORDER PASSED U/S.143(3) OF THE ACT DATED 31.12.2007 IS VOID AB-INITIO; II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED U/S. 143(3) IS BAD IN LAW IN ABSENCE OF NOTICE U/S. 143(2) OF THE ACT. ITA NO.2322/MUM/2014 VASHDEV G ADNANI 3 3. THE ASSESSEE HAS RAISED A LEGAL ISSUE IN THE ADD ITIONAL GROUND THAT THE ASSESSMENT ORDER PASSED U/S. 143(3) IS VOID AB-INIT IO, FOR THE REASON THAT THE SAME HAS BEEN PASSED AFTER THE EXPIRY PERIOD AS PRO VIDED IN THE ACT. IN THE PRESENT CASE, A SEARCH WAS CONDUCTED ON 05.01.2005 AND THE ORDER U/S 143(3) SHOULD HAVE BEEN PASSED ON OR BEFORE 31.03.2 007 WHEREAS, AS A MATTER OF FACT, THE ASSESSMENT ORDER WAS PASSED ON 31.12.2007. THE LEARNED AR DREW OUR ATTENTION TO THE PROVISIONS OF SECTION 153B(B) OF THE ACT, WHICH DEALS WITH THE TIME LIMIT FOR COMPLETION OF ASSESSM ENT U/S. 153A. HE FURTHER CONTENDED THAT SINCE THE ORDER PASSED IN THE PRESEN T CASE IS AFTER THE EXPIRY OF THE STATUTORY TIME LIMIT AS HAS BEEN SPECIFIED U /S. 153B(B) THE SAME IS LIABLE TO BE QUASHED ON THE GROUND OF BEING BARRED BY LIMITATION. 4. THE LEARNED DR, ON THE OTHER HAND, OPPOSED THE S UBMISSIONS AND ARGUMENTS OF THE LEARNED AR AND RELIED ON THE ORDER S OF THE AUTHORITIES BELOW. THE LEARNED DR SUBMITTED THAT THE GROUND WA S NOT TAKEN EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A) A ND, THEREFORE, THE SAME SHOULD NOT BE ADMITTED AT THIS STAGE. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFUL LY PERUSED THE MATERIAL ON RECORD. THE FACTS OF THE CASE REVEAL T HAT THE SEARCH IN THIS CASE WAS CONDUCTED ON 05.01.2005 AND AS PER THE PROVISIO NS OF SECTION 153B(B) OF THE ACT , THE ORDER OF ASSESSMENT U/S. 153A SHOULD HAVE BEEN FRAMED ON OR BEFORE 31.03.2007 WHEREAS, AS A MATTER OF FACT, THE SAME WAS FRAMED VIDE ORDER DATED 31.12.2007. WE ALSO FIND THAT IN THE A SSESSEES OWN CASE THE CO- ORDINATE BENCH OF THIS TRIBUNAL, VIDE ITS ORDER DAT ED 14.09.2016, FOR A.Y. 2002-03 IN ITA NO.2321/MUM/2014, RELATING TO THE SA ME SEARCH, HAS HELD THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING O FFICER IS INVALID AS BEING BARRED BY LIMITATION. THE RELEVANT PARAGRAPH IS RE PRODUCED AS UNDER: 3. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE RAISED I N GROUND NO.2 BY THE ASSESSEE QUA THE ASSESSMENT ORDER PASSED IS BAR RED BY ITA NO.2322/MUM/2014 VASHDEV G ADNANI 4 LIMITATION AS THE SAME WAS PASSED AFTER THE LAST DA TE ON WHICH THE ORDER SHOULD HAVE BEEN PASSED BY THE AO. THE ISSUE HAS BEEN SETTLED BY THE COORDINATE BENCH IN THE EARLIER YEAR S IN THE ASSESSEE OWN CASE IN ITA NO 2968/M/2011 (SUPRA) IN THE SAME SEARCH ASSESSMENT. THE OPERATIVE PART OF THE DECISION OF T HE CO-ORDINATE BENCH IS REPRODUCED AS UNDER: 4. CONSIDERING THE ABOVE, WE ARE OF THE OPINION TH AT ONE OF THE ISSUES FOR DETERMINATION IS WHETHER THE PRESENT PRO CEEDINGS WHICH WERE TAKEN IN PURSUANCE OF NOTICE U/S.148 DAT ED 20.02.2006 FOR AY.S.1999-2000, 2000-01, 2001-02 & 2 004-05 CAN BE TREATED AS PROCEEDINGS U/S. 153A OF THE ACT AND ACCORDINGLY CAN BE RECTIFIED U/S. 292B OF THE ACT, AS STATED IN THE CROSS OBJECTIONS OF THE AO FILED ON 01.12.2008.SECO ND ISSUE IS WHETHER THE RE-ASSESSMENT PROCEEDINGS INITIATED BY THE AO WERE VALID? ONE OF THE QUESTIONS FOR THE AY. 2004-05 IS AGAIN THE VALIDITY OF THE ASSESSMENT. IN THAT MATTER THE AO H AD ISSUED THE NOTICE U/S.147 DURING THE PENDENCY OF THE ASSESSMEN T PROCEEDINGS, THOUGH A NOTICE U/S. 143(2) OF THE ACT WAS ISSUED BY THE AO IN PURSUANCE OF THE VALID RETURN FILED BY THE ASSESSEE ON 30/10/2004. 4.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE AO, VIDE HIS CROSS OBJECTIONS DATED 01.12.2012,HAS ARGUED THAT THE ASS ESSMENTS COMPLETED U/S.148 SHOULD BE TREATED AS ASSESSMENT F INALISED U/S.153A OF THE ACT. IT CLEARLY INDICATES THAT AN A CTION 132/132A WAS TAKEN IN THE CASE UNDER CONSIDERATION. BUT, IN RESPONSE TO A QUERY RAISED UNDER RTI ACT ON 7/12/2012 BY THE ASSE SSEE, THE AO HAD STATED THAT NO SEARCH WAS CONDUCTED IN THE C ASE UNDER APPEAL AND THAT NO PANCHANAMA WAS DRAWN. THUS, TWO DIAGONALLY OPPOSITE STANDS HAVE BEEN TAKEN BY THE A O. IT IS BEYOND OUR COMPREHENSION AS TO HOW THE SAME OFFICER CAN SAY THAT SEARCH WAS CONDUCTED IN THE CASE OF THE ASSESS EE IN ONE BREATH AND IN ANOTHER HE DENIES THE SAME FACT. FROM THE DOCUMENTARY EVIDENCES AVAILABLE ON THE FILES IT IS CLEAR THAT AN ACTION U/S.132A OF THE ACT WAS CARRIED OUT BY THE I NVESTIGATION WING OF THE DEPARTMENT IN THE CASE OF THE ASSESSEE AND A PANCHNAMA WAS ALSO DRAWN. THEREFORE, THE STANDS TAK EN BY THE JCIT AND THE AO IN THE FORWARDING LETTER OF THE REM AND REPORT AND IN FURNISHING REPLY TO THE ASSESSEE WITH REGARD TO RTI ACT RESPECTIVELY ARE FACTUALLY INCORRECT. ITA NO.2322/MUM/2014 VASHDEV G ADNANI 5 4.2.ONCE,IT IS ESTABLISHED THAT IT IS A SEARCH-CASE , THEN IT HAS TO BE HELD THAT IT WOULD TO BE GOVERNED BY THE PROVISI ONS OF SECTION 153A OF THE ACT, AS THE ACTION U/S.132A WAS TAKEN A FTER 31.05.2003. EXPLAINING THE SCOPE OF THE SECTION 143 A,THE HONBLE JHARKHAND HIGH COURT HAS, IN THE CASE OF ABHAY KUMA R SHROFF (290 ITR114),HELD AS UNDER: FROM A BARE READING OF THE PROVISIONS OF SECTIONS 153A, 153B AND 153C OF THE INCOME -TAX ACT, 1961 AND THE DEPAR TMENTAL CIRCULAR NO. 7 DATED SEPTEMBER 5, 2003, IT IS MANIF ESTLY CLEAR THAT AFTER MAY 31 ,2003,THE EARLIER PROVISION OF BLOCK A SSESSMENT IN THE CASE OF SEARCH INITIATED AGAINST THE ASSESSEE, SHALL NOT APPLY. INSTEAD, THE PROVISION THAT THERE SHALL BE SINGLE A SSESSMENT ON UNDISCLOSED INCOME COMPRISING PREVIOUS YEARS RELATI NG TO SIX ASSESSMENT YEARS PRECEDING THAT IN WHICH THE SEARCH WAS CONDUCTED, SHALL APPLY. IT FURTHER PROVIDES THAT TH E ASSESSING OFFICER SHALL ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN OF INCOME IN RESPECT OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELATING TO THE PREVI OUS YEAR IN WHICH THE SEARCH WAS CONDUCTED UNDER SECTION 132 OR REQUISITION WAS MADE UNDER SECTION 132A OF THE ACT. THE SECOND PROVISO TO SECTION 153A MAKES IT CLEAR THAT ASSESSMENT OR REAS SESSMENT RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YEARS PENDING ON THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR REQUISITION UNDER SECTION 132A SHALL ABATE. IN OTHER WORDS, IF ON THE DATE OF INITIATION OF SEA RCH OR REQUISITION UNDER SECTION 132 OR SECTION 132A ANY ASSESSMENT OR REASSESSMENT PROCEEDING IS INITIATED RELATING TO AN Y ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF SIX ASSESSMENT YE ARS, IT SHALL STAND ABATED AND THE ASSESSING AUTHORITY CANNOT AND SHALL NOT PROCEED WITH SUCH PENDING ASSESSMENT AFTER INITIATI ON OF SEARCH OR REQUISITION. THE WORD ABATEMENT MEANS THE ACT OF ELIMINATING OR NULLIFYING OR SUSPENSION OR DEFEAT O F A PENDING ACTION. HONBLE DELHI HIGH COURT IN THE CASE OF SA RAYA INDUSTRIES LTD. HAS (306ITR189) INCORPORATED SOME MORE PRINCIP LES RELATED WITH THE SECTION IN FOLLOWING MANNER: THE OPENING PORTION OF SECTION 153A OF THE INCOME-T AX ACT, 1961, MAKES IT CLEAR THAT IT APPLIES TO A PERSON IN RESPECT OF WHOM A SEARCH IS INITIATED UNDER SECTION 132 OF THE ACT, OR WHOSE BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS AR E REQUISITIONED UNDER SECTION 132A AFTER MAY 31, 2003 . SECTION 153C OF THE ACT IS WITH REFERENCE TO A PERSON IN RE SPECT OF WHOM ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ART ICLES OR THINGS ITA NO.2322/MUM/2014 VASHDEV G ADNANI 6 OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISIT IONED BELONG. THE PERSONS MENTIONED IN SECTION 153A OF THE ACT AR E SPECIFICALLY EXCLUDED FROM SECTION 153C OF THE ACT. THE PROCEDUR E THAT IS SOUGHT TO BE FOLLOWED IN RESPECT OF THESE TWO CATEG ORIES OF PERSONS HAS BEEN PROVIDED FOR IN SECTIONS 153A AND 153C OF THE ACT. THAT THE PROCEDURE IN RESPECT OF BOTH OF THEM OVERLAPS OR IS SIMILAR IS HARDLY OF ANY CONSEQUENCE, SINCE BOTH HA VE TO BE TREATED IN ACCORDANCE WITH THE PRINCIPLES OF NATURA L JUSTICE. IT IS CLEARLY MENTIONED IN THE SUBSTANTIVE PORTION OF SEC TION 153C(1) OF THE ACT THAT THE ASSESSING OFFICER SHALL PROCEED AG AINST A PERSON COVERED BY THE SECTION BY ISSUING A NOTICE TO HIM F OR THE PURPOSE OF ASSESSING OR REASSESSING HIS INCOME. THE VERY FA CT THAT NOTICE IS REQUIRED TO BE ISSUED CLEARLY POSTULATES THAT TH E PRINCIPLES OF NATURAL JUSTICE ARE INCORPORATED IN THE PROVISION. THERE IS NOTHING ARBITRARY IN THE PROCEDURE ADOPTED. ESSENTIALLY BOT H THE CATEGORIES OF PERSONS ARE THE SAME INASMUCH AS THEI R BOOKS OF ACCOUNT, ASSETS, DOCUMENTS, ETC., ARE SEIZED OR REQ UISITIONED, THOUGH FROM DIFFERENT LOCATIONS. MOREOVER, THE SEIZ URE OR REQUISITION MUST BE OF SUCH A CHARACTER AS TO PERSU ADE THE ASSESSING OFFICER TO EVEN REOPEN CLOSED ASSESSMENTS . IN THIS SENSE, THERE IS NO HOSTILE DISCRIMINATION BETWEEN T HE TWO CATEGORIES OF PERSONS. FROM THE ABOVE IT IS CLEAR THAT FOR THE ACTIONS TAK EN W.E.F.01.06.2003,ASSESSMENTS WILL HAVE TO BE COMPLE TED AS PER THE SCHEME OF SECTION 153A.THE SECTION PROVIDES FOR ISS UING OF NOTICE FOR ASSESSING OR REASSESSING THE INCOME OF AN ASSES SEE. FROM THE RECORDS AND THE GROUNDS OF CO.S.IT CLEAR THAT THOUG H IN THE CASES UNDER CONSIDERATION NOTICES HAD TO BE ISSUED U/S.15 3 A OF THE ACT, BUT WERE NOT ISSUED. THE AO HAD ISSUED NOTICES U/.1 48 OF THE ACT. ISSUE OF NOTICE U/S.153A AND 148 HAS BEEN DECIDED B Y THE HONBLE M P HIGH COURT, IN THE CASE OF RAMBALLABH GUPTA (28 8ITR347), AS UNDER: IN ORDER TO DECIDE THE LEGALITY AND VALIDITY OF TH E NOTICE ISSUED UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961, IT I S NECESSARY TO SEE AS TO WHETHER THE CONDITIONS PRECEDENT PROVIDED IN SECTION 148 ARE SATISFIED OR NOT. ONCE THE CONDITIONS PRESCRIBE D UNDER SECTION 148 ARE FOUND PRESENT IN THE NOTICE ISSUED, IN THAT EVENT, THE NOTICE HAS TO BE UPHELD HAVING BEEN ISSUED IN CONFORMITY W ITH THE REQUIREMENT OF SECTION 148. THE ONLY FETTER PUT ON THE POWERS OF THE ASSESSING OFFICER IN TAKING RECOURSE TO SECTION 148 IS THAT IT CANNOT BE ISSUED IN RELATION TO THOSE SIX ASSESSMEN T YEARS WHICH ARE DEFINED IN SECTION 153A.(EMPHASIS SUPPLIED). IN ALL OTHER CASES ITA NO.2322/MUM/2014 VASHDEV G ADNANI 7 AND FOR ALL OTHER ASSESSMENT YEARS SECTION 148 CAN ALWAYS BE RESORTED TO SUBJECT OF COURSE TO THE CONDITION THAT IT MUST SATISFY THE REQUIREMENT SPECIFIED IN SECTION 148. 4.3. NOW, WE WOULD TAKE UP THE ISSUE AS TO WHETHER THE PROVISIONS OF SECTION 292 B CAN BE INVOKED FOR TREA TING THE RE- ASSESSMENT PROCEEDINGS AS PROCEEDINGS U/S.153A OF T HE ACT, AS ARGUED BY THE REVENUE. SECTION 292B OF THE ACT, WHI CH SAYS THAT NO RETURN OF INCOME FURNISHED UNDER THE ACT SHALL BE I NVALID MERELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN SUCH R ETURN OF INCOME, IF IT, IN SUBSTANCE AND EFFECT, IS IN CONFORMITY WI TH OR ACCORDING TO THE INTENT AND PURPOSE OF THE ACT, WAS INTRODUCED I NTO THE ACT WITH EFFECT FROM 01.10.1975. IN THE STATEMENT OF OBJECTS AND REASONS, PUBLISHED IN THE GAZETTE DATED 09.05 1973,FOR BILL NO.34 OF 1973 - 89 ITR(ST.)33),IT IS STATED, AT CLAUSE 80, REFERRIN G TO SECTION 292B,THAT IT SEEKS TO PROVIDE AGAINST PURELY 'TECHN ICAL OBJECTIONS' WITHOUT SUBSTANCE COMING IN THE WAY OF THE VALIDITY OF ASSESSMENT PROCEEDINGS, ETC. IN THE DEPARTMENTAL CIRCULAR NO. 179 DATED 30.09. 1975 -102 ITR(ST.)28), EXPLAINING THE SCOPE OF SECT ION 292B, IT IS STATED THAT THE PROVISION HAS BEEN MADE TO PROVIDE AGAINST PURELY TECHNICAL OBJECTIONS WITHOUT SUBSTANCE COMING IN TH E WAY OF THE VALIDITY OF ASSESSMENT PROCEEDINGS, ETC. COURTS HAV E HELD THAT IT WAS NOT RETROSPECTIVE. OVER THE YEARS THE LAW REGAR DING THE PROVISIONS OF SECTION 292 B HAVE EVOLVED AND IT HAS TAKEN A DEFINITE SHAPE. HERE, WE WOULD LIKE TO MENTION CERTAIN PRINC IPLES GOVERNING THE SECTION 292B AND SAME CAN BE SUMMARISED AS UNDE R: I.) IF AN ASSESSEE DOES NOT FILE HIS RETURN OF INCOME I N THE PRESCRIBED FORM AS ENVISAGED BY THE PROVISIONS OF T HE ACT, THE RETURN FILED BY HIM HAS TO BE IGNORED AS NOT FI LING OF RETURN IS NOT CURABLE BY THE PROVISIONS OF SECTION 292B OF THE ACT. II.) AN IRREGULARITY IN NOT SCORING OUT PORTIONS OF THE FORM OF WARRANT OF SEARCH DOES NOT AFFECT THE EXERCISE OF T HEIR POWER BY THE AUTHORITIES. IN ANY CASE, SUCH DEFECT WOULD BE CURED BY SECTION 292B. III.) THE SIGNING OF A NOTICE ISSUED UNDER S.271(1)(A) OF THE ACT, FOR SHOWING CAUSE WHY PENALTY SHOULD NOT BE IMPOSED ON THE ASSESSEE FOR DELAY IN FILING RETURNS, IS NOT A MERE INCONSEQUENTIAL TECHNICALITY. IT IS A REQUIREMENT O F THE PROVISIONS OF O.5, R. 1(3) OF THE CIVIL PROCEDURE C ODE, 1908, WHICH ARE APPLICABLE BY VIRTUE OF THE PROVISIONS OF SECTION 282 OF THE ACT. SECTION 282 OF THE ACT PROVIDES THA T A NOTICE UNDER THE ACT MAY BE SERVED ON THE PERSON NAMED THE REIN ITA NO.2322/MUM/2014 VASHDEV G ADNANI 8 AS IF IT WERE A SUMMONS ISSUED BY A COURT UNDER THE CPC,1908. SUB-RULE (3) OF R. 1 OF O. 5 OF THE CPC P ROVIDES THAT EVERY SUMMONS SHALL BE SIGNED BY THE JUDGE OR SUCH OFFICER AS HE APPOINTS. THEREFORE, IN VIEW OF THIS PROVISION, THE NOTICE TO SHOW CAUSE WHY PENALTY SHOULD NOT BE LEVIED BY THE ITO SHOULD BE SIGNED BY THE AO AND THE OMISS ION TO DO SO INVALIDATES THE NOTICE AND IN SUCH A SITUATIO N SECTION 292 B WILL NOT COME TO RESCUE OF THE AO. IV.) SECTION 292B MIGHT APPLY TO A CASE WHERE SERVICE OF NOTICE HAD ALREADY BEEN EFFECTED AND THERE IS ONLY A TECHN ICAL MISTAKE IN THE NOTICE. BUT, WHERE NO NOTICE HAD BEE N SERVED, THE SECTION WOULD NOT COME TO THE HELP OF T HE DEPARTMENT E.G. IF A NOTICE IS NOT ISSUED TO A MINO R OR TO HIS GUARDIAN OR THE KARTA OF THE HUF AND SUCH NOTICE AF FECTS THE RIGHTS OF THE MINOR ADVERSELY, THE PROCEEDINGS INIT IATED IN PURSUANCE OF THAT NOTICE CANNOT BE CURED BY THE PRO VISIONS OF SECTION 292B OF THE ACT. V.) WHERE AN ASSESSMENT ORDER CONTAINING COMPUTATION OF INCOME IS SIGNED BY THE AO, BUT THE COMPUTATION OF TAX MADE ON SEPARATE SHEET OF PAPER IS NOT SIGNED BY HI M, THE ASSESSMENT CANNOT BE HELD INVALID. IN SUCH CASES, C OURTS ARE OF THE VIEWS THAT IT IS NOT A CASE OF NON-COMPLIANC E WITH MANDATORY PROVISION. SUCH AN ASSESSMENT CANNOT BE H ELD INVALID BECAUSE OF THE EXISTING PROVISIONS OF SECTI ON 292B OF THE ACT. VI.) A COMPOSITE NOTICE ASKING AN ASSESSEE TO PAY BALANC E ADVANCE TAX AND STATING THAT ON FAILURE TO PAY ASSE SSEE TO SHOW CAUSE WHY PENALTY SHOULD NOT BE LEVIED IT HAS BEEN HELD VALID HAVING REGARD TO THE PURPORT OF THE NOT ICE AND THE PROVISIONS OF SECTION 292B. VII.) CONVERTING THE PROCEEDING UNDER SECTION 147(B) INTO A PROCEEDING UNDER SECTION 147(A) OF THE ACT, IS INVA LID. IT IS SAID THAT SECTION 292B DOES NOT EMPOWER THE AO TO T REAT A PROCEEDING TAKEN UNDER ONE SECTION AS A PROCEEDING UNDER ANOTHER SECTION, THAT IT IS NOT A MERE TECHNICALIT Y, BUT, WAS A QUESTION OF JURISDICTION. VIII.) IN CASE OF AN ASSOCIATION OF PERSONS IF A NOTICE FO R NOT FURNISHING RETURN OF INCOME IS ISSUED TO AN INDIVID UAL WITHOUT SPECIFYING WHETHER IT WAS ISSUED TO PRINCIPAL OFFIC ER OR MEMBER OF AOP, THEN THE AO IS NOT COMPETENT TO RE-A SSESS THE INCOME OF THE AOP CONSISTING OF THAT PERSON AND OTHERS. DEFECT IN ISSUE OF NOTICE IN SUCH A CASE COULD NOT BE CURED BY RELIANCE ON SECTION 292B OF THE ACT. ITA NO.2322/MUM/2014 VASHDEV G ADNANI 9 IX.) IN CASE OF A DECEASED ASSESSEE IF THE LEGAL REPRESE NTATIVES ARE IMPLEADED AND HEARD AND AFTER THAT IF THE ASSES SMENT ORDER IS PASSED IN THE NAME OF THE DECEASED INSTEAD OF THE LEGAL HEIRS, THE ORDER HAS TO BE TAKEN AS A CLERIC AL MISTAKE IN LIGHT OF THE PROVISIONS OF THE SECTION UNDER CON SIDERATION. X.) THE TRIBUNAL HAS NO POWER TO ENHANCE THE ASSESSMENT , BUT THAT DOES NOT MEAN THAT AN ORDER WHICH IS SET ASIDE BY THE FIRST APPELLATE AUTHORITY CANNOT BE RESTORED. IN CA SE OF ANY MISTAKE ORERROR, THE TRIBUNAL HAS THE POWER TO HAVE RECOURSE TO SECTION 292B OF THE ACT.(224ITR57). XI.) THE PROVISION IN SECTION 139(9)OVERRIDES THE OTHER PROVISIONS OF THE ACT INCLUDING SECTION 292B OF THE ACT. XII.) ACCORDING TO SECTION 140 OF THE ACT, EVERY RETURN H AS TO BE SIGNED AND VERIFIED. THE WORD 'SHALL' HAS BEEN USED IN THE SECTION WHICH SHOWS THAT IT IS MANDATORY THAT EVERY RETURN SHOULD BE SIGNED AND VERIFIED AND IF IT IS NOT SIGN ED AND VERIFIED, THEN IT IS IN BREACH OF THE PROVISIONS OF SECTION 140 OF THE ACT. THEREFORE, THIS CANNOT BE A DEFECT WHIC H CAN BE CURED AS PER THE PROVISIONS OF SECTION 292B OF THE ACT AND ANY RETURN FILED WITHOUT SIGNATURE AND VERIFICATION OF THE ASSESSEE WILL NOT BE TREATED AS A VALID RETURN. XIII.) TIME BARRING ASSESSMENT DOES NOT COME WITHIN THE PU RVIEW OF MISTAKE, DEFECT OR OMISSION REFERRED IN SECTION 292B OF THE ACT. IN PEERU LAL, MOHAN LAL (257ITR198), HONB LE RAJASTHAN HIGH COURT HELD THAT THE EXPRESSION MIST AKE, DEFECT OR OMISSION CANNOT BE UNDERSTOOD AS ONE OF PROCEDURE, SO AS TO OVERRIDE THE LIMITATION PRESCRI BED BY LAW. XIV.) CANCELLING THE REGISTRATION OF THE FIRM ON THE GROU ND OF ERROR IN THE ALLOCATION OF SHARES AMONG THE PARTNERS, WIT HOUT ISSUING NOTICE UNDER SECTION 158R.W.S.187 AND 67 OF THE ACT PROPOSING TO CHANGE THE SHARE ALLOCATION AMONG THE PARTNERS, INVOLVES QUESTION OF JURISDICTION AND THE REFORE DIRECTION GIVEN TO AO TO MODIFY THE ORDER U/S.158 C ANNOT BE SUSTAINED BY RELYING ON SECTION 292B. XV.) PROVISIONS RELATING TO ISSUE OF NOTICE FOR BLOCK PE RIOD ARE CONSIDERED PROCEDURAL AND NOT SUBSTANTIVE IN NATURE . THEREFORE MENTION OF BLOCK PERIOD WRONGLY IN NOTICE CANNOT RENDER ENTIRE ASSESSMENT A NULLITY AS THE DEFECTS A RE CURABLE UNDER SECTION 292B.SECONDLY,IN BLOCK ASSESSMENT IF A NOTICE IS ISSUED UNDER SECTION 158BC R.W.S.158BD OF THE AC T AND THE AO FAILS TO MENTION SEC. 158BD IN THE NOTICE, I T IS NOT CONSIDERED FATAL. IT IS SAID THAT THE DEFECT IN MEN TIONING A PARTICULAR SECTION IS CURABLE UNDER SECTION 292B AN D ITA NO.2322/MUM/2014 VASHDEV G ADNANI 10 CONSEQUENT BLOCK ASSESSMENT ORDER IS CONSIDERED WIT HIN JURISDICTION. XVI.) AFTER INSERTION OF SECTION 292 B OF THE ACT, AN APP EAL CANNOT BE DISMISSED DUE TO DEFECT IN MEMORANDUM, BECAUSE I T IS ONLY A TECHNICAL DEFECT AND CAN BE CURED. XVII.) PENALTY PROCEEDINGS CANNOT BE HELD INVALID BECAUSE THE AO HAD NOT STRUCK OFF THE COLUMN FOR WHICH THE ASSESSE E WAS NOT REQUIRED TO GIVE REPLY. XVIII.) IF A RETURN OF COMPANY IS NOT SIGNED BY MANAGING DI RECTOR BUT BY A PERSON AUTHORISED BY BOARD RESOLUTION THE DEFECT IN SIGNING THE RETURN IS CURABLE UNDER SECTION 292B. XIX.) UNDER SECTION 151 OF THE ACT, IT IS ONLY THE JOINT COMMISSIONER OR ADDITIONAL COMMISSIONER, WHO COULD GRANT THE APPROVAL FOR ISSUE OF NOTICE U/S.148 AND IN SUC H CASES IF THE APPROVAL IS GRANTED BY THE COMMISSIONER IT IS N OT AN IRREGULARITY THAT IS CURABLE BY SECTION 292B.COURTS HAVE HELD THAT SUCH NOTICES ARE INVALID. XX.) GENERAL MISTAKES IN FILING RETURN ARE PROTECTED BY THE SECTION 292 B OF THE ACT E.G.IF FOUR UNITS OF A COM PANY FILE SEPARATE RETURNS AT SAME TIME DISCLOSING LOSSES AND SUBSEQUENTLY A CONSOLIDATED RETURN INCORPORATING LO SS OF ALL FOUR UNITS CONTAINING SAME INFORMATION IS FILED, TH E ORIGINAL RETURNS REMAIN VALID AND TECHNICAL MISTAKE STANDS R EMOVED ON FILING OF REVISED RETURN. IN SUCH A MATTER REVIS ED RETURN WOULD RELATE BACK TO DATE OF FILING OF ORIGINAL RET URNS. FROM THE ABOVE, IT CLEAR THAT IF ANY MINOR DEFECT IS THE RE WHICH DOES NOT MILITATE AGAINST THE INTENT AND PURPOSE OF THE ACT THEN SUCH DEFECT CAN BE CURED U/S.292 B OF THE ACT, BUT THE SECTION DOES NOT COME TO THE ASSISTANCE OF THE REVE NUE, WHERE THERE IS A FUNDAMENTAL INFIRMITY IN THE ASSES SMENT. IT CANNOT CONFER JURISDICTION, WHERE JURISDICTION HAS NOT BEEN PROPERLY ASSUMED. IN THE MATTER OF NORTON MOTORS(275ITR595),THE HONBLE P&H HIGH COURT HAS HE LD AS UNDER: TO PUT IT DIFFERENTLY, SECTION 292B CAN BE RELIED UPON FOR RESISTING A CHALLENGE TO THE NOTICE, ETC., ONLY IF THERE IS A TECHNICAL DEFECT OR OMISSION IN IT. HOWEVER, THERE IS NOTHING IN THE PLAIN LANGUAGE OF THAT SECTION FROM WHICH IT CAN BE INFERRED THAT THE SAME CAN BE RELIED UPON FOR CURIN G A JURISDICTIONAL DEFECT IN THE ASSESSMENT NOTICE, SUM MONS OR OTHER PROCEEDING. IN OTHER WORDS, IF THE NOTICE, SU MMONS OR OTHER PROCEEDING TAKEN BY AN AUTHORITY SUFFERS FROM AN ITA NO.2322/MUM/2014 VASHDEV G ADNANI 11 INHERENT LACUNA AFFECTING HIS /ITS JURISDICTION, TH E SAME CANNOT BE CURED BY HAVING RESORT TO SECTION 292B. IF THE FACTS OF THE CASE UNDER APPEAL ARE CONSIDERE D IN LIGHT OF THE ABOVE DISCUSSION, IT BECOMES CLEAR THAT THE PROVISI ONS OF SECTION 292B ARE NOT APPLICABLE. IN THE CROSS OBJECTIONS TH E AO WANTS US TO TREAT US THE ASSESSMENT COMPLETED U/S.148 AS ASSESS MENT FINALISED U/S.153A OF THE ACT. IN OUR OPINION, BOTH THE SECTI ONS DEAL WITH DIFFERENT SITUATIONS AND NOTICE ISSUED UNDER ONE SE CTION CANNOT BE TREATED NOTICE UNDER ANOTHER SECTION NOR CAN BE ASS ESSMENT MADE UNDER A PARTICULAR SECTION CAN BE TREATED AS FINALI SED UNDER ANOTHER SECTION. SECTION 147-148 DEAL WITH RE-ASSESSING OF INCOME FOR A PARTICULAR AY. THAT ESCAPES TAXATION BECAUSE OF THE FAILURE OF THE ASSESSEE OR OTHRERWISE. SECTION 153A DEALS WITH THE MATTERS WHERE ACTION HAS BEEN TAKEN U/S.132 OR 132A OF THE ACT. E ACH AND EVERY SECTION OF THE ACT HAS BEEN INCLUDED IN THE STATUE WITH A SPECIFIC INTENTION AND PURPOSE. THE LEGISLATURE IN ITS WISDO M HAS INTRODUCED VARIOUS SECTION TO REGULATE THE TAX COLLECTION. SO, TO ASSUME THAT ONE SECTION IS RE-PLACABLE BY ANOTHER IS NOT A LOGI CAL OR LEGAL CONCLUSION. EACH SECTION, EACH PHRASE AND EACH WORD OF THE ACT HAS ITS OWN PLACE AND IMPORTANCE. IF AN AO COMMITS A MI STAKE WHILE PASSING ASSESSMENT ORDERS, IT CANNOT BE CURED BY RE LYING UPON ANY OTHER SECTION, BECAUSE SUCH A MISTAKE IS NOT A CLER ICAL MISTAKE-IT RELATES TO JURISDICTION. THE MISTAKE/DEFECT OR OMI SSION IN NOTICES ISSUED BY THE AO U/S.148 INSTEAD OF SECTION 153A OF THE ACT IS NOT IN CONFORMITY WITH /ACCORDING TO THE INTENT AND P URPOSE OF THE ACT. JURISDICTIONAL ISSUES CANNOT FALL IN THE CATEG ORY OF CLERICAL MISTAKES-THEY GO THE ROOTS OF THE ASSESSMENT. IN TH ESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT ORDERS PA SSED BY THE AO FOR THE AY.1999-2000,2001-01,2001-02 ARE NOT VALID. AS FAR AS THE ASSESSMENT OF AY.2004-05 IS CONCERNED , IT IS FOUND THAT THE AO HAD ISSUED NOTICE U/S.143(2) OF THE ACT AND BEFORE COMPLETING THE ORIGINAL ASSESSMENT HAD ISSUE A NOTI CE U/S.148 OF THE ACT. WE CANNOT COMPREHEND AS HOW CAN AN AO ISSU E A NOTICE FOR REASSESSING ESCAPED INCOME DURING THE PENDENCY OF THE ASSESSMENT ITSELF. THE CHRONOLOGICAL EVENTS DISCUSS ED IN EARLIER CLEARLY SHOW THAT THE AO HAD ISSUED NOTICE U/S.148 FOR THAT YEAR ON 20.02.2006 AND THE ASSESSMENT WAS COMPLETED ON 29.12.2006.BESIDES HE HAS ISSUED NOTICE U/S.143(2)O N 17.2.2005.CONSIDERING THESE FACTS, WE ARE OF THE OP INION THAT THE ASSESSMENT ORDER FOR THE AY.2004-05 WAS INVALID. AD DITIONAL GROUNDS TAKEN BY THE ASSESSEE ARE TO BE ALLOWED FOR ALL THE YEARS AND THE CROSS OBJECTIONS RAISED BY THE AO ARE REJEC TED. ITA NO.2322/MUM/2014 VASHDEV G ADNANI 12 4. WE FIND THAT THE ISSUE IS FULLY COVERED BY THE D ECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL AS STATED ABOVE IN ASSESSEES OWN CASE. WE, THEREFORE, RESPECTFULLY FOLLOWING THE SAME WE SET ASIDE THE ORDER OF CIT(A) AND HOLD THAT THE ASSESSM ENT MADE BY THE AO IS INVALID AND BARRED BY LIMITATION. WE, THEREFORE, ARE OF THE OPINION THAT THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE DETAILED ORDER OF THE CO-ORDINATE BE NCH IN THE ASSESSEES OWN CASE FOR A.Y. 2002-03. RESPECTFULLY, FOLLOWING THE SAID ORDER, WE SET ASIDE THE ORDER OF THE CIT(A) AND HOLD THAT THE ASSESSMEN T OF THE ASSESSING OFFICER IS INVALID AND VOID AB-INITIO AS THE SAME WAS BARRE D BY LIMITATION AS PROVIDED U/S. 153B(B) OF THE I.T.ACT. SINCE THE ASSESSMENT MADE BY THE ASSESSING OFFICER HAS EVENTUALLY BEEN QUASHED BY US AS VOID AB-INITIO, THE OTHER GRO UNDS TAKEN BY THE ASSESSEE DOES NOT REQUIRE ANY ADJUDICATION. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 18 TH MAY, 2018 SD/- SD/- (SAKTIJIT DEY) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 18 TH MAY 2018 SA ITA NO.2322/MUM/2014 VASHDEV G ADNANI 13 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI