ACIT CIR 6(3), MUMBAI V. HINDUSTAN CANDLE MFG. CO. P. LTD, MUMBAI

ITA 4020/MUM/2009

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9148 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2015
• Appeal Filed By: Department
• Bench Allotted: H
• Next Hearing Date: 15-01-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 26-06-2009
• Court: TRIBUNAL
• Department Lawyers: AND CROSS OBJECTION
• Assessee Lawyers: ARE DIRECTED A GAINST
• Keywords: Period of limitation; Fair market value; Validity of assessment; Procedural lapse; Assessment record; Block assessment
• Section: 143(3); 142(1); 14A; 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.4020/MUM/2009 ASSESSMENT YEAR: - 2006-07 ACIT, CIR.- 6(3) MUMBAI, ROOM NO. 522, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS.` M/S HINDUSTAN CANDLE MFG. CO. LTD, KHATAU TERACE, DR. S.S. ROAD, LALBAUG, MUMBAI 400 012. APPELLANT RESPONDENT CROSS OBJECTION NO. 08/MUM/2010 ARISING OUT OF ITA NO.4020/MUM/200 9 ASSESSMENT YEAR: - 2006-07 M/S HINDUSTAN CANDLE MFG. CO. LTD, KHATAU TERACE, DR. S.S. ROAD, LALBAUG, MUMBAI 400 012 VS.` ACIT, CIR.- 6(3) MUMBAI, ROOM NO. 522, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 21.04.2009 OF CIT|(A) F OR A.Y. 2006-07. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APPE AL:- 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, LD. CIT(A) ERRED IN ADMITTING THE EVIDENCE IN RESPECT OF FMV AS ON 01/0 4/1981 AND ALLOWING INDEXATION THEREOF IN CONTRARY TO RULE 46A(2) & (3) OF THE I.T. RULES .. ' REVENUE BY SHRI SURINDER JEET SINGH ASSESSEE BY SHRI J.D. MISTRY DATE OF HEARING 03.03.2015 DATE OF PRONOUNCEMENT 25.03.2015 M/S HINDUSTAN CANDLE MFG. CO. LTD, 2 | P A G E 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, LD. CIT(A) ERRED IN TAKING CONTRARY DECISION THAT THE ASSESSEE HAS INCURRED A LONG TERM CAPITAL LOSS IN RESPECT OF THE IMPUGNED TRANSACTION AND YET HOLDING THAT THE SUBSEQUENT TRANSFER OF STOCK-IN-TRADE FOR CONSIDERATION OF RS. 35,00,96,000/- DID NOT AMOUNT TO TRANSFER OR SALE OF STOCK-IN-TRADE. ' 3. 'THE APPELLANT PRAYS THAT THE ORDER OF LD. CIT(A ) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED .' IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED FOLL OWING GROUNDS:- 1. PRELIMINARY OBJECTIONS: (A) THE APPEAL HAS BEEN FILED BY THE ASSISTANT COMM ISSIONER OF INCOME TAX, CIRCLE - 6 (3), MUMBAI [HEREAFTER THE ACIT] , WHERE AS THE ASSESSMENT WAS MADE BY THE INCOME TAX OFFICER, WARD - 6(3)(2), MUMBAI [ HEREAFTER THE ITO], AND EVEN TO-DAY THE ITO IS HAVING JURISDICTION OVER THE CASE OF THE ASSESSEE; THEREFORE, THE APPEAL FILED BY THE ACIT IS NOT MAINTAINABLE. (B) THE MAIN GROUNDS OF APPEAL STARTS WITH 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE' WHICH MEANS THE FACTS FOUND BY THE LD. CO MMISSIONER OF INCOME TAX (APPEALS) [HEREAFTER THE CIT (A)] ARE ADMITTED AND UNDISPUTED AND THEREFORE IN VIEW OF THE CBDT'S INSTRUCTION NO. 1493 DATED 18-11 -1982 AND REITERATED VIDE INSTRUCTION NO. 1894 DATED 16-06-1992, THE APPEAL I S NOT MAINTAINABLE. 2. THE ASSESSMENT MADE IS WITHOUT JURISDICTION, PA RTICULARLY BECAUSE: (A) ANY VALID NOTICE U/S 143 (2) OF THE INCOME TAX ACT, 1961 [HEREAFTER THE ACT] WAS NOT ISSUED WITHIN THE STATUTORY MANDATORY TIME PRESCRIBED BY THE PROVISO TO SECTION 143 (2) OF THE ACT, (B) ANY NOTICE U/S 143 (2) OF THE ACT WAS NOT SERVE D UPON THE ASSESSEE WITHIN THE STATUTORY MANDATORY TIME PRESCRIBED BY THE PROV ISO TO SECTION 143 (2) OF THE ACT, (C) THE PROCEEDINGS WERE INITIATED BY THE ACIT, BUT WERE COMPLETED BY THE ITO, WITHOUT THERE BEING ANY ORDER TRANSFERRING THE JURI SDICTION TO THE ITO. 3. THE ID. CIT (A) ERRED IN SUSTAINING DISALLOWANCE OF RS. 2,78,310 U/S 14A OF THE ACT. 3.1 THE LD. CIT (A) FAILED TO APPRECIATE THAT THERE IS NO FINDING BY THE LD. AO THAT EXPENDITURE INCURRED HAS ANY NEXUS WITH EXEMPTED IN COME. 3.2 WITHOUT PREJUDICE THE ADDITION IS HIGHLY EXCESS IVE. M/S HINDUSTAN CANDLE MFG. CO. LTD, 3 | P A G E 4.. THE LD. CIT (A) ERRED IN SUSTAINING THE ADDITIO N OF RS. 3,36,000 BEING INCOME FROM HOUSE PROPERTY. 4.1 THE LD. CIT (A) FAILED TO APPRECIATE THE FACT T HAT THE ASSESSEE IS IN THE BUSINESS OF REAL ESTATE. 4.2 THE LD. CIT (A) FAILED TO APPRECIATE THAT THE R ESULT OF LOCAL ENQUIRY CONDUCTED BY THE LD. AO WAS NEVER CONFRONTED TO THE ASSESSEE. 4.3 THE LD. CIT (A) FAILED TO APPRECIATE THE MUNICI PAL VALUATION. 4.4' WITHOUT PREJUDICE THE ADDITION IS HIGHLY EXCES SIVE. 2. SINCE THE ASSESSEE HAS RAISED AN ISSUE OF VALIDITY OF ASSESSMENT IN THE CROSS OBJECTION WHICH GOES TO THE ROOT OF THE MATTE R, THEREFORE, WE FIRST TAKE UP THE CROSS OBJECTION FILED BY THE ASSESSEE AND THE ISSUE OF VALIDITY OF ASSESSMENT FOR WANT OF NOTICE U/S 143(2). AT THE OU TSET, WE NOTE THAT THIS GROUND OF VALIDITY OF ASSESSMENT FOR WANT OF JURISDI CTION DUE TO NO SERVICE OF NOTICE U/S 143(2), WAS NOT TAKEN BY THE ASSESSEE BEFORE THE CIT(A). ON THIS POINT, THE LD. SENIOR COUNSEL OF THE ASSESSEE H AS SUBMITTED THAT THIS OBJECTION WAS VERY WELL TAKEN BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE HAS REFERRED THE LETTER DATED 8.08.2008 AND SUBMITTED THAT THE ASSESSEE HAS SPECIFICALLY RAISED T HE OBJECTION THAT ANY NOTICE U/S 143(2) OF THE ACT HAS NOT BEEN RECEIVED T ILL DATE. THUS THE LD. SENIOR COUNSEL HAS SUBMITTED THAT THIS IS NOT A NE W PLEA OR GROUND RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL BUT THE OBJECTI ON WAS RAISED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. SINCE THE NO TICE U/S 143(2) GIVES THE JURISDICTION TO ASSESSING OFFICER TO FRAME THE SCRU TINY ASSESSMENT AND IT IS NOT A PROCEDURAL IRREGULARITY, THEREFORE, THE SAME I S NOT CURABLE. FAILURE ON THE PART OF ASSESSING OFFICER TO ISSUE NOTICE U/S 143(2) WITHIN THE STIPULATED TIME PERIOD RENDERS THE ASSESSMENT VOID AND INVALID. HE HAS RELIED UPON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF ACIT VS. HOTEL BLUE MOON 321 ITR 362 AS WELL AS DECISION OF HON'BLE JURISDICTIONAL M/S HINDUSTAN CANDLE MFG. CO. LTD, 4 | P A G E HIGH COURT IN THE CASE OF COMMISSIONER OF WEALTH-TAX VS. HUF OF H.H. LATE J.M. SCINDIA 300 ITR 193. HE HAS FURTHER SUBMITTED THAT AS PER THE DIRECTIONS OF THE TRIBUNAL, THE ASSESSING OFFICER HA S FILED THE AFFIDAVIT IN SUPPORT OF THE CASE OF THE REVENUE THAT THE NOTICE U/S 143(2) WAS DULY ISSUED AND SERVED UPON THE ASSESSEE ON 23.10.2007. THE LD. COUNSEL HAS SUBMITTED THAT THE ASSESSEE HAS DENIED THE SERVICE OF THE ALLEGED NOTICE. EVEN THERE IS NO MENTION ON THE ALLEGED SERVICE OF T HE NOTICE AS TO WHOM THE NOTICE WAS SERVED BY THE ASSESSING OFFICER. HE H AS POINTED OUT THAT THE ASSESSING OFFICER HAS CLAIMED TO HAVE SERVED THE NO TICE IN PERSON THROUGH INSPECTOR BUT THERE IS NOTHING ON RECORD AS TO WHOM THE NOTICE WAS SERVED. EVENT THE AFFIDAVIT FILED BY THE REVENUE IS NOT OF T HE PERSON CONCERNED WHO HAS ISSUED THE NOTICE OR SERVED THE SAME ALLEGEDLY ON THE ASSESSEE. THUS, THE LD. COUNSEL HAS SUBMITTED THAT THE ORDER PASSED BY THE ASSESSING OFFICER WITHOUT JURISDICTION RENDERS THE ORDER VOID AB INITIO. TO COUNTER THE AFFIDAVIT FILED BY THE REVENUE, THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT OF ONE SHRI SUNIL K. GUPTA, MANAGING DIRECTOR OF THE ASSES SEE COMPANY AND DENIED THE SERVICE OF ALLEGED NOTICE U/S 143(2) ON THE ASSE SSEE. THE LD. SENIOR COUNSEL HAS ALSO RELIED UPON THE FOLLOWING DECISIONS: - (I) ACIT & ANR VS. HOTEL BLUE MOON 321 ITR 362 (II) COMMISSIONER OF WEALTH-TAX VS. HUF OF H.H. LATE J.M . SCINDIA 300 ITR 193. (III) INCOME TAX OFFICER VS. BEDI ENTERPRISES 114 TTJ (L UCKNOW) 706 (IV) HARSINGAR GUTKHA (P) LTD. VS. DEPUTY COMMISSIONER O F INCOME TAX 138 TTJ(LUCKNOW) 318 (V) DR. Y.D. SINGH VS. DEPUTY COMMISSIONER OF INCOME TA X 143 TTJ (ALL) 467 (VI) ASSISTANT COMMISSIONER OF INCOME TAX VS. VISION INC . 130 TTJ (DEL) 696. (VII) ANIL KUMAR GOEL VS. INCOME TAX OFFICER 116 TTJ (LU CKNOW) 239. (VIII) DEPUTY COMMISSIONER OF INCOME TAX VS. MAHI VAILEY H OTELS AND RESORTS 287 ITR 360 (GUJ.) 3. REFERRING THE ISSUE DISCUSSED IN THE ABOVE SAID D ECISIONS, THE LD. SENIOR COUNSEL HAS SUBMITTED THAT THE ASSESSING OFF ICER HAS NOT BROUGHT M/S HINDUSTAN CANDLE MFG. CO. LTD, 5 | P A G E ANY MATERIAL ON RECORD TO SHOW THAT THE NOTICE WAS SERVED ON THE ASSESSEE WITHIN THE STIPULATED PERIOD AND ACCORDINGLY THE REVEN UE HAS FAILED TO PROVE THAT THE SERVICE HAS BEEN AFFECTED ON THE ASS ESSEE OR ITS AGENT. HE HAS POINTED OUT THAT IN THE SERIES OF DECISIONS, THE TRI BUNAL HAS TIME AND AGAIN REITERATED THAT THE SERVICE OF NOTICE SHOULD BE ON TH E ASSESSEE OR ITS AUTHORIZED PERSON. THE ONUS IS ON THE ASSESSING OFFI CER TO ESTABLISH THAT THERE WAS A VALID SERVICE ON THE ASSESSEE WITHIN THE STIPULATED TIME. HE HAS REFERRED THE ALLEGED NOTICE U/S 143(2) AND SUBMITTED T HAT THERE IS NO IDENTIFICATION TO WHOM THE NOTICE WAS SERVED AND IN TH E ABSENCE OF IDENTIFICATION, THERE IS NO VALID SERVICE ON THE ASSE SSEE. 4. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT A NOTICE U/S 143(2) ALONG WITH NOTICE U/S 115WE(2)WERE SERVED ON THE ASS ESSEE ON 23.10.2007 AT 1.20 P.M. HE HAS REFERRED THE COPY OF THE NOTIC E ON WHICH THE ACKNOWLEDGEMENT OF THE RECEIPT OF THE NOTICE ALONG WITH TELEPHONE NO. IS MENTIONED. THE LD. DR HAS SUBMITTED THAT THE ASSESSEE , THEREAFTER, APPEARED BEFORE THE ASSESSING OFFICER AND EVEN NOTICE U/S 142(1) DATED 20.06.2008 WAS ISSUED TO THE ASSESSEE THROUGH SPEED POST WAS SERVED UPON THE ASSESSEE. ONCE THE ASSESSEE HAS APPEARED A ND PARTICIPATED IN THE ASSESSMENT PROCEEDINGS, THEN THE CASE FALLS U/S 292 BB OF THE INCOME TAX ACT AND IT SHALL BE DEEMED AS THE NOTICE U/S 143(2) WAS DULY SERVED UPON THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF TH E ACT. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT RAISED ANY OBJECT ION FOR NON RECEIPT OF NOTICE U/S 115WE(2) WHICH WAS SERVED ALONG WITH NOTI CE U/S 143(2), THEREFORE, THERE WAS A VALID SERVICE OF THE NOTICE U/S 143(2) ON THE ASSESSEE. HE HAS REFERRED THE AFFIDAVIT FILED BY THE ASSESSING OFFICER, ANIL KUMAR GUPTA, DCIT, CIR- 6(3) AND SUBMITTED THAT SIN CE 27.06.2008, THE ASSESSEE HAD BEEN REGULARLY ATTENDING THE ASSESSMENT PROCEEDINGS UP TO M/S HINDUSTAN CANDLE MFG. CO. LTD, 6 | P A G E 19.12.2008. THEREFORE, THE FACTS AND CIRCUMSTANCES O F THE CASE PROVES THAT THE NOTICE U/S 143(2) WAS DULY SERVED UPON THE ASSE SSEE. 5. IN REJOINDER, THE LD. SENIOR COUNSEL HAS SUBMITTE D THAT THE ASSESSEE HAS FILED THE AFFIDAVIT IN WHICH HE DENIED ANY SERVICE OF NOTICE U/S 115WE(2). HE HAS ALSO REFERRED THE FRINGE BENEFIT TA X ASSESSMENT AND SUBMITTED THAT SINCE THE ASSESSING OFFICER HAS ACCEP TED THE RETURN, THEREFORE, THERE WAS NO QUESTION OF ANY OBJECTION O R ANY PROCEEDINGS UNDER THE FRINGE BENEFIT ASSESSMENT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL A S RELEVANT MATERIAL ON RECORD. THE REVENUE HAS NOT DENIED THE FAC T THAT VIDE LETTER DATED 08.08.2008, THE ASSESSEE HAS RAISED THE OBJECTI ON REGARDING NON RECEIPT OF NOTICE U/S 143(2). THE RELEVANT PART OF THE LETTER DATED 08.08.2008 IS AS UNDER:- OTHER DETAILS REQUESTED BY YOU IN THE LETTER ARE U NDER PREPARATION AND WILL BE SUBMITTED TO YOU IN DUE COURSE. THE ABOVE SUBMISSIONS ARE WITHOUT PREJUDICE TO OUR L EGAL RIGHTS. IT IS PERTINENT TO MENTION THAT ANY NOTICE U/S 143(2) OF THE ACT HAS NOT BEEN RECEIVED BY US TILL DATE. 7. THE ABOVE SAID LETTER WAS PART OF THE ASSESSMENT RECORD AND, THEREFORE, THE OBJECTION RAISED BY THE ASSESSEE WA S NOT DENIED. FURTHER THE ASSESSING OFFICER HAS NOT ADJUDICATED THE OBJECTION RAISED BY THE ASSESSEE AND PROCEEDED TO COMPLETE THE ASSESSMENT. THOUGH THE A SSESSEE HAS NOT RAISED THIS OBJECTION BEFORE THE CIT(A), HOWEVER, IT IS NOT A FRESH PLEA AS IT IS MANIFEST FROM THE ASSESSMENT RECORD THAT THE ASSESSE E RAISED THIS OBJECTION DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WE FURT HER NOTE THAT IN THE PROCEEDINGS RECORDED ON 08.08.2008, THE ASSESSING OF FICER HAS DULY M/S HINDUSTAN CANDLE MFG. CO. LTD, 7 | P A G E RECORDED THE PRESENCE OF REPRESENTATIVE OF THE ASSES SEE AND FILING OF VARIOUS DETAILS IN RESPONSE TO THE LETTER DATED 28.07 .2008. THIS LETTER DATED 08.08.2008 IS IN RESPONSE TO LETTER DATED 28.07.2008. THEREFORE THIS ISSUE/PLEA WAS TAKEN BY THE ASSESSEE BEFORE THE AS SESSING OFFICER IN THE ASSESSMENT PROCEEDINGS. EVEN, OTHERWISE, THIS IS A LEGAL OBJECTION RAISED BY THE ASSESSEE AND AS PER THE JUDGMENT OF HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF PRASHANT S. JOSHI VS. ITO 324 ITR 154 . A FRESH PLEA CAN BE RAISED BEFORE THE APPELLATE AUTHORITY. THEREFORE, WE DO NOT FIND ANY LEGAL HURDLE IN CONSIDERING THE OBJECTIONS RAISED BY THE A SSESSEE IN CROSS OBJECTION REGARDING VALIDITY OF ASSESSMENT FOR WANT OF SERVICE OF NOTICE U/S 143(2). WE FIND THAT THE FIRST ENTRY IN THE ASSESSMENT PROCE EDINGS IS DATED 08.08.2008 AND PRIOR TO THAT DATE THERE IS NOTHING ON THE ASSESSMENT RECORDS TO SHOW THAT ANY NOTICE U/S 143(2) WAS ISSU ED BY THE ASSESSING OFFICER EXCEPT THE COPY OF NOTICE DATED 20.10.2007 PU RPORTED TO BE SERVED ON THE ASSESSEE ON 23.10.2007. FROM THE ALLEGED NOTI CE, WE FIND THAT THIS NOTICE WAS NOT SENT THROUGH THE PROCESS OF REGISTER ED POST OR POSTAL AUTHORITIES BUT THE REVENUE HAS CLAIMED THAT IT WAS SERVED PERSONALLY ON THE ASSESSEE. THIS NOTICE DOES NOT BEAR ANY NAME OF THE PERSON OR IDENTIFICATION OF THE PERSON TO WHOM IT WAS SERVED. ONLY ONE SIGNATURE APPEARS ON IT WITH DATE 23.10.2007AND TIME 1.20 P.M . THEREFORE, FROM THE COPY OF THE ALLEGED NOTICE, IT CAN NOT BE ASCERTAINE D AS TO WHOM THE NOTICE WAS SERVED. EVEN, OTHERWISE THE ASSESSEE IS A COMPAN Y AND THE NOTICE SERVED ON THE ASSESSEE MUST BEAR THE SIGNATURE OF TH E AUTHORIZED PERSON OF THE ASSESSEE ALONG WITH SEAL AND AT LEAST THE NAME A ND DESIGNATION OF THE PERSON WHO RECEIVED THE NOTICE. IN THE CASE IN HAND T HERE IS NOTHING ON RECORD TO SHOW THAT TO WHOM THE NOTICE WAS SERVED AN D WHETHER THE M/S HINDUSTAN CANDLE MFG. CO. LTD, 8 | P A G E RECIPIENT OF THE NOTICE WAS AUTHORIZED PERSON OF TH E ASSESSEE OR AT LEAST BELONGING TO THE ASSESSEE. THE AFFIDAVITS FILED BY TH E REVENUE OF ONE MR. ANIL K. GUPTA IS NEITHER THE THEN ASSESSING OFFICER WHO ISSUED THE NOTICE NOR HAVING PERSONAL KNOWLEDGE ABOUT THE FACT OF SERVICE OF NOTICE. IN THE AFFIDAVIT, THE OFFICER HAS MADE THE CLAIMS ON THE BAS IS OF THE ASSESSMENT RECORD. EVEN FROM THE AFFIDAVITS, IT CAN BE SEEN THA T THE DEPONENT HAS NOT CLAIMED TO HAVE SERVED THE NOTICE U/S 143(2) AND GIVE N THE DETAILS OF ISSUANCE OF NOTICE. AS REGARDS THE ALLEGED NOTICE U/ S 115WE(2), THERE IS NOTHING ON RECORD TO SHOW THAT ANY SUCH NOTICE WAS I SSUED TO THE ASSESSEE. FURTHER WHEN THE RETURN FILED BY THE ASSESSEE WAS AC CEPTED BY THE ASSESSING OFFICER THEN THERE WAS NO QUESTION OF ANY PROCEEDINGS OR RAISING THE OBJECTION BY THE ASSESSEE AGAINST THE SERVICE O F NOTICE U/S 115WE(2). THEREFORE, THE AFFIDAVIT FILED BY THE REVENUE AS WEL L AS ASSESSMENT U/S 115WE(2) WOULD NOT HELP THE CASE OF THE REVENUE. AS REGARDS THE PLEA THAT THE CASE OF THE ASSESSEE IS COVERED U/S 292 BB, IT I S PERTINENT TO NOTE THAT THAT THIS PROVISION HAS BEEN INSERTED IN THE STATUT E BY THE FINANCE ACT, 2008, W.E.F 01.04.2008 AND, THEREFORE, THE PROVISION S OF SECTION 292 BB ARE NOT APPLICABLE FOR THE A.Y. UNDER CONSIDERATION. WHEN THE ASSESSEE HAS RAISED THE OBJECTION REGARDING NON RECEIPT OF NOTICE U/S 143(2) DURING THE ASSESSMENT PROCEEDINGS, THEN IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO BRING ON RECORD THE F ACT AND MATERIAL TO SHOW THAT THE ALLEGED NOTICE DATED 20.10.2007 WAS DULY SERV ED UPON THE ASSESSEE. THE SILENCE ON THE PART OF THE ASSESSING OFFICER TO ADJUDICATE THE OBJECTION RAISED BY THE ASSESSEE CLEARLY RAISE THE PRESUMPTION AGAINST THE REVENUE THAT NO SUCH NOTICE WAS SERVED UPON THE ASS ESSEE. FURTHER WHEN THERE IS NOTHING ON RECORD TO SHOW THAT THE ALLEGED NOTICE WAS SERVED UPON THE ASSESSEE OR THE AUTHORIZED PERSON OF THE ASSESSE E THEN, WE FIND THAT THE M/S HINDUSTAN CANDLE MFG. CO. LTD, 9 | P A G E OBJECTION RAISED BY THE ASSESSEE VIDE LETTER DATED 0 8.08.2008 REMAINED UNCONTROVERTED. ONCE THE NOTICE U/S 143(2) REMAINED U NSERVED ON THE ASSESSEE WITHIN THE STIPULATED PERIOD THEN IT IS NOT A MERE PROCEDURAL IRREGULARITY BUT THERE IS A LACK OF JURISDICTION WHI CH ENABLE THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT. THE HON'BLE SUP REME COURT IN THE CASE OF ACIT & ANR VS. HOTEL BLUE MOON (SUPRA) WHILE DEALING WITH ISSUE OF NOTICE U/S 143(2) HAS OBSERVED IN PARA 15 AS UNDER:- 15. WE MAY NOW REVERT BACK TO SECTION 158 BC(B) WHICH IS THE MATERIAL PROVISION WHICH REQUIRES OUR CONSIDERATION. SECTION 158 BC(B) PROVIDES FOR ENQUIRY AND ASSESSMENT. THE SAID PROVISION READS 'T HAT THE ASSESSING OFFICER SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME O F THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158 BB AND THE PROVISIO NS OF SECTION 142, SUB- SECTION (2) AND (3) OF SECTION 143, SECTION 144 AND SECTION 145 SHALL, SO FAR AS MAY BE, APPLY.' AN ANALYSIS OF THIS SUB SECTION IND ICATES THAT, AFTER THE RETURN IS FILED, THIS CLAUSE ENABLES THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT BY FOLLOWING THE PROCEDURE LIKE ISSUE OF NOTICE UNDER SECTIONS 143(2)/142 AND COMPLETE THE ASSESSMENT UNDER SECTION 143(3). THIS SECTION DOES NOT PROVIDE FOR ACCEPTING THE RETURN AS PROVIDED UNDER SECTION 143( I)(A). THE ASSESSING OFFICER HAS TO COMPLETE THE ASSESSMENT UNDER SECTION 143(3) ONLY. IN CASE OF DEFAULT IN NOT FILING THE RETURN OR NOT COMPLYING WITH THE NOT ICE UNDER SECTIONS 143(2)/142, THE ASSESSING OFFICER IS AUTHORIZED TO COMPLETE THE ASSESSMENT EX- PARTE UNDER SECTION 144. CLAUSE (B) OF SECTION 158 BC BY REFERRING TO SECTION 143(2) AND (3) WOULD APPEAR TO IMPLY THAT THE PROVI SIONS OF SECTION 143(1) ARE EXCLUDED. BUT SECTION 143(2) ITSELF BECOMES NECESSA RY ONLY WHERE IT BECOMES NECESSARY TO CHECK THE RETURN, SO THAT WHERE BLOCK RETURN CONFORMS TO THE UNDISCLOSED INCOME INFERRED BY THE AUTHORITIES, THE RE IS NO REASON, WHY THE AUTHORITIES SHOULD ISSUE NOTICE UNDER SECTION 143(2 ). HOWEVER, IF AN ASSESSMENT IS TO BE COMPLETED UNDER SECTION 143(3) READ WITH S ECTION 158-BC, NOTICE UNDER SECTION 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FRO M THE DATE OF FILING OF BLOCK RETURN. OMISSION ON THE PART OF THE ASSESSING AUTHO RITY TO ISSUE NOTICE UNDER SECTION 143(2) CANNOT BE A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABLE AND, THEREFORE, THE REQUIREMENT OF NOTICE UNDER SEC TION 143(2) CANNOT BE DISPENSED WITH. THE OTHER IMPORTANT FEATURE THAT RE QUIRES TO BE NOTICED IS THAT THE SECTION 158 BC(B) SPECIFICALLY REFERS TO SOME O F THE PROVISIONS OF THE ACT WHICH REQUIRES TO BE FOLLOWED BY THE ASSESSING OFFI CER WHILE COMPLETING THE BLOCK ASSESSMENTS UNDER CHAPTER XIV-B OF THE ACT. THIS LE GISLATION IS BY INCORPORATION. THIS SECTION EVEN SPEAKS OF SUBSECTIONS WHICH ARE T O BE FOLLOWED BY THE ASSESSING OFFICER. HAD THE INTENTION OF THE LEGISLA TURE WAS TO EXCLUDE THE PROVISIONS OF CHAPTER XIV OF THE ACT, THE LEGISLATU RE WOULD HAVE OR COULD HAVE INDICATED THAT ALSO. A READING OF THE PROVISION WOU LD CLEARLY INDICATE, IN OUR OPINION, IF THE ASSESSING OFFICER, IF FOR ANY REASO N, REPUDIATES THE RETURN FILED BY M/S HINDUSTAN CANDLE MFG. CO. LTD, 10 | P A G E THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 15 8 BC(A), THE ASSESSING OFFICER MUST NECESSARILY ISSUE NOTICE UNDER SECTION 143(2) OF THE ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO TO SECTION 143(2) OF THE ACT. WHERE THE LEGISLATURE INTENDED TO EXCLUDE CERTAIN PROVISIONS FROM THE AMB IT OF SECTION 158 BC(B) IT HAS DONE SO SPECIFICALLY. THUS, WHEN SECTION 158 BC (B) SPECIFICALLY REFERS TO APPLICABILITY OF THE PROVISO THERETO CANNOT BE EXCL UDE. WE MAY ALSO NOTICE HERE ITSELF THAT THE CLARIFICATION GIVEN BY CBDT IN ITS CIRCULAR NO.717 DATED 14 TH AUGUST, 1995, HAS A BINDING EFFECT ON THE DEPARTME NT, BUT NOT ON THE COURT. THIS CIRCULAR CLARIFIES THE REQUIREMENT OF LAW IN R ESPECT OF SERVICE OF NOTICE UNDER SUB-SECTION (2) OF SECTION 143 OF THE ACT. AC CORDINGLY, WE CONCLUDE EVEN FOR THE PURPOSE OF CHAPTER XIV-B OF THE ACT, FOR TH E DETERMINATION OF UNDISCLOSED INCOME FOR A BLOCK PERIOD UNDER THE PROVISIONS OF S ECTION 158 BC, THE PROVISIONS OF SECTION 142 AND SUB-SECTIONS (2) AND (3) OF SECT ION 143 ARE APPLICABLE AND NO ASSESSMENT COULD BE MADE WITHOUT ISSUING NOTICE UND ER SECTION 143(2) OF THE ACT. HOWEVER, IT IS CONTENDED BY SRI SHEKHAR, LEARN ED COUNSEL FOR THE DEPARTMENT THAT IN VIEW OF THE EXPRESSION 'SO FAR AS MAY BE' I N SECTION 153 BC(B), THE ISSUE OF NOTICE IS NOT MANDATORY BUT OPTIONAL AND ARE TO BE APPLIED TO THE EXTENT PRACTICABLE. IN SUPPORT OF THAT CONTENTION, THE LEA RNED COUNSEL HAS RELIED ON THE OBSERVATION MADE BY THIS COURT IN DR. PRATAP SINGH' S CASE [1985] 155 ITR 166(SC). IN THIS CASE, THE COURT HAS OBSERV ED THAT 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(2). READING THE TWO SECTIONS TOGETHER IT MERELY MEANS THAT THE METHODOLOGY PRESC RIBED FOR CARRYING OUT THE SEARCH PROVIDED IN SECTION 165 HAS TO BE GENERALLY FOLLOWED. THE EXPRESSION 'SO FAR AS MAY BE' HAS ALWAYS BEEN CONSTRUED TO MEAN TH AT THOSE PROVISIONS MAY BE GENERALLY FOLLOWED TO THE EXTENT POSSIBLE. THE LEAR NED COUNSEL FOR THE RESPONDENT HAS BROUGHT TO OUR NOTICE THE OBSERVATIONS MADE BY THIS COURT IN THE CASE OF MAGANLAL VS. JAISWAL INDUSTRIES, NEEMACH AND ORS., [(1989) 4 SCC 344], WHEREIN THIS COURT WHILE DEALING WITH THE SCOPE AND IMPORT OF THE EXPRESSION 'AS FAR AS PRACTICABLE' HAS STATED 'WITHOUT ANYTHING MORE THE EXPRESSION `AS FAR AS POSSIBLE' WILL MEAN THAT THE MANNER PROVIDED IN THE CODE FOR ATTACHMENT OR SALE OF PROPERTY IN EXECUTION OF A DECREE SHALL BE APPLI CABLE IN ITS ENTIRETY EXCEPT SUCH PROVISION THEREIN WHICH MAY NOT BE PRACTICABLE TO BE APPLIED.' 8. A SIMILAR VIEW WAS TAKEN BY THE HON'BLE JURISDIC TIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF WEALTH-TAX VS. HUF OF H.H. LATE J.M . SCINDIA (SUPRA) IN PARA 10 AS UNDER:- 16. EVEN INDEPENDENTLY, WE HAVE EXAMINED THE SCOPE AND EFFECT OF SECTIONS 14 TO 16 ON THE ONE HAND AND SECTION 17 ON THE OTHER. IN OUR OPINION, THERE IS NO ESCAPE FROM ARRIVING AT THE CONCLUSION THAT WHEN TH E ASSESSING OFFICER INVOKES SECTION 17, THE PROVISIONS OF SECTIONS 14 AND 16 TO THE EXTENT APPLICABLE, FOR THE PURPOSE OF MAKING AN ORDER OF REASSESSMENT WILL HAV E TO BE FOLLOWED WHICH WILL M/S HINDUSTAN CANDLE MFG. CO. LTD, 11 | P A G E INCLUDE THE TIME-LIMIT FOR NOTICE UNDER SECTION 16( 2). ONCE THE LANGUAGE OF SECTION 17 ITSELF REQUIRES THAT OTHER PROVISIONS TO THE EXTENT APPLICABLE WOULD APPLY CONSIDERING THE RETURN AS FILED UNDER SECTION 14, IT CONTEMPLATES THAT BOTH PROCEDURAL AND SUBSTANTIVE PROVISIONS WILL APPLY. I N OUR OPINION, THEREFORE, WHILE INVOKING THE POWERS UNDER SECTION 17, THE ASS ESSING OFFICER IS BOUND BY THE MANDATE OF THE PROVISO TO SECTION 16(2) AND ON FAILURE THE ORDER OF REASSESSMENT WILL BE WITHOUT JURISDICTION AND CONSE QUENTLY THE ORDER OF REASSESSMENT WILL HAVE TO BE SET ASIDE. 9. THUS IT IS CLEAR THAT A NOTICE U/S 143(2) GIVES THE JURISDICTIONAL POWER TO THE ASSESSING OFFICER TO FRAME THE ASSESSMENT AN D FAILURE ON THE PART OF THE ASSESSING OFFICER TO SERVE THE NOTICE WITHIN TH E STIPULATED PERIOD OF 12 MONTHS WHICH RENDERS THE ASSESSMENT VOID AB INITIO . THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX VS. MAHI VAILEY HOTELS AND RESORTS (SUPRA), WHILE DEALING WITH THE ISSUE OF NOTICE U/S 143(2) AND CONSEQUENTIAL EFFECT ON THE ASSESSMEN T HAS OBSERVED IN PARA 4 AND 6 AS UNDER :- 4. THE SECOND CONTENTION REGARDING THERE BEING ACQUIE SCENCE AND/OR WAIVER ON THE PART OF THE ASSESSEE BY PARTICIPATING IN THE PROCEEDINGS ALSO DOES NOT MERIT ACCEPTANCE. IT IS AN ADMITTED POSITION THAT T HE RETURN OF INCOME WAS FILED ON MARCH 30, 1997, FOR THE ASSESSMENT YEAR 1997-98 AND THE NOTICE UNDER SECTION 143(2) OF THE ACT CAME TO BE ISSUED FOR THE FIRST TIME ONLY ON AUGUST 20, 1998. THEREFORE, THE NOTICE WAS ADMITTEDLY BEYOND T HE PERIOD OF 12 MONTHS WHICH IS THE STATUTORY PERIOD OF LIMITATION PRESCRI BED UNDER THE PROVISO TO SUB- SECTION (2) OF SECTION 143 OF THE ACT. 6. SECTION 143(2) OF THE ACT REQUIRES THAT WHERE A RE TURN HAS BEEN MADE BY AN ASSESSEE, IF THE ASSESSING OFFICER CONSIDERS IT NEC ESSARY OR EXPEDIENT TO ENSURE THAT THE ASSESSEE HAS NOT UNDERSTATED THE INCOME, O R HAS NOT COMPUTED EXCESSIVE LOSS, OR HAS NOT UNDERPAID TAX IN ANY MANNER, HE SH ALL SERVE ON THE ASSESSEE A NOTICE REQUIRING HIM EITHER TO ATTEND HIS OFFICE, O R TO PRODUCE, OR CAUSE TO BE PRODUCED THERE, ANY EVIDENCE ON WHICH THE ASSESSEE MAY RELY IN SUPPORT OF THE RETURN. THEREFORE, THE LANGUAGE OF THE MAIN PROVISI ON REQUIRES THE ASSESSING OFFICER TO PRIMA FACIE ARRIVE AT SATISFACTION OF EX ISTENCE OF ANY ONE OF THE THREE CONDITIONS. THE PROVISO UNDER THE SAID SUB-SECTION STATES: ''PROVIDED THAT NO NOTICE UNDER THIS SUB-SECTION SHALL BE SERVED ON TH E ASSESSEE AFTER THE EXPIRY OF TWELVE MONTHS FROM THE END OF THE MONTH IN WHICH TH E RETURN IS FURNISHED'. ON A PLAIN READING OF THE LANGUAGE IN WHICH THE PROVISO IS COUCHED IT IS APPARENT THAT THE LIMITATION PRESCRIBED THEREIN IS MANDATORY, THE FORMAT OF THE PROVISION BEING IN NEGATIVE TERMS. THE POSITION IN LAW IS WEL L-SETTLED THAT IF THE M/S HINDUSTAN CANDLE MFG. CO. LTD, 12 | P A G E REQUIREMENTS OF A STATUTE WHICH PRESCRIBES THE MANN ER IN WHICH SOMETHING IS TO BE DONE ARE EXPRESSED IN NEGATIVE LANGUAGE, THAT IS TO SAY, IF THE STATUTE ENACTS THAT IT SHALL BE DONE IN SUCH A MANNER AND IN NO OT HER MANNER, SUCH REQUIREMENTS ARE, IN ALL CASES ABSOLUTE AND NEGLECT TO ATTEND TO SUCH REQUIREMENT WILL INVALIDATE THE WHOLE PROCEEDING. 10. THEREFORE, IN THE ABSENCE OF A NOTICE U/S 143(2 ), THE WHOLE PROCEEDINGS BECOME INVALID. 11. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE ASSESSMENT IN QUESTION IS INVALID BECAUSE OF LACK OF JURISDICTION OF THE ASSESSING OFFICER AS THE REVENU E HAS FAILED TO SHOW THAT THE NOTICE U/S 143(2) WAS SERVED ON THE ASSESSEE WIT HIN THE STIPULATED PERIOD. ACCORDINGLY, WE QUASH/ SET ASIDE THE ASSESSM ENT IN QUESTION. SINCE THE ASSESSMENT HAS BEEN QUASHED BY US, THEREFORE, TH E OTHER GROUNDS RAISED BY THE ASSESSEE IN THE CROSS OBJECTION AS WELL AS THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL BECOME INFRUCTUOUS AND THE SAM E ARE DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUCNED IN THE OPEN COURT ON THIS 25 TH DAY OF MARCH 2015. SD/- SD/- ( N.K. BILLAIYA ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER ) MUMBAI DATED 25.03.2015 SKS SR. P.S, M/S HINDUSTAN CANDLE MFG. CO. LTD, 13 | P A G E COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, H BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI