Sh. Prem Nath S/o. Sh. Baldev Raj, Jammu ( J&k) V. The Income-tax Officer, Jammu

ITA 449/ASR/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68190 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-09-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 10-12-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: UPENDER BHATCA
• Keywords: Rejection of books of accounts; Principle of natural justice; Question of law; Procedural lapse; Competent authority; Assessment record; Block assessment
• Section: 143(3); 142(1); 153A; 147; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.449(ASR)/2012 ASSESSMENT YEAR:2004-05 PAN :ABMPN8338B SH. PREM NATH S/O SH. BALDEV RAJ, VS. INCOME TAX OF FICER, JAMMU ( J & K). WAD 1(2), JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. UPENDER BHAT,CA RESPONDENT BY:SH.TARSEM LAL, DR DATE OF HEARING:05/09/2013 DATE OF PRONOUNCEMENT:12/09/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JAMMU DATED 08.10.2012 FOR THE ASSESSMENT YEAR 2 004-05. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. REG. NON ISSUE & NON ISSUE OF NOTICE U/S 143(2 ) A) THAT ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN NOT DELETING ALL THE ADDITIONS BY TREATING THE ASSESSMENT AS BAD IN LAW AS NO NOTICE U/S 143(2) W AS ISSUED & ACCORDINGLY SERVED ON THE ASSESSEE. B) IN ANY VIEW OF THE MATTER & IN ANY CASE THE ACTION OF THE LD. CIT(A) IN NOT DELETING THE ADDITIONS/SETTING ASIDE THE ORDER OF 2 A.O. IS BAD IN LAW, AS THE SAME WAS PASSED WITHOUT ISSUING NOTICE U/S 143(2) 2. REG ISSUE OF NOTICE U/S 148 WITHOUT ATTAINING SAN CTION OF JCIT THAT ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN NOT DELETING ALL THE ADDITIONS BY TREATING THE ASSESSMENT AS BAD IN LAW AS NO PROPER APPROVAL OF COMPETENT AUTHORITY I.E. JCIT WAS OBTAINED BY A.O. AS REQUI RED BY LAW. IN ANY VIEW OF THE MATTER & IN ANY CASE THE ACTION OF THE LD. CIT(A) IN NOT DELETING THE ADDITIONS/SETTING ASID E THE ORDER OF A.O. IS BAD IN LAW, AS THE SAME WAS PASSED WITHOUT ISSUING NOTICE U/S 148. 3. REG: NON COGNIZANCE OF FINANCIAL STATEMENT, BOOKS O F ACCOUNTS & OTHER SUBMISSIONS BY LD. CIT(A). THAT ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN NOT TAKING THE COGNIZANCE OF FINANCIAL STATEMENTS AND OTHER SUBMISSIONS I.E. BALANCE SHE ET, DETAILS OF SOURCES OF DEPOSITS IN BANKS, BOOKS OF ACCOUNTS, C ONFIRMATIONS OF CREDITS ETC. C) IN ANY VIEW OF THE MATTER & IN ANY CASE THE ACTION OF THE LD. CIT(A) IN NOT TAKING THE COGNIZANCE OF FINANCIAL ST ATEMENTS I.E. BALANCE SHEET, DETAILS OF SOURCES OF DEPOSITS IN BA NKS, CONFIRMATIONS OF CREDITORS ETC & WITHOUT HEARING /A DJUDICATING IS BAD IN LAW, UNJUSTIFIED & AGAINST THE PRINCIPAL OF NATURAL JUSTICE IN FACTS & CIRCUMSTANCES OF THE CASE. 4. REG: MAKING ADDITION OF RS.2385260/- ON A/C OF DEPO SIT AS INCOME OF THE ASSESSEE U/S 69A OF THE ACT. THAT ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN MAKING THE FULL ADDITION OF RS .2385,260/- ON ACCOUNT OF DEPOSITS IN BANK AS THE FULL INCOME OF THE ASSESSEE U/S 69A OF THE ACT. THERE IS NO APPLICABI LITY OF SECTION 69A. 5. REG: MAKING OF ADDITION OF RS.2385260/- ON A/C O F DEPOSIT AS INCOME OF THE ASSESSEE. 3 THAT ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN MAKING THE FULL ADDITION OF RS .2385,260/- ON ACCOUNT OF DEPOSITS IN BANK AS THE FULL INCOME OF THE ASSESSEE IGNORING EVEN IF THESE DEPOSITS ARE TREAT ED AS SALES, THE FULL AMOUNT IS NOT PROFIT AND ERRED IN NOT APPLYIN G THE N.P. RATE. 6. THAT THE APPLICANT CRAVES THE LEAVE TO ADD, TO M ODIFY, TO AMEND OR DELETE ANY GROUND OF APPEAL AT THE TIME OF HEAR ING. 2. AS REGARDS GROUNDS NO. 1 & 2, BEING THE LEGAL GR OUNDS, THE BRIEF FACTS ARE THAT NOTICE U/S 148 WAS ISSUED ON 29.03.2011, W HICH WAS SERVED UPON THE ASSESSEE AFTER GETTING APPROVAL U/S 151(2) OF THE I NCOME TAX ACT, 1961 FROM THE ADDITIONAL C.I.T. RANGE-1, JAMMU. THE ASSESSEE WAS REQUESTED TO FURNISH RETURN OF INCOME WITHIN 30 DAYS FROM THE DA TE OF SERVICE OF NOTICE U/S 148. THE ASSESSEE VIDE APPLICATION DATED 02.05.2011 CHALLENGED THE PROCEEDINGS INITIATED U/S 147 OF THE ACT WITH REFER ENCE TO THE APPROVAL U/S 151(2) OF THE ACT FROM THE COMPETENT AUTHORITY HAS NOT BEEN TAKEN. THE AO DISPOSED OFF THE OBJECTION THAT NECESSARY APPROVAL HAS BEEN TAKEN AND IT IS A FIT CASE FOR ISSUE OF SUCH NOTICE WHICH HAS BEEN I SSUED, AFTER TAKING NECESSARY APPROVAL OF THE ADLL. CIT. 3. BEFORE THE LD. CIT(A), THE ASSESSEE AGAIN AGITA TED ON THE SAME ISSUE AND THE LD. CIT(A) REJECTED THE GROUND OF THE ASSES SEE BY OBSERVING IN PARA 4.2 OF HIS ORDER THAT AS PER SECTION 2(28C) OF THE ACT, THE JCIT INCLUDE ADDL. CIT AND GROUND OF THE ASSESSEE WAS REJECTED. 4 4. BEFORE THE LD. CIT(A), THE ASSESSEE RAISED AN A DDITIONAL GROUND THAT NOTICE UNDER SECTION 143(2) OF THE ACT HAS NOT BEEN ISSUED AND SERVED. THE LD. CIT(A) REJECTED THE GROUND BY OBSERVING AS UNDE R: (I) THE NON ISSUE AND NO SERVICE OF NOTICE U/S 143(2) WAS NOT AGITATED BEFORE THE A.O. AND THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT ATTENDED THE ASSES SMENT PROCEEDINGS BEFORE THE A.O. IN RESPONSE TO NOTICE U /S 142(1). THUS HE IS DEBARRED FROM TAKING SUCH PLEA O F NON ISSUE AND SERVICE OF NOTICE IN VIEW OF PROVISION U/ S 292BB. THE PROVISIONS OF SECTION 292BB ARE RELATING TO VALIDITY IN CERTAIN CIRCUMSTANCES ISSUE AND SERVICE OF NOTICE HENCE PROCEDURAL IN NATURE AND THUS APPLY TO ALL PENDING PROCEEDINGS FROM THE DATE OF INCORPORATION I.E. 1.4.2008 EVEN THOUGH PENDING ASSTT PERTAINS TO PRIO R PERIOD. THE CASE LAWS QUOTED BY THE APPELLANT DO NO T PERTAIN TO JURISDICTIONAL TRIBUNAL OR HIGH COURT. (II) THE PURPOSE OF A NOTICE IS TO GIVE FAIR OPPORTUNITY TO THE ASSESSEE TO REPRESENT HIS CASE. THE A.O. HAS GIVEN 148 AND 142(1) NOTICES WHICH WERE COMPLIED WITH. EVEN F OR ARGUMENT SAKE 143(2) NOTICE WAS NOT ISSUED IT WILL NOT VITIATE THE ASSESSMENT PROCEEDING BECAUSE THE PURPO SE OF NOTICE U/S 143(2) HAS BEEN ACHIEVED BY 142(1) NOTIC E. THIS HAS BEEN HELD SO IN THE CASE OF ASHOK CHADHA V S. ITO IN 337 ITR 399 IN PARA 14 OF THE ORDER OF HON'B LE DELHI HIGH COURT. THE HON'BLE HIGH COURT HAS HELD T HAT ONCE NOTICE U/S 153A IS ISSUED NO NOTICE U/S 143(2) IS COMPULSORY. A SIMILAR ANALOGY APPLIES HERE ALSO. (III) THOUGH THE A.O. HAS FRAMED ASSESSMENT U/S 143(3) INSTEAD OF NOTICE U/S 143(3) READ WITH SECTION 148 BUT SUCH MISTAKE IS A CURABLE DEFECT IN TERMS OF PROVIS IONS OF SECTION 292B OF I.T. ACT. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE, MR. UPENDER BHATT, CA ARGUED ON THE SIMILAR LINES AS BEFORE THE LD. CIT(A ) AND PRAYED TO QUASH THE 5 ASSESSMENT SO FRAMED IN VIEW OF NON-SANCTION OF ISS UE OF NOTICE BY THE COMPETENT AUTHORITY AND NON ISSUANCE AND NON SERVI CE OF NOTICE U/S 143(2) OF THE ACT. HE RELIED UPON THE DECISIONS OF VARIOU S COURTS OF LAW. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF THE AUTHORITIES BELOW AND THE DECISION OF ITAT, AMRITSA R BENCH IN THE CASE OF SH.GURKIRPAL SINGH, JALANDHAR VS. ITO, WARD 11), JA LANDHAR, IN ITA NOS.225 & 226(ASR)/2010 FOR THE ASSESSMENT YEARS 2000-01 & 2001-02 DATED 30.08.2013 ON THE IDENTICAL ISSUE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE WITH REGARD TO THE LEGAL GROUNDS. AS REGARDS THE A PPROVAL FROM THE ADDL. C.I.T., THE AO HAS OBTAINED THE APPROVAL FROM THE A DDL. C.I.T. BEFORE THE ISSUANCE OF NOTICE U/S 148 OF THE ACT. WE CONCUR WI TH THE VIEWS OF THE LD. CIT(A) THAT U/S 2(28C) OF THE ACT, JCIT MEANS A PER SON APPOINTED AS JCIT OR THE ADDL. CIT U/S 117(1) OF THE ACT. THEREFORE T AKING APPROVAL OF THE JCIT/ADDL.CIT TANTAMOUNT TO ONE AND SAME AND THERE FORE, THERE IS NO VIOLATION OF PROVISIONS IN TAKING APPROVAL BEFORE ISSUANCE OF NOTICE U/S 148 OF THE ACT. ACCORDINGLY, WE FIND NO INFIRMITY IN T HE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY REJECTED THE GROUND RAISED BY THE A SSESSEE. 6 8. AS REGARDS NON-ISSUANCE OF NOTICE U/S 143(2), W E CONCUR WITH THE VIEWS OF THE LD. CIT(A) GIVEN IN PARA 4.2 AT PAGE 6 & 7 OF HIS ORDER , WHICH HAS ALSO BEEN REPRODUCED HEREINABOVE. IN ADDITION, THE IDENTICAL ISSUE HAS BEEN DECIDED BY THIS BENCH IN THE CASE OF SH.GURKI RPAL SINGH, JALANDHAR VS. ITO, WARD 11), JALANDHAR (SUPRA), WHICH FOR THE SAK E OF CONVENIENCE IS REPRODUCED AS UNDER: 17. AS REGARDS ADDITIONAL GROUND NO.2 , WHERE THE A SSESSEE HAS ALLEGED THAT THE A.O. HAS ERRED IN LAW AND FACTS O F THE CASE BY FRAMING ASSESSMENT U/S 148/143(3) OF THE ACT WITHOUT ISSUI NG A NOTICE U/S 143(2) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSE E HAS RELIED UPON THE DECISION IN THE CASE OF ACIT VS. HOTEL BLUE MOON ( 201) 321 ITR 362 (SC) AND OTHER DECISIONS IN THIS REGARD. 17.1. THE ASSESSEE THROUGH HIS COUNSEL SH. ASHWANI RNADEV,CA HAS ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO T IME I.E. SINCE COMMENCEMENT TILL THE CONCLUSION OF THE ASSESSMENT PROCEEDINGS WHICH FACTS ARE AVAILABLE IN THE ASSESSMENT RECORD AND THE ASSESSMENT ORDER REPRODUCED HEREINABOVE. 17.2 AS REGARDS THE ARGUMENTS OF THE LD. COUNSEL F OR THE ASSESSEE THAT REASSESSMENT IS NULLITY THAT THERE BEING A JU RISDICTIONAL DEFECT IN CONTINUATION OF PROCEEDINGS, WE ARE OF THE VIEW TH AT THE WORD JURISDICTION DOES NOT HAVE A FIXED MEANING AND I N ONE SENSE IT MEANS AN ENTITLEMENT TO ENTER UPON THE ENQUIRY IN QUESTI ON AND IN WIDER SENSE IT IMPLIES RIGHT TO CONDUCT ENQUIRY INTO THE MATTER IN LAWFUL MANNER. 17.3 IN THE AFORESAID CONTEXT, THERE IS NO ARGUMEN T ON BEHALF OF THE ASSESSEE AS TO WHAT NATURE OF CHALLENGE IS BEING MADE TO THE PROCEEDINGS I.E. ON THE ASSUMPTION OF JURISDICTION / OR APPLICATION THEREOF AND FURTHER TO STATE THAT NO PLEADINGS HAV E BEEN RAISED OF WHATSOEVER KIND WHICH ADDRESSES THE POINT THAT THE AO DO NOT HAVE ANY RIGHT TO CONDUCT ENQUIRY. 17.4. THE ANOTHER ISSUE WHICH LEADS TO BE CONSIDER ED IS THE CHALLENGE TO THE JURISDICTION IS DETERMINABLE AT THE COMMEN CEMENT AND NOT AT THE CONCLUSION OF THE PROCEEDINGS AND THIS ASPECT HAS BEEN VERY CLEARLY NOTICED BY THE HONBLE SUPREME COURT IN TH E CASE OF M.L. SETHI VS. R.P. KAPUR REPORTED IN (1972) 2 SCC 427 IN PARA 12 AT 7 PAGES 434 & 435 WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: THE 'JURISDICTION' IS A VERBAL COAT OF MANY COLOUR S JURISDICTION ORIGINALLY SEEMS TO HAVE HAD THE MEANING WHICH LOR D REID ASCRIBED TO IT IN ANISMINIC LTD. V. FOREIGN COMPE NSATION OMISSION, NAMELY, THE ENTITLEMENT 'TO ENTER UPON THE ENQUIRY IN QUESTION'. IF THERE WAS AN ENTITLEMENT TO ENTER UPON AN ENQUIRY INTO THE QUESTION, BEEN ANY SUBSEQUENT ERROR COULD ONLY BE REGARDED A S AN ERROR WITHIN THE JURISDICTION. THE BEST KNOWN FORMULATION OF TH IS THEORY IS THAT MADE BY LORD DARMAN IN R. V. BOLTON. HE SAID THA T THE QUESTION OF JURISDICTION IS DETERMINABLE AT THE COMMENCEMENT , NOT AT THE CONCLUSION OF THE ENQUIRY. IN ANISMINIC LTD. CASE (SUPRA), LORD REID SAID: 'BUT THERE ARE MANY CASES WHERE, ALTHOUGH THE TRIB UNAL HAD JURISDICTION TO ENTER ON THE ENQUIRY IT HAS DONE O R FAILED TO DO SOMETHING IN THE COURSE OF THE ENQUIRY WHICH IS OF SUCH A NATURE THAT ITS DECISION IS A NULLITY. IT MAY HAVE GIVEN ITS DECISION IN BAD FAITH. IT MAY HAVE MADE A DECISION WHICH IT HAD NO POWER TO MAKE. IT MAY HAVE FAILED IN THE COURSE OF THE ENQUIRY TO COMPLY WITH THE REQUIREMENTS OF NATURAL JUSTICE. IT MAY IN PERFECT GOOD FAITH HAVE MISCONSTRUED THE PROVISIONS GIVING IT POWER TO AC T SO THAT IT FAILED TO DEAL WITH THE QUESTION REMITTED TO IT AND DECIDED SOME QUESTION WHICH WAS NOT REMITTED TO IT. IT MAY HAVE REFUSED TO TAK E INTO ACCOUNT SOMETHING WHICH IT WAS REQUIRED TO TAKE INTO ACCOU NT. OR IT MAY HAVE BASED ITS DECISION ON SOME MATTER WHICH, UND ER THE PROVISIONS SETTING IT UP, IT HAD NO RIGHT TO TAKE INTO ACCOUN T. I DO NOT INTEND THIS LIST TO BE EXHAUSTIVE.' IN THE SAME CASE, LORD PEARCE SAID 'LACK OF JURISDICTION MAY ARISE IN VARIOUS WAYS. T HERE MAY BE AN ABSENCE OF THOSE FORMALITIES OR. THINGS WHICH ARE CONDITIONS PRECEDENT TO THE TRIBUNAL HAVING ANY JURISDICTION TO EMBARK ON AN ,ENQUIRY. OR THE TRIBUNAL MAY AT THE END MAKE AN O RDER THAT IT HAS NO JURISDICTION TO MAKE. OR, IN THE INTERVENING STAGE WHILE ENGAGED ON A PROPER ENQUIRY, THE TRIBUNAL MAY DEPART FROM THE R ULES OF NATURAL JUSTICE; OR IT MAY ASK ITSELF THE WRONG QUESTIONS; OR IT MAY TAKE INTO ACCOUNT MATTERS WHICH IT WAS NOT DIRECTED TO TAKE INTO ACCOUNT. THEREBY IT WOULD STEP OUTSIDE ITS JURISD ICTION. IT WOULD TURN 8 ITS INQUIRY INTO SOMETHING NOT DIRECTED BY PARLIA MENT AND FAIL TO MAKE THE INQUIRY WHICH THE PARLIAMENT DID DIRECT. ANY OF THESE THINGS WOULD CAUSE ITS PURPORTED DECISION TO BE A NULLITY .' THE DICTA OF THE MAJORITY OF THE HOUSE OF LORDS IN THE ABOVE CASE WOULD SHOW THE EXTENT TO WHICH `LACK' AND 'EXCESS ' OF JURISDICTION HAVE BEEN ASSIMILATED OR, IN OTHER WORDS, THE EXT ENT TO WHICH WE HAVE MOVED AWAY FROM THE TRADITIONAL CONCEPT OF 'J URISDICTION'. THE EFFECT OF THE DICTA IN THAT CASE IS TO REDUCE THE DIFFERENCE 'BETWEEN JURISDICTIONAL ERROR AND ERROR OF LAW WIT HIN JURISDICTION ALMOST TO VANISHING POINT. THE PRACTICAL EFFECT OF THE DECISION IS THAT ANY ERROR OF LAW CAN BE RECKONED AS JURISDICTIONAL . THIS COMES PERILOUSLY CLOSE TO SAYING THAT THERE IS JURISDICT ION IT THE DECISION IS RIGHT IN LAW BUT NONE IF IT IS WRONG. ALMOST ANY MISCONSTRUCTION OF A STATUTE CAN BE REPRESENTED AS 'BASING THEIR DECI SION ON A MATTER WITH WHICH THEY HAVE NO RIGHT TO DEAL', 'IM POSING AN UNWARRANTED CONDITION' OR 'ADDRESSING THEMSELVES T O A WRONG QUESTION'. THE MAJORITY OPINION IN THE, CASE LEAVE S A COURT OR TRIBUNAL WITH VIRTUALLY NO MARGIN OF LEGAL ERROR. WHETHER THERE IS EXCESS OF JURISDICTION OR MERELY ERROR WITHIN JURI SDICTION CAN BE DETERMINED ONLY BY CONSTRUING THE EMPOWERING STATU TE, WHICH WILL, GIVE LITTLE GUIDANCE. IT IS REALLY A QUESTION OF HOW MUCH LATITUDE THE COURT IS PREPARED TO ALLOW. IN THE END IT CAN ONLY BE A VALUE JUDGMENT (SEE H.W.R. WADE, 'CONSTITUTIONAL AND ADM INISTRATIVE ASPECTS OF THE ANISMANIC CASE', LAW QUARTERLY REV IEW, VOL. 85, 1969, P. 198). WHY IS IT THAT A WRONG DECISI ON ON A QUESTION OF LIMITATION OR RES JUDICATA 'WAS TREATED AS A JURIS DICTIONAL ERROR AND LIABLE TO BE INTERFERED WITH IN REVISION ? IT IS A IT DIFFICULT TO UNDERSTAND HOW AN ERRONEOUS DECISION ON A QUESTION OF LIMITATION OR RES JUDICATA WOULD OUST THE JURISDICTION OF THE CO URT IN THE PRIMITIVE SENSE OF THE TERM AND RENDER THE DECISION OR A DE CREE EMBODYING THE DECISION A NULLITY LIABLE TO COLLATERAL ATTACK . THE REASON CAN ONLY BE THAT THE ERROR OF LAW WAS CONSIDERED AS VI TAL BY THE COURT. AND THERE IS NO YARDSTICK TO DETERMINE THE MAGNITUDE O F THE ERROR OTHER THAN THE OPINION OF THE COURT. 17.5. THE AFORESAID PRINCIPLE OF LAW WITH GREATEST RESPECT WE ARE BOUND TO FOLLOW. 17.6. EVEN AS PER RECORDS BEFORE US, IT HAS BEEN N OTICED THAT THE ASSESSEE HAS BEEN DILIGENT IN PURSUING THE REMEDY AVAILABLE THROUGH ATTENDING TO THE CASE PROCEEDINGS BEFORE THE AO AN D IT IS A SETTLED LAW 9 THAT OBJECTION REGARDING JURISDICTION BE RAISED AT THE EARLIER POSSIBLE OPPORTUNITY. THUS, THERE IS NO REASON FOR COMING F ORWARD FOR THE ASSESSEE WAITING FOR SUCH LONG FOR RAISING SAID OB JECTION (LEGAL GROUND) AFTER COMPLETION OF REASSESSMENT. ANOTHER ISSUE TO BE ADDRESSED IS THAT CHALLENGE IS NOT TO THE CONTINUA TION OF PROCEEDINGS BY THE A.O. WHEREAS THE PURPOSE OF ISSUANCE NOTICE U/S 143(2) OF THE ACT CANNOT BE LOST SIGHT AND WE ARE SUPPORTED BY THE PRINCIPLE OF LAW AS NOTICED IN THE CASE OF DHIRENDRA NATH GOARI ( I N CA NO.85 OF 1961), SUBAL CHANDRA NATH SAHA AND OTHERS ( IN CA NO.86 OF 1961) VS. SUDHIR CHANDRA GHOSH AND OTHERS (1964) 6 SCR 1001 : AIR 1964 SC 1300. IN PARA-7 WHERE THE DIFFERENCE BETWE EN A NULLITY AND AN IRREGULARITY HAS BEEN NOTICED, WHICH HAS BEE N EXTRACTED HEREINBELOW: EVEN THEN, THE QUESTION ARISES WHETHER AN ACT DON E IN BREACH OF THE MANDATORY PROVISION IS PER FORCE A NULLITY. IN AS HUTOSH SIKDAR V. BEHARI LAL KIRTANIA(1), MOOKERJEE, J., AFTER REFE RRING TO MACNAMARA ON 'NULLITY AND IRREGULAR TIES, OBSERVED : NO HARD AND FAST LINE CAN BE DRAWN BETWEEN A NULL ITY AND AN IRREGULARITY; BUT THIS MUCH IS CLEAR, THAT AN IRRE GULARITY IS A DEVIATION FROM A RULE OF LAW WHICH DOES NOT TAKE AWAY THE FOUNDATION OR AUTHORITY FOR THE PROCEEDING, OR APPLY TO ITS W HOLE OPERATION, WHEREAS A NULLITY IS A PROCEEDING THAT IS TAKEN WI THOUT ANY FOUNDATION FOR IT, OR IS SO ESSENTIALLY DEFECTIVE AS TO BE OF NO AVAIL OR EFFECT WHATEVER, OR IS VOID AND INCAPABLE OF BEING VALIDA TED.' WHETHER A PROVISION FALLS UNDER ONE CATEGORY OR TH E OTHER IS NOT EASY OF DISCERNMENT, BUT IN THE ULTIMATE ANALYSIS IT DE PENDS UPON THE NATURE, SCOPE AND OBJECT OF A PARTICULAR PROVISIO N. A WORKABLE TEST HAS BEEN LAID DOWN BY JUSTICE COLERIDGE IN HOLMES V. RUSSELL(2), WHICH READS: 'IT IS DIFFICULT SOMETIMES TO DISTING UISH BETWEEN AN IRREGULARITY AND A NULLITY; BUT THE SAFEST RULE TO DETERMINE WHAT IS AN IRREGULARITY AND WHAT IS A NULLITY IS TO SEE WHETH ER THE PARTY CAN WAIVE THE OBJECTION; IF HE CAN WAIVE IT, IT AMOUNTS TO A N IRREGULARITY; IF HE CANNOT, IT IS ANULLITY.' A WAIVER IS AN INTENTION AL RELINQUISHMENT OF A KNOWN RIGHT BUT OBVIOUSLY AN OBJECTION TO JURISDIC TION CANNOT BE WAIVED, FOR CONSENT CANNOT GIVE A COURT JURISDICTI ON WHERE THERE IS NONE. EVEN IF THERE IS INHERENT JURISDICTION, CER TAIN PROVISIONS CANNOT BE WAIVED. MAXWELL IN HIS BOOK 'ON THE (1) (1908) I.L.R. 35 CAL. 61, 72. (2) [1841] 9 DOWL. 487. 1012. 10 INTERPRETATION OF STATUTES', 11TH EDN., AT P. 375, DESCRIBES THE RULE THUS: 'ANOTHER MAXIM WHICH SANCTIONS THE NON- OBSERVANCE OF A STATUTORY PROVISION IS THAT CUILIBET LICET RENUNTIARE JURI PRO SE INTRODUCTO. EVERYONE HAS A RIGHT TO WAIVE AND TO AGREE TO WAI VE THE ADVANTAGE OF A LAW OR RULE MADE SOLELY FOR THE BENEFIT AND PROTECTION OF THE INDIVIDUAL IN HIS PRIVATE CAPACITY, WHICH MAY BE D ISPENSED WITH WITHOUT INFRINGING ANY PUBLIC RIGHT OR PUBLIC POLI CY.' THE SAME RULE IS RESTATED IN 'CRAIES ON STATUTE LAW', 6TH EDN., AT P. 269, THUS : 'AS A GENERAL RULE, THE CONDITIONS IMPOSED BY STAT UTES WHICH AUTHORISE LEGAL PROCEEDINGS ARE TREATED AS BEING INDISPENSA BLE TO GIVING THE COURT JURISDICTION. BUT IF IT APPEARS THAT THE ST ATUTORY CONDITIONS WERE INSERTED BY THE LEGISLATURE SIMPLY FOR THE S ECURITY OR BENEFIT OF THE PARTIES TO THE ACTION THEMSELVES, AND THAT NO PUBLIC INTERESTS ARE INVOLVED, SUCH CONDITIONS WILL NOT BE CONSIDER ED AS INDISPENSABLE, AND EITHER PARTY MAY WAIVE THEM WIT HOUT AFFECTING THE JURISDICTION OF THE COURT.' 17.7 HAVING NOTICED MATERIAL FACTS, WE CONSIDER IT APPROPRIATE WITH GREAT RESPECT IN ACCORDANCE WITH THE PRINCIPLE OF LAW THAT AT THE MOST THE PRESENT KIND OF GRIEVANCE IS MERELY AN ERROR WITHIN JURISDICTION, WHICH CAN BE DETERMINED ONLY BY CONSTRUING THE EMP OWERING STATUTE, WHICH WILL GIVE GUIDANCE ON THE SUBJECT AND IN THE PRESENT CASE. FURTHER WE ARE SUPPORTED BY THE DECISION OF ACIT V S. HOTEL BLUE MOON DECIDED BY THE HONBLE SUPREME COURT REPORTE D IN (2010) 321 ITR 362 DATED 2 ND FEB., 2010. THUS, THE PURPOSE IS TO GIVE OPPORTUNI TY TO THE ASSESSEE FOR BRINGING TO THE KNOWLEDGE THE PROCEEDINGS BEING UNDERTAKEN IN ACCORDANCE WITH LAW WHICH TOO HAS BE EN DONE BY THE A.O. THE RELEVANT PART OF THE DECISION IN THE CASE OF ACIT & ANR. VS. HOTEL BLUE MOON REPORTED IN (2010) 321 ITR 362 (SC ) IN PARA 15 IS REPRODUCED AS UNDER: BUT S. 143(2) ITSELF BECOMES NECESSARY ONLY WHERE I T BECOMES NECESSARY TO CHECK THE RETURN, SO THAT WHE RE BLOCK RETURN CONFORMS TO THE UNDISCLOSED INCOME INFERRED BY THE AUTHORITIES, THERE IS NO REASON, W HY THE AUTHORITIES SHOULD ISSUE NOTICE UNDER S. 143(2 ). HOWEVER, IF AN ASSESSMENT IS TO BE COMPLETED UNDER S. 143(3) R/W S. 158BC, NOTICE UNDER S. 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FROM THE DATE OF FILING OF BLOCK RETURN. OMISSION ON THE PART OF THE ASSESSIN G 11 AUTHORITY TO ISSUE NOTICE UNDER S. 143(2) CANNOT B E A PROCEDURAL IRREGULARITY AND THE SAME IS NOT CURABL E AND, THEREFORE, THE REQUIREMENT OF NOTICE UNDER S. 143(2) CANNOT BE DISPENSED WITH. THE OTHER IMPORTA NT FEATURE THAT REQUIRES TO BE NOTICED IS THAT THE S. 158BC(B) SPECIFICALLY REFERS TO SOME OF THE PROVIS IONS OF THE ACT WHICH REQUIRES TO BE FOLLOWED BY THE AO WHILE COMPLETING THE BLOCK ASSESSMENTS UNDER CHAPT ER XIV-B OF THE ACT. THIS LEGISLATION IS BY INCORPORATION. THIS SECTION EVEN SPEAKS OF SUB- SECTIONS WHICH ARE TO BE FOLLOWED BY THE AO. HAD T HE INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PROVISIONS OF CHAPTER XIV OF THE ACT, THE LEGISLAT URE WOULD HAVE OR COULD HAVE INDICATED THAT ALSO. A READING OF THE PROVISION WOULD CLEARLY INDICATE, I N OUR OPINION, IF THE AO, IF FOR ANY REASON, REPUDIA TES THE RETURN FILED BY THE ASSESSEE IN RESPONSE TO NO TICE UNDER S. 158BC(A), THE AO MUST NECESSARILY ISSUE NOTICE UNDER S. 143(2) OF THE ACT WITHIN THE TIME PRESCRIBED IN THE PROVISO TO S. 143(2) OF THE ACT. WHERE THE LEGISLATURE INTENDED TO EXCLUDE CERTAIN PROVISIONS FROM THE AMBIT OF S. 158BC(B) IT HAS DO NE SO SPECIFICALLY. THUS, WHEN S. 158BC(B) SPECIFICAL LY REFERS TO [SIC-S. 143(2)] APPLICABILITY OF THE PRO VISO THERETO CANNOT BE EXCLUDED. WE MAY ALSO NOTICE HER E ITSELF THAT THE CLARIFICATION GIVEN BY CBDT IN ITS CIRCULAR NO. 717. DT. 14TH AUG.. 1995, HAS A BINDI NG EFFECT ON THE DEPARTMENT, BUT NOT ON THE COURT. TH IS CIRCULAR CLARIFIES THE REQUIREMENT OF LAW IN RESPE CT OF SERVICE OF NOTICE UNDER SUB-S. (2) OF S. 143 OF THE ACT. ACCORDINGLY, WE CONCLUDE EVEN FOR THE PURPOSE OF CHAPTER XIV-B OF THE ACT. FOR THE DETERMINATION OF UNDISCLOSED INCOME FOR A BLOCK PERIOD UNDER THE PROVISIONS OF S. 158BC. THE PROVISIONS OF S. 142 A ND SUB-SS. (2) AND (3) OF S. 143 ARC APPLICABLE AND N O ASSESSMENT COULD BE MADE WITHOUT ISSUING NOTICE UN DER S. 143(2) OF THE ACT. HOWEVER, IT IS CONTENDED BY SRI SHEKHAR. LEARNED COUNSEL FOR THE DEPARTMENT THAT I N VIEW OF THE EXPRESSION 'SO FAR AS MAY BE' IN S. 153BC(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 LEARNED COUNSEL HAS RELIED ON THE OBSERVATION MADE BY THIS COURT IN DR. PARTAP SINGH'S CASE (SUPRA). IN THIS CASE, THE COURT HAS OBSERVED THAT S. 37(2) PROVIDE S THAT 'THE PROVISIONS OF THE CODE RELATING TO SEARC HES, SHALL SO FAR AS MAY BE, APPLY TO SEARCHES DIRECTED UNDER S. 37(2). READING THE TWO SECTIONS TOGETHER IT 12 MERELY MEANS THAT THE METHODOLOGY PRESCRIBED FOR CARRYING OUT THE SEARCH PROVIDED IN S. 165 HAS TO BE GENERALLY FOLLOWED. THE EXPRESSION 'SO FAR AS MAY BE' HAS ALWAYS BEEN CONSTRUED TO MEAN THAT THOSE PROVISIONS MAY BE GENERALLY FOLLOWED TO THE EXTENT POSSIBLE. THE LEARNED COUNSEL FOR THE RESPONDENT H AS BROUGHT TO OUR NOTICE THE OBSERVATIONS MADE BY THI S COURT IN THE CASE OF MAGANLAL V. JAISWAL INDUSTRIE S & ORS. [1989] 4 SCC 344, WHEREIN THIS COURT WHILE DEALING WITH THE SCOPE AND IMPORT OF THE EXPRESSIO N 'AS FAR AS PRACTICABLE' HAS STATED 'WITHOUT ANYTHI NG MORE THE EXPRESSION 'AS FAR AS POSSIBLE' WILL MEAN THAT THE MANNER PROVIDED IN THE CODE FOR ATTACHMEN T OR SALE OF PROPERTY IN EXECUTION OF A DECREE SHALL BE APPLICABLE IN ITS ENTIRETY EXCEPT SUCH PROVISION THEREIN WHICH MAY NOT BE PRACTICABLE TO BE APPLIED .' 18 WE MAY REFER TO THE JUDGMENT OF HONBLE JURISDI CTIONAL HIGH COURT OF PUNJAB & HARYANA WHICH IS BINDING IN NAT URE TITLED AS CIT VS RAM NARAIN BANSAL REPORTED IN ITA NO.814 OF 201 0 DATED 13 TH JULY, 213 REPORTED IN 202 TAXMAN 213 (PLACED ON RE CORD) PERTAINING TO ASSESSMENT YEAR 2002-03 WHEREIN THE QUESTION FA LLING CONSIDERATION IS THE SAME AS RAISED BEFORE THIS BENCH IN THE PRE SENT APPEAL, WHICH IS EXTRACTED HEREINBELOW: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE TRIBUNAL WAS RIGHT IN LAW IN CONCURRI NG WITH THE FINDING OF CIT (A) IN HOLDING THE ASSESSMENT BAD IN LAW, MADE PURSUANT TO THE ISSUE OF NOTICE U/S 148 WITHOU T APPRECIATING THAT NO PREJUDICE WAS CAUSED TO THE ASSESSEE BY NON-ISS UANCE OF NOTICE U/S 143(2), PARTICULARLY, W HEN THE ASSESSEE WAS PARTICIPATING IN THE ASSESSMENT PROCEEDING WITHOUT OBJECTING TO THE ASSESSMENT PROCEEDIN GS ON THIS ACCOUNT AT THE ASSESSMENT STAGE? 19. THE HONBLE HIGH COURT NOTICING THE PROVISIONS OF LAW HAS ANSWERED THE QUESTION AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE WITH THE DIRECTION OF REMANDING THE MATTER TO THE TRIBUNAL FOR DECISION ON MERIT AFRESH IN ACCORDANCE WITH LAW. T HE RELEVANT PORTION OF THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HI GH COURT IN THE CASE OF CIT VS. RAM NARAIN BANSAL (SUPRA) IS REPRO DUCED HEREINBELOW FOR THE SAKE OF CONVENIENCE AS UNDER: 13 9. LEARNED COUNSEL FOR THE REVENUE SUBMITTED T HAT NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE AS SESSEE WHICH WAS DULY SERVED. IN PURSUANCE TO THE SAID NOTICE, THE ASSESSEE APPEARED BEFORE THE ASSESSING AUTHORITY AND PARTICIPATED IN THE RE-ASSESSMENT PROCEEDINGS ON 30.11.2007, 6.12.2007, 12.1 2.2007, 13.12.2007, 18.12.2007, 24.12.2007, 27.12.2007, 28.12.200 7 AND 31.12.2007 AND ALSO CROSS-EXAMINED THE WITNESSES WHO WERE SUMMONED AND THEIR STATEMENTS WERE RECORDED. THE COUNSEL DRE W SUPPORT FROM A JUDGMENT OF THE KERALA HIGH COURT IN K.J. THOMA S VS. CIT (2008) 301 ITR 301 TO SUBMIT THAT NON-SERVICE OF NOTICE UNDER SECTION 143 (2) OF THE ACT WAS NOT FATAL TO RE -ASSESSMENT PROCEEDINGS. REFERENCE WAS MADE TO SECTION 292 OF THE ACT AND A CCORDING TO THE COUNSEL THE SAID PROVISIONS WERE A PPLICABLE TO ALL PENDING PROCEEDINGS. RELIANCE WAS ALSO PLACED ON A JUDGMENT OF THIS COURT IN COMMISSIONER OF INCOME TAX, BATHINDA V. M/S PANCHVATI MOTORS (P) LTD. (ITA 292 OF 2008) DECID ED ON 3.5.2011. 10. WE FIND CONSIDERABLE FORCE I N THE SUBMISSION OF THE LEARNED COUNSEL. THE KERALA HIGH COURT IN K.J.THOMASS CASE (SUPRA), WHILE CONSIDERING SIMILAR ISSUE, HAD HELD AS UNDER: THE PROCEDURE UNDER S. 143(2) OF THE ACT IS TO ENSURE THAT AN ADVERSE ORDER IS IS SUED ONLY AFTER PROPER OPPORTUNITY IS GIVEN TO THE ASSESSEE. IN T HIS CASE, IT IS CONCEDED THAT THE ASSESSEE GOT OPPORT UNITY TO FILE REPLY AND DETAILED REPLY WAS IN FACT FILED AND REASSESSMENT NOTICE AND FINAL ORDER WERE ALSO ISS UED WITHIN THE TIME- LIMIT PRESCRIBED UNDER THE ACT. 11. FURTHER, THIS COURT IN M/S PANCH WATI MOTOR (P) LTD.S CASE (SUPRA) WHILE EXAMINING THE SCOPE OF SECTION 292 BBOF THE ACT AND ITS APPLICABILITY HAD NOTED AS UNDER: SECTION 292BB OF THE ACT WAS INSERT ED BY FINANCE ACT, 2008 W.E.F. 1.4.2008. IT READS THUS:- 292BB: WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDING OR CO-OPERATED IN ANY I NQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THE ACT, WHIC H IS REQUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED U PON HIM IN TIME IN 14 ACCORDANCE WITH THE PROVISIONS OF THIS ACT A ND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKING ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UNDER THIS ACT THAT THE NOTICE WA S A) NOT SERVED UPON HIM; OR B) NOT SERVED UPON HIM IN TI ME; OR C) SERVED UPON HIM IN AN IMP ROPER MANNER. PROVIDED THAT NOTHING CONTAINE D IN THIS SECTION SHALL APPLY WHERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE THE COMPLETION OF SUCH ASSESSMENT OR REASSESSMENT. A PRESUMPTION HAS BEEN R AISED UNDER THE SAID PROVISION RELATING TO SERVICE OF NOTI CE UPON THE ASSESSEE IN RESPECT OF ASSESSMENT OR REASSES SMENT PROCEEDINGS. ACCORDING TO THIS PROVISION, WHERE AN ASSESSEE APPEARS IN ANY PROCEEDINGS OR COOPERATES IN ANY ENQUIRY RELATING TO ASSESSMENT OR REASSESSMENT PROC EEDINGS, IT SHALL BE PRESUMED THAT THE ASSESSEE HAS BEEN VALIDLY SERVED AND IT SHALL NOT BE OPEN TO THE ASSE SSEE TO OBJECT THAT THE NOTICE WAS NOT SERVED UPON HIM OR WA S NOT SERVED IN TIME OR WAS SERVED UPON HIM IN AN IMPROPER MANNER. HOWEVER, AN EXCEPTION TO THE AFORESA ID PRESUMPTION HAS BEEN MADE IN A CASE WHERE SUCH OBJECTION HAS BEEN RAISED BEFORE COMPLETION OF ASSESSMENT OR REASSESSMENT. THE PROVISION HAS BEEN MADE EFFECTIVE FROM 1.4.2008 AND THEREFORE, SHAL L APPLY TO ALL PENDING PROCEEDINGS. THE CENTRAL BOARD OF DIRECT TAXES ISSUED THE CIRCULAR NO.1 OF 2009 DATED 27 MARCH, 2009 (2009) 310 ITR (ST.) 42 GIVING EXPLANATORY NOTES ON THE PROVISIONS RELATING TO DIRECT TAXES CONTAINED IN FINANCE ACT, 2008. 15 CLAUSE 42.7 (AT PAGE 86 OF THE REPO RT) IS RELEVANT WHICH RELATES TO APPLICABILITY OF THIS PRO VISION AND READS THUS: 42.7 APPLICABILITY THIS AMENDMENT HAS BEEN MADE APPLICABLE WI TH EFFECT FROM 1ST APRIL, 2008. THIS MEANS THAT THE P ROVISION OF NEW-SECTION 292 SHALL APPLY IN ALL PROCEEDINGS WHICH ARE PENDING ON 1ST APRIL, 2008. 12. IT IS NOT DISPUTED THAT THE ASSESSEE HAD APPEARED BEFORE THE ASSESSING OFFICER ON VARIOUS DATES AND P ARTICIPATED IN THE RE- ASSESSMENT PROCEEDINGS BEFORE THE FINALIZATIO N AND NO OBJECTION REGARDING ISSUANCE AND SERVICE OF NOTICE UNDER SEC TION 143(2) OF THE ACT WAS RAISED BEFORE THE ASSESSING OFFICER. THE CIT(A) AND THE TRIBUNAL WERE, THUS, IN ERROR IN NULLI FYING THE RE-ASSESSMENT PROCEEDINGS AND DECLARING THE RE-ASSESSMENT ORDER TO BE INVALID. 13. IN VIEW OF THE ABOVE, THE SUBSTANTI AL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. CONSEQUENTLY, THE MATTER IS REMANDED TO THE TRI BUNAL FOR DECISION AFRESH ON MERITS IN ACCORDANCE WITH LAW. 20. ACCORDINGLY, UNDER THE AFORESAID FACTS AND CIR CUMSTANCES OF THE CASE AND THE DECISIONS OF THE HONBLE COURTS REFER RED TO HEREINABOVE, WE ARE BOUND TO FOLLOW THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAM NARAIN BANSA L (SUPRA), WHICH IS DIRECTLY ON THE QUESTION INVOLVED IN THE PRESEN T CASE AND THE DECISIONS AS RELIED UPON BY THE LD. COUNSEL FOR TH E ASSESSEE ARE NOT DIRECTLY ON THE ISSUE, DO NOT SUPPORT THE CASE OF THE ASSESSEE. THUS, IN VIEW OF THE ABOVE DISCUSSIONS AND OUR FINDINGS HE REINABOVE, WE DISMISS ADDITIONAL GROUND NO.2 RAISED BY THE ASSES SEE 9. IN THE PRESENT CASE ALSO, THE ASSESSEE HAS BEEN ATTENDING PROCEEDINGS FROM TIME TO TIME AND HAS PARTICIPATED IN THE ASSES SMENT PROCEEDINGS, WHICH IS NOT UNDER DISPUTE BEFORE THE ASSESSMENT ORDER WH ICH WAS PASSED ON 23.12.2011. ACCORDINGLY, UNDER THE AFORESAID FACTS AND CIRCUMSTANCES OF THE 16 CASE AND OUR DECISION IN THE CASE OF SH. GURKIRPAL SINGH, JALANDHAR VS. I.T.O. WARD 1(1), JALANDHAR (SUPRA) , WHICH IS DIRE CTLY ON THE QUESTION INVOLVED IN THE PRESENT CASE. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS RIGHTLY REJECTED THE GROUNDS OF THE ASSESSEE. ACCORDINGLY, GROUNDS NO. 1 & 2 OF THE ASSESSEE ARE DISMISSED. 10. AS REGARDS GROUNDS NO. 3 TO 5, THE BRIEF FACTS ARE THAT THE AO OBSERVED THAT THERE ARE UNEXPLAINED DEPOSITS IN THE BANK ACC OUNT OF THE ASSESSEE. ON RECEIVING INFORMATION FROM DIT(INV.), THE ASSESSEE SUBMITTED EXPLANATION THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME UN DER PRESUMPTIVE SCHEME U/S 44AF WHERE THE PROFIT ON THE SALES OF RS.6,85,5 69/- HAS BEEN DECLARED @ 8%. THE AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND OBSERVED THAT THE ASSESSEE HAS NOT DEPOSITED THE A MOUNT OF RS.23,85,260/- IN BOTH THE BANK ACCOUNTS OUT OF SALES FROM ICE CREAM AND THEREFORE, THE SAME WAS TREATED AS INCOME OF THE ASSESSEE U/S 69A OF TH E ACT. 10.1. THE LD. CIT(A), CONFIRMED THE ACTION OF THE A SSESSING OFFICER. 10.2 THE LD. COUNSEL FOR THE ASSESSEE, ARGUED THAT THE ASSESSEE HAS PRODUCED THE BOOKS OF ACCOUNT BEFORE THE A.O. AND A LSO THE BALANCE-SHEET AND PROFIT & LOSS ACCOUNT, WHICH HAS BEEN IGNORED BY THE AO. THOUGH UNDER SECTION 44AF, THE ASSESSEE IS NOT REQUIRED T O MAINTAIN THE BOOKS OF ACCOUNT. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS DECLARED NET PROFIT RATE OF 8% ON THE SALES MADE BY THE ASSESSEE INSTEAD OF 5%. THE CREDITS IN THE 17 BANK ACCOUNT HAVE BEEN EXPLAINED. HE MADE SUBMISSIO NS BEFORE THE LD. CIT(A), RELEVANT PART OF THE SAME IS REPRODUCED HER EINBELOW FOR THE SAKE OF CONVENIENCE: 3.3 ADDITION ON ACCOUNT OF UNDISCLOSED INCOME RS. 23,85,260/- (I) THE ASSESSEE IS IN THE BUSINESS OF PURCHASE A ND SALE OF ICE CREAM AT GANDHINAGAR, JAMMU. HIS BROTHER SH. RAJ KUMAR WAS IN SIMILAR BUSINESS WITH SHOP OF KC THEATRE, JAMMU. B OTH THE BROTHERS WERE LIVING TOGETHER. IN THE ABSENCE OF ONE BROTHE R THE BUSINESS WAS LOOKED AFTER BY THE OTHER BROTHER. THEY HAVE BEEN IN THIS TRADE FOR OVER THIRTY YEARS. IT WAS ALSO SUBMITTED TO THE LEARNED A.O. THAT SH. RAJ KUMAR WAS NOT LITERATE AND THEREFORE HIS ACCOUNTS AND SOME BUSINESS FUNCTIONS WERE BEING LOOKED AFTER BY THE ASSESSEE. THE ASSESSEE WISH TO SUBMIT THAT THROUGH THERE WERE TWO SHOPS AND BO TH WERE FILING AN PAYING INCOME TAX INDEPENDENTLY, BUT FOR PURPOSES OF FINANCE AND MANAGEMENT THEY WERE ONE. THE OTHER BROTHER SH. KU MAR RAJ HAD NO BANK ACCOUNT. IT IS SUBMITTED THAT BOTH THE FAMILI ES WERE LIVING JOINTLY AND HAD COMMON KITCHEN. (II) THAT THE ASSESSEE FILED HIS RETURN OF INCOME ON 24.11.2004, UNDER THE PROVISIONS OF SECTION 44AF OF THE INCOME TAX ACT. (III & IV) (V) THAT THOUGH THE RETURN WAS FILED UNDER SECTIO N 44AF OF THE ACT, BUT DURING THE ASSESSMENT PROCEEDINGS COPIES OF BA LANCE SHEET FOR THE YEAR ENDED 31.03.2003 WAS FILED. IN THE SAID BALAN CE SHEET FULL DETAILS OF THE SOURCE OF DEPOSIT IN BANK WERE REFLECTED. (VI) THAT THE PROVISIONS OF SECTION 69A STATES WHE RE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY, OR OTHER VALUE ABLE ARTICLE AND SUCH MO NEY, BULLION, JEWELLERY, OR OTHER VALUE ABLE ARTICLE IS NOT RECO RDED IN THE BOOKS OF ACCOUNTS. THUS THE ASSESSEE SUBMITS THAT AMOUNTS DEPOSITED IN THE BANK ACCOUNT ARE NEITHER MONEY NOR BULLION, JEWELL ERY, OR OTHER VALUE ABLE ARTICLE AND THEREFORE APPLICATION OF THE PROV ISIONS OF SECTION 69A ARE NOT APPLICABLE AS IT IS NEITHER OF THESE. THE TERM MONEY IS NOT DEFINED IN THE INCOME TAX ACT, AS PER OXFORD DICTI ONARY MONEY HAS 18 BEEN DEFINED AS A CURRENT MEDIUM OF EXCHANGE IN TH E FORM OF COINS AND BANK NOTES COLLECTIVELY. THEREFORE AMOUNTS LY ING AS DEPOSIT IN BANK CANNOT BE TERMED AS MONEY FOR PURPOSES OF S ECTION 69A OF THE ACT. (VII) THAT THE PROVISIONS HAVE BEEN CLARIFIED BY CBDT IN THE CIRCULAR NO. 20-D(XXVI) DATED 7.7.1964. IN PARA 87 IT IS ST ATED THAT THE CONDITION PRECEDENT TO APPLY PROVISION OF SECTION 69A IS THAT THE SAME ARE NOT RECORDED IN BOOKS OF ACCOUNTS BANKS MAINTA INED BY THE ASSESSEE. FURTHER IT IS STATED THAT IT IS APPLICAB LE WHERE THE ASSESSEE IS FOUND TO BE OWNER OF MONEY BESIDES OTHER VALUE ABLES. A BARE READING OF THE PROVISION AND THE BOARD CIRCULAR SU GGEST THAT THE PROVISION IS APPLICABLE ONLY IN CASE OF SEARCH OF SURVEY AND NOT IN ORDINARY COURSE. (VIII) THE ASSESSEE FURTHER SUBMITS THAT THE AMOU NT IN QUESTION HAS ALREADY BEEN REFLECTED IN THE BOOKS MAINTAINED AND BALANCE SHEET SUBMITTED TO THE LEARNED A.O. BOOKS OF ACCOUNTS WE RE PRODUCED AT THE TIME OF HEARING. THE LEARNED A.O. HAS COMMENTED TH AT POSSIBILITY OF PREPARING BOOKS OF ACCOUNTS AFTER ISSUE OF NOTICE U/S 148 CANNOT BE DENIED. THIS STATEMENT IS WITHOUT ANY MATERIAL ON RECORD. THE LEARNED A.O. SHOULD HAVE BROUGHT SOME MATERIAL FOR COMING TO THIS CONCLUSION. IN THE ABSENCE OF ANY MATERIAL THIS ST ATEMENT IS DEVOID OF ANY LOGIC. ONCE THE BALANCE SHEET IS FILED AND CON SIDERED BY THE LEARNED A.O. AND THE BANK ACCOUNT ARE DULY REFLECT ED THEREIN THE PRINCIPAL CONDITION THAT THE SAID MONEYS ETC. ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS IS NEGATED AND PROVISIONS OF SE CTION 69A NOT APPLICABLE. IT IS SUBMITTED THAT THE LEARNED A.O. HAS NOT REJECTED THE BOOKS OF ACCOUNTS AND PROCEEDED FURTHER TO MAKE AS SESSMENT U/S 143(3). (IX) IT IS SUBMITTED THAT THE BOOKS OF ACCOUNTS AR E RELEVANT AND CONSTITUTE VERY GOOD PIECE OF EVIDENCE WITH REGARD TO THEIR CONTENTS. THE ACCOUNTS MAY BE PRESENTED AT ANY TIME AND IN T HE INSTANT CASE TO JUSTIFY THE CREDITS IN THE BANK THE BOOKS WERE PRO DUCED AND BALANCE SHEET FILED. THERE IS NORMALLY A PRESUMPTION THAT THE ACCOUNTS AND THE BALANCE SHEET PREPARED FROM THESE ACCOUNTS ARE BON A FIDE. THERE IS ALSO A PRESUMPTION THAT THE ENTRIES THEREIN ARE AL SO CORRECT AND BONA FIDE. THE BONA FIDE IS ALSO ESTABLISHED AS THE LEA RNED A.O. HAS NOT REJECTED THE BALANCE SHEET. THAT THE BALANCE SHEET FURNISHED MAKES IT CLEAR THAT THE ASSESSEE HAD OPENING CAPITAL OF RS. 18,52,709/- AS ON 1.4.2003 CONSISTING OF CASH RS. 10,59,510/- AND SU NDRY DEBTORS RS. 19 6,27,184/- AND OTHER ASSETS. MAJOR CREDIT BALANCES AS ON 31.03.2004 WERE DULY CONFIRMED BY THE RESPECTIVE CREDITORS, T HE LEARNED A.O. HAS NOT MADE ANY COMMENTS THEREON, SUGGESTING ACCEPTIN G THE SAME. THE DEPOSITS IN THE BANK ACCOUNTS WERE MADE OUT OF THE OPENING CAPITAL REPRESENTED BY CASH AND RECOVERABLE. ON THE RECOVE RY OF THE OUTSTANDINGS AND THE CASH LYING WITH THE ASSESSEE, DEPOSITS WERE MADE IN THE BANK. (X) THAT DURING THE ASSESSMENT PROCEEDINGS THE AS SESSEE HAD SUBMITTED HE AND HIS BROTHER WERE CONDUCTING THE B USINESS OF ICE CREAM AND DAILY SALES OF THE BROTHERS WERE PARTLY USED FOR BUSINESS AND PARTLY DEPOSITED IN THE BANK ACCOUNT OF THE ASSES SEE. XI) IT WAS ALSO SUBMITTED THAT THE ASSESSEE WAS KE EPING CONSIDERABLE AMOUNT OF CASH IN HIS CHEST WHICH HAD BEEN ACCUMUL ATED FROM EARLIER YEARS AND ALSO OUT OF CAPITAL, LIABILITIES AND OT HER CREDITS. THE LEANER A.O. HAS NOT AT ALL CONSIDERED THE SAID ARGUMENT A ND HAS NOT REJECTED THE SAME. SH. RAJ KUMAR HAD NO BANK ACCOUNT THEREF ORE ALL HIS SALES WERE BEING DEPOSITED IN THE BANK ACCOUNT OF THE AS SESSEE. (XII) THAT AGAIN ON 21.12.2011 DETAILED SUBMISSIO N WERE MADE BY THE ASSESSEE. THE LEARNED A.O. HAS INCORPORATED THE SAID SUBMISSIONS IN HIS ORDERS BUT HAS NOT MADE ANY COM MENTS THEREON AND HAS NOT REJECTED THE SAID SUBMISSION. (XIII) THAT THE ASSESSEE TO BUTTRESS HIS SUBMISSI ON FILED AN AFFIDAVIT, SUCH EVIDENCE IN THE SHAPE OF AFFIDAVIT IS A LEGAL EVIDENCE, WHICH ALSO REMAINED UNCHALLENGED AND THUS BECAME F INAL. THE LEARNED A.O. SHOULD HAVE RELIED AND ACTED UPON THE SAID AF FIDAVIT. (XIV) IN TOLA RAM DAGA VS. CIT 59 ITR 632 (AASAM) , IT WAS HELD THAT GENUINENESS OF THE ACCOUNTS NOT C HALLENGED ACCOUNTS ARE PRIMA FACIE PROOF OF CORRECTNESS OF ENTRIES. (XV) CIT VS. PK NOORHAHAN 237 ITR 570 (SC). THE HON'BLE COURT HAS HELD THAT ADDITION U/S 69 IS DIS CRETIONARY AND FURTHER HELD THAT IT IS NOT POSSIBLE FOR A YOUNG LADY TO E ARN AN AMOUNT IN A DECADE AND THAT SOURCE OF INVESTMENT COULD NOT TRE ATED AS INCOME OF THE ASSESSEE. 16. IT IS THEREFORE PRAYED THAT THE ADDITION MADE BY THE LEARNED A.O. IS NOT WARRANTED AND IS AGAINST FACTS AND LAW ON THE MATTER THEREFORE THE ORDER OR REASSESSMENT DOES NOT JUSTIFY ADDITION OF RS. 23,85,260/- 20 3.4 IN THE LIGHT OF THE AFORESAID, THE ASSESSEE S UBMITS THAT: A. NOTICE U/S 143(2) NOT ISSUE. B. NOTICE U/S 147/148 NOT PROPERLY APPROVED. C. PROVISIONS OF SECTION 69A NOT APPLICABLE AS MON EY NOT FOUND AND THE AMOUNTS IN QUESTION ARE PROPERLY RECO RDED IN THE BOOKS OF ACCOUNTS. HENCE, THE ASSESSEE PRAYS THAT THE ASSESSMENT BE AN NULLED AND IN THE ALTERNATIVE ADDITION OF RS. 23,85,260/- BE DELETED. THE ASSESSEE SHALL BE PLEASED TO FURNISH ANY OTHER INFORMATION THAT MAY BE REQUIRED IN THIS REGARD. 10.3. THE LD. DR, ON THE OTHER HAND, RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE I S NOT REQUIRED TO MAINTAIN THE BOOKS OF ACCOUNT U/S 44AF OF THE ACT, IF HE DEC LARES INCOME EQUAL TO 5% OF THE TOTAL TURNOVER OR SOME HIGHER THAN THE INCOM E DECLARED IN HIS RETURN OF INCOME, WHICH SHALL BE DEEMED TO BE THE PROFITS & GAINS OF SUCH BUSINESS CHARGEABLE TO TAX UNDER THE HEAD PROFITS & GAINS O F BUSINESS OR PROFESSION. THE TURNOVER OF THE ASSESSEE IS LESS THAN RS 40 LAC S DURING THE IMPUGNED YEAR IS NOT UNDER DISPUTE. THE ASSESSEE HAS DECLARE D TURNOVER OF RS.6,85,569/- AS A MATTER OF FACT IS UNDER DISPUTE. THE ASSESSEE HAS DECLARED NET PROFIT RATE OF 8% ON THE DECLARED TURNOVER WHI CH IS OVER AND ABOVE 5% AS REQUIRED UNDER SECTION 44AF OF THE ACT. AT THE S AME TIME, THERE IS NO BAR IF THE ASSESSEE MAINTAINS BOOKS OF ACCOUNT, IN CAS E THE TURNOVER IS LESS THAN RS.40 LACS AND THE ASSESSEE DECLARED 5% N.P. RATE O R MORE. THIS IS EXACTLY 21 THE SITUATION IN THE PRESENT CASE, AS THE ASSESSEE IS HAVING TURNOVER OF LESS THAN RS.40 LACS AND HAVE DECLARED N.P. RATE OF MOR E THAN 5%. AT THE SAME TIME, THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT AND HAS SUBMITTED THE BOOKS OF ACCOUNT AND PROFIT & LOSS A/C BEFORE THE A .O. THE EXPLANATION HAS BEEN SUBMITTED BEFORE THE A.O. AS WELL AS BEFORE TH E LD. CIT(A) WITH REGARD TO CASH CREDITS IN THE BANK ACCOUNT. THE AO AS WELL AS THE LD. CIT(A) HAS DOUBTED THE SAME AND HAVE REJECTED THE EXPLANATIO N GIVEN BY THE ASSESSEE AND THE BOOKS OF ACCOUNT PRODUCED BY THE ASSESSEE W ITHOUT ANY COGENT REASON OR WITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD. THE EXPLANATION GIVEN BY THE ASSESSEE HAS BEEN REPRODUCED BY THE LD . CIT(A) AT PAGES 3 TO 6 OF HIS ORDER AND ALSO HEREINABOVE. ON PERUSAL OF TH E FACTS AND CIRCUMSTANCES OF THE CASE AND THE EXPLANATION SUBMITTED BY THE AS SESSEE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS SUBMITTED THE EXPLANATION WIT H REGARD TO DEPOSITS IN THE BANK ACCOUNT AND THE SALES DECLARED IN THE RETURN O F INCOME, WHICH IS BACKED BY THE BALANCE SHEET AND PROFIT & LOSS ACCOUNT IN W HICH NO DEFECT HAS BEEN POINTED OUT. THE BOOKS OF ACCOUNT HAVE NOT BEEN REJ ECTED AND NO PROVISION OF SECTION 145(3) HAS BEEN INVOKED. IN THE FACTS AN D CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. AND ACCORDINGLY THE AO IS DIRECTED TO DELETE THE ADDITI ON SO MADE BY HIM. THUS, GROUNDS NO. 3, 4 & 5 OF THE ASSESSEE ARE ALLOWED. 22 12. GROUND NO.6 IS GENERAL IN NATURE. THEREFORE, DO ES NOT REQUIRE ANY ADJUDICATION. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.449(ASR)/2012 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH SEPT., 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 TH SEPT., 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. PREM NATH, JAMMU 2. THE ITO WARD 1(2), JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.