Sri. S.V. Srinivasa Babu, Bangalore V. DCIT, Bangalore

ITSSA 15/BANG/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0296 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-09-2014
• Assessment Year: misc
• Appeal Filed On: 19-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRISCILLA SINGSIT CITIIIDR
• Keywords: Reasonable cause; Block assessment; Right to appeal; Retraction; Documents seized
• Section: 133A; 145; 132; 144; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IT(SS)A NO.15/BANG/2012 ASSESSMENT YEAR : BLOCK PERIOD 1.4.1988 TO 27.3.199 9 SHRI S.V. SRINIVASA BABU, # 7, FIRST FLOOR, 32 ND CROSS, KILARI ROAD, BANGALORE 560 053. PAN: AGHPS 4145B VS. THE DEPUTY COMMISSIONER OF INCOME TAX (INVESTIGATION), CIRCLE 2(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI S. PARTHASARATHI, ADVOCATE RESPONDENT BY : MS. PRISCILLA SINGSIT, CIT-III(DR) DATE OF HEARING : 10.09.2014 DATE OF PRONOUNCEMENT : 19.09.2014 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER DATED 11.10.2012 OF THE CIT(APPEALS)-V, BANGALORE, RELATI NG TO THE BLOCK PERIOD 1.4.1988 TO 27.3.1999. 2. THE ASSESSEE IS AN INDIVIDUAL. ON 4.6.1999, THE INSPECTOR OF INCOME-TAX VISITED THE BUSINESS PREMISES OF THE ASS ESSEE AND TOOK IT(SS)A NO.15/BANG/2012 PAGE 2 OF 14 POSSESSION OF 6 FILES. THEREAFTER, ON 22.3.1999, A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF THE A SSESSEE. IN THE COURSE OF SURVEY, SUMMONS WERE ISSUED TO THE FOLLOW ING PERSONS AND THEIR STATEMENTS RECORDED:- 1. S.V. SRINIVASA BABU 2. B.S. KRISHNAMURTHY 3. G.V. SRINIVASAMURTHY 4. S.V. NARAYANAMURTHY 5. S.V. SHASHIKALA 6. B.V. VENKATESH 7. S.V. RATNAIAH 8. P.R. RAMESH 9. S.V. SRINIVASA BABU (HUF) 3. ON 27.3.1999, A SEARCH U/S. 132 OF THE ACT WAS C ONDUCTED IN THE CASE OF THE ASSESSEE. THE VERY SAME BOOKS AND DOCU MENTS WHICH WERE SCRUTINIZED AT THE TIME OF SURVEY WHICH WERE KEPT I N ALMIRAH WERE SEIZED. ON 12.5.1999, THE ASSESSEE FILED AN AFFIDAVIT DECLA RING UNDISCLOSED INCOME FOR THE BLOCK PERIOD OF RS.40 LAKHS. IT IS THE PLE A OF THE ASSESSEE THAT HE WAS FORCED TO GIVE AFFIDAVIT BY THE DDI CARRYING OU T THE SEARCH. ON 4.12.1999, THE ASSESSEES STATEMENT WAS RECORDED BY DCIT (INV.), WARD 2(1). THEREAFTER, ON 12.1.2000, THE ASSESSEE FILED A RETURN OF INCOME IN WHICH HE DECLARED A SUM OF RS.40 LAKHS AS UNDISCLOS ED INCOME. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILE D A LETTER DATED 29.4.1999 IN WHICH HE CLAIMED THAT THE AMOUNT OF RS .40 LAKHS OFFERED TO TAX WAS NOT HIS INCOME. THE ASSESSEE SUBMITTED THAT TR ANSACTIONS REPRESENTED IT(SS)A NO.15/BANG/2012 PAGE 3 OF 14 BY DOCUMENTS FOUND IN THE COURSE OF SEARCH IN WHICH HIS NAME APPEARS, WAS ONLY FOR AND ON BEHALF OF THE FOLLOWING PERSONS :- S.V. SRINIVASA BABU 3,00,000 S.V. SRINIVASA BABU (HUF) 6,00,000 S.V. RATHNAIAH 6,50,000 B.V. VENKATESH 3,00,000 G.V. SRINIVAS 1,00,000 K. THYAGARAJ 7,00,000 B.S. KRISHNAMURTHY 4,00,000 S.V. NARAYANA 2,50,000 S.V. SHASHIKALA 7,00,000 4. THE ASSESSEE SUBMITTED THAT INCOME SHOULD ACCORD INGLY BE BROUGHT TO TAX IN THE HANDS OF THE AFORESAID PERSONS AND NO T IN THE ASSESSEES HANDS. 5. THE AO, HOWEVER, COMPLETED THE ASSESSMENT OBSERV ING THAT THE ASSESSEE HAS BEEN CHANGING HIS STAND OFTEN AND THER E IS NO BASIS FOR THE STAND TAKEN BY THE ASSESSEE IN THE COURSE OF ASSESS MENT PROCEEDINGS. ACCORDINGLY, THE AO BROUGHT TO TAX THE SUM OF RS.40 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD. 6. AGAINST THE AFORESAID ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS). THERE WAS A DELAY IN FILING THE APPE AL BEFORE THE CIT(A). THE CIT(A) REFUSED TO CONDONE THE DELAY IN FLING TH E APPEAL. THE TRIBUNAL, HOWEVER, HELD THAT THERE WAS A REASONABLE CAUSE FOR THE DELAY IN FILING THE APPEAL AND CONDONED THE DELAY IN FILING THE APPEAL BY ITS ORDER DATED IT(SS)A NO.15/BANG/2012 PAGE 4 OF 14 27.2.2004. THE TRIBUNAL REMANDED THE QUESTION OF D ETERMINATION OF ASSESSEES APPEAL ON MERITS BY THE CIT(A). 7. PURSUANT TO THE ORDER OF THE TRIBUNAL, THE CIT(A ) TOOK UP THE APPEAL OF THE ASSESSEE FOR CONSIDERATION. THE CIT(A) NOTI CED THAT THE ASSESSEE HAD NOT PAID TAXES DUE ON THE INCOME RETURNED BY HI M. UNDER THE PROVISIONS OF SECTION 249(4)(A) OF THE ACT, THE APP EAL FILED BEFORE THE CIT(A) SHALL NOT BE ADMITTED, UNLESS AT THE TIME OF FILING OF APPEAL, IN A CASE WHERE THE ASSESSEE HAS FILED RETURN OF INCOME, THE ASSESS EE HAS PAID TAX DUE ON THE INCOME RETURNED BY HIM. SINCE THE ASSESSEE DID NOT PAY THE TAX DUE ON THE INCOME OF RS.40 LAKHS DECLARED BY HIM IN THE RE TURN OF INCOME, THE CIT(A) REFUSED TO ADMIT THE APPEAL OF THE ASSESSEE FOR ADJUDICATION. 8. THE ASSESSEE FILED AN APPEAL AGAINST THE ORDER O F THE CIT(A) AND THIS TRIBUNAL IN IT(SS)A NO.21/BANG/2009 BY ORDER D ATED 16.9.2011, HELD THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO E XPLAIN AS TO HOW THE APPEAL OF THE ASSESSEE IS TO BE ENTERTAINED AND THE REFORE SET ASIDE THE ORDER OF CIT(A) AND REMANDED IT TO CIT(A) FRESH CON SIDERATION ON THE QUESTION OF ADMITTING THE APPEAL. 9. IN THE MEAN TIME, THE ASSESSEE ALSO FILED A WRIT PETITION BEFORE THE HONBLE HIGH COURT OF KARNATAKA AND BY JUDGMENT DAT ED 13.6.2012, THE HONBLE HIGH COURT DIRECTED THE ASSESSEE TO APPROAC H THE CIT(APPEALS) AND SUBSTANTIATE HIS CONTENTION WITH REGARD TO MAIN TAINABILITY OF THE APPEAL IN THE LIGHT OF NON-PAYMENT OF ADMITTED TAXES. IT(SS)A NO.15/BANG/2012 PAGE 5 OF 14 10. PURSUANT TO THE ORDERS OF ITAT AND THE HONBLE HIGH COURT OF KARNATAKA, THE CIT(A) TOOK UP THE ISSUE OF ADMITTIN G THE APPEAL FOR CONSIDERATION IN THE LIGHT OF THE PROVISIONS OF SEC TION 249(4)(A) OF THE ACT. 11. THE SUBMISSION OF THE ASSESSEE BEFORE THE CIT(A ) IN THIS REGARD WERE AS FOLLOWS:- 11.1 THE PROCEEDINGS U/S. 132 OF THE ACT WERE INVAL ID BECAUSE PRIOR TO THE SEARCH, THERE WAS A SURVEY U/S. 133A OF THE ACT ON 22.3.1999 AND CERTAIN FILES WERE SEIZED. ON 27.3.1999, SEARCH WA S CONDUCTED U/S. 132 OF THE ACT AND DOCUMENTS SEIZED AT THE TIME OF SURVEY WERE BROUGHT BACK TO THE ASSESSEES PREMISES, KEPT IN THE ALMIRAH AND SE ALED. ON 12.5.1999, THE ASSESSEE WAS FORCED BY THE DDIT, BANGALORE TO D ECLARE AN INCOME OF RS.40 LAKHS THROUGH AFFIDAVIT. THE STATEMENT OF THE ASSESSEE WAS OBTAINED ON 24.12.1999 AND ULTIMATELY THE ASSESSEE WAS FORCE D TO FILE THE RETURN OF INCOME DECLARING RS.40 LAKHS ON 12.1.2000. IT WAS THUS SUBMITTED THAT THE RECOVERY OF MATERIAL IN THE SEARCH WAS ITSELF ILLEG AL. 11.2 NOTICE U/S. 158BC WAS ISSUED ON 21.6.1999 AND THE ASSESSEE WAS REQUIRED TO FILE RETURN OF INCOME ON OR BEFORE 19.7 .1999. THE ASSESSEE FILED RETURNS FOR THE BLOCK PERIOD ONLY ON 12.1.2000. IT WAS SUBMITTED THAT THERE WAS NO PROVISION TO EXTEND THE TIME LIMIT FOR FILIN G THE RETURN U/S. 158BC OF THE ACT AND THE RETURN FILED ON 12.1.2000 WAS NOT A VALID RETURN FILED IN THE EYES OF LAW. CONSEQUENTLY, THE PROVISIONS OF SECT ION 249(4)(A) OF THE ACT WILL ALSO NOT COME INTO PLAY. IT(SS)A NO.15/BANG/2012 PAGE 6 OF 14 12. THE CIT(APPEALS), HOWEVER, WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 249(4)(A) OF THE ACT WERE MANDATORY AND HE HAD NO POWER TO OVERLOOK THOSE PROVISIONS. 13. WITH REGARD TO THE CONTENTION OF RETURN OF INCO ME FILED BY THE ASSESSEE BEING INVALID IN THE EYES OF LAW, THE CIT( A) HELD THAT U/S. 249(4)(A), THE QUESTION WHETHER RETURN FILED BY THE ASSESSEE WAS A VALID RETURN OR NOT, NEED NOT BE LOOKED INTO AND THE SAID PROVISIONS HAD TO BE APPLIED AS IT IS. THE CIT(A) ACCORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE AS UNADMITTED. 14. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 15. THE LD. COUNSEL FOR THE ASSESSEE, BESIDES REIT ERATING THE SUBMISSIONS AS WERE MADE BEFORE THE CIT(APPEALS), F URTHER PLACED RELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF T. GOVINDAPPA SETTY V. ITO & ANR., 231 ITR 892 (KAR N). THE FACTS IN THE AFORESAID CASE WAS, THAT SMT. G WHO WAS A MEMBER OF THE HUF EXPIRED ON 19TH SEPT., 1991. RETURN OF INCOME FOR T HE ASST. YRS. 1991-92 AND 1992-93 WERE FILED ON 31ST DEC., 1991 AND 8TH F EB., 1993, RESPECTIVELY I.E., AFTER THE DEATH OF SMT. G, TREATING THE STATU S OF THE ASSESSEE AS HUF AS WAS DONE FOR THE EARLIER PERIOD. AN INTIMATION U /S.143(1) WAS ISSUED BY THE AO RAISING DEMAND FOR TAXES. BEFORE ISSUE OF I NTIMATION, THE PETITIONER WROTE A LETTER CLAIMING THAT HUF WAS NO MORE IN EXI STENCE AND THEREFORE IT(SS)A NO.15/BANG/2012 PAGE 7 OF 14 THE ASSESSEE CANNOT BE ASSESSED AS HUF. THE ASSESSE E ALSO GAVE A NOTE ALONG WITH THE RETURN OF INCOME FILED THAT HE HAD B ROUGHT TO THE NOTICE OF THE AO THAT HIS WIFE HAD EXPIRED ON 19TH SEPT., 1991. AN APPLICATION U/S.154 OF THE ACT WAS FILED BY THE ASSESSEE SEEKING RECTIFICA TION OF THE INTIMATIONS ISSUED TO THE PETITIONER FOR THE ASST. YRS. 1991-92 AND 1992-93 ON THE GROUND THAT THE INTIMATION WAS INVALID AS THERE WAS NO HUF IN EXISTENCE ON THE DATE WHEN THE RETURNS WERE FILED AND ALSO WHEN INTIMATION WAS ISSUED. THE SAID APPLICATION WAS DISMISSED BY THE AO. THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. THE APPEAL W AS REJECTED FOR THE REASON THAT THE ASSESSEE HAD NOT PAID TAX ON THE INCOME DE CLARED IN THE RETURN OF INCOME. THIS ACTION OF THE REVENUE WAS QUESTIONED BY THE ASSESSEE BEFORE THE HONBLE HIGH COURT OF KARNATAKA. THE HO NBLE KARNATAKA HIGH COURT HELD AS FOLLOWS: SUB-S. (4) OF S. 249 PROVIDES THAT NO APPEAL UNDER CHAPTER XX IS ADMITTED UNLESS AT THE TIME OF FILING OF THE APPEAL , WHERE THE RETURN IS FILED BY THE ASSESSEE, THE ASSESSEE HAS P AID THE TAX DUE ON THE INCOME, OR WHERE NO RETURN HAS BEEN FILED BY THE ASSESSEE, THE ASSESSEE HAS PAID AN AMOUNT EQUAL TO THE AMOUNT OF THE ADVANCE TAX WHICH WAS PAYABLE BY HIM. WHAT IS CONTE MPLATED BY CL. (A) OF SUB-S. (4) OF S. 249 IS THAT WHEN THERE IS AN UNDISPUTED LIABILITY, THE APPEAL FILED BY THE ASSESSEE IN RESP ECT OF THE DISPUTED LIABILITY CANNOT BE ADMITTED UNLESS THE ASSESSEE PA YS THE ADMITTED LIABILITY. THE OBJECT OF CL. (A) OF SUB-S. (4) OF S . 249 IS NOT TO ENTERTAIN THE APPEAL WHERE THE ASSESSEE FAILS TO PA Y THE UNDISPUTED TAX LIABILITY. IN THE INSTANT CASE, IT IS THE CASE OF THE PETITIONER THAT THE INTIMATIONS ISSUED WERE WHOLLY ILLEGAL AND ON T HAT BASIS THE PETITIONER SOUGHT FOR RECTIFICATION OF THE INTIMATI ONS ISSUED BY FILING APPLICATIONS UNDER S. 154; AND SINCE THE FIR ST RESPONDENT FAILED TO ALLOW THE APPLICATIONS FILED BY THE PETIT IONER OR RECTIFY THE INTIMATIONS ISSUED, THE PETITIONER HAD PREFERRE D APPEALS AGAINST THE INTIMATIONS ISSUED AND THE ORDERS PASSE D UNDER S. 154. IT(SS)A NO.15/BANG/2012 PAGE 8 OF 14 THEREFORE, IT IS CLEAR THAT THOUGH THE PETITIONER H AD FILED THE RETURNS, THE PETITIONER HAD DISPUTED HIS LIABILITY TO BE ASSESSED AS HUF AND PAY THE TAX LIABILITY IMPOSED ON HIM. UNDER THESE CIRCUMSTANCES, THE VIEW TAKEN BY THE SECOND RESPOND ENT THAT THE APPEALS FILED BY THE PETITIONER CANNOT BE ADMITTED SINCE THE PETITIONER HAD FAILED TO PAY THE TAX DUE ON INCOME SHOWN BY HIM IN THE RETURN FILED BY HIM IS ERRONEOUS IN LAW. SUB -S. (4) OF S. 249 HAS TO BE CONSTRUED IN THE BACKDROP OF THE RIGHT TO APPEAL PROVIDED TO AN ASSESSEE UNDER S. 249. UNDER THESE C IRCUMSTANCES, WHILE INTERPRETING SUB-S. (4) OF S. 249, THE COURT WILL HAVE TO KEEP IN MIND THE OBJECT OF SUB-S. (4) OF S. 249 AND ALSO THE RIGHT TO PREFER AN APPEAL GUARANTEED TO AN ASSESSEE. IN THAT VIEW OF THE MATTER, SUB-S. (4) OF S. 249 HAS TO BE LIBERALLY CO NSTRUED TO SERVE THE OBJECT OF THE RIGHT OF APPEAL PROVIDED TO AN AS SESSEE, AND NOT WITH A VIEW TO DEPRIVE THE RIGHT PROVIDED TO AN ASS ESSEE TO PREFER AN APPEAL. WHEN THE VERY LIABILITY IS DISPUTED BY T HE PETITIONER ON THE GROUND THAT THE PETITIONER COULD NOT HAVE BEEN ASSESSED AS AN HUF AS ON THE DATE OF FILING OF THE RETURN AND ON T HE DATE OF THE ASSESSMENT THERE WAS NO HUF IN EXISTENCE, THE RIGHT GUARANTEED TO THE PETITIONER TO PREFER AN APPEAL CANNOT BE DEP RIVED OF BY TAKING THE VIEW THAT THE PETITIONER HAS FAILED TO P AY THE TAX DUE ON THE INCOME SHOWN IN THE RETURN FILED. THEREFORE, TH E ORDER PASSED BY THE SECOND RESPONDENT IS LIABLE TO BE QUASHED. 16. OUR ATTENTION WAS DRAWN TO THE PROVISIONS OF SE CTION 249(4)(A) OF THE ACT AND IT WAS SUBMITTED THAT THE EXPRESSION WHERE A RETURN HAS BEEN FILED HAS TO BE CONSTRUED AS MAKING A REFERENCE TO A VALID RETURN FILED UNDER THE ACT. IT WAS CONTENDED THAT RETURN OF INC OME FILED BY THE ASSESSEE WAS NOT A VALID RETURN OF INCOME AS IT WAS FILED AFTER THE TIME LIMIT GIVEN BY THE AO IN THE NOTICE U/S.158BC OF THE ACT. THE OTHER CIRCUMSTANCES POINTED BY THE ASSESSEE BEFORE THE CI T(A) WAS ALSO BROUGHT TO OUR NOTICE. IT(SS)A NO.15/BANG/2012 PAGE 9 OF 14 17. THE LD. DR RELIED ON THE ORDER OF THE CIT(APPEA LS). 18. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO T HE RIVAL SUBMISSIONS. TO APPRECIATE THE CONTENTIONS RAISED BY THE ASSESSE E, WE NEED TO LOOK AT CERTAIN DATES. NOTICE U/S. 158BC WAS ISSUED ON 21. 6.1999 AND THE ASSESSEE WAS REQUIRED TO FILE RETURN OF INCOME ON O R BEFORE 19.7.1999. THE ASSESSEE FILED RETURNS FOR THE BLOCK PERIOD ONLY ON 12.1.2000. IT WAS THE ARGUMENT OF THE LEARNED COUNSEL FOR THE ASSESSEE BE FORE US THAT THERE WAS NO PROVISION TO EXTEND THE TIME LIMIT FOR FILING TH E RETURN U/S. 158BC OF THE ACT AND THE RETURN FILED ON 12.1.2000 WAS NOT A VAL ID RETURN FILED IN THE EYES OF LAW. THE RELEVANT PORTION OF THE PROVISIONS OF SEC.158BC OF THE ACT READS THUS: SECTION 158BC - PROCEDURE FOR BLOCK ASSESSMENT PROCEDURE FOR BLOCK ASSESSMENT.-WHERE ANY SEARCH HA S BEEN CONDUCTED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS ARE REQUISITIONED UNDER SECTION 132A , IN THE CASE OF ANY PERSON, THEN,- (A) THE ASSESSING OFFICER SHALL- (I) IN RESPECT OF SEARCH INITIATED OR BOOKS OF ACC OUNTS OR OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED AFTER THE 30T H DAY OF JUNE, 1995, BUT BEFORE THE 1ST DAY OF JANUARY, 1997 SERVE A NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITH IN SUCH TIME NOT BEING LESS THEN FIFTEEN DAYS; (II) IN RESPECT OF SEARCH INITIATED OR BOOKS OF ACC OUNTS OR OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED ON OR AFTER T HE 1ST DAY OF JANUARY, 1997 SERVE A NOTICE TO SUCH PERSON REQU IRING HIM TO FURNISH WITHIN SUCH TIME NOT BEING LESS THAN FIF TEEN DAYS BUT NOT MORE THAN FORTY FIVE DAYS, IT(SS)A NO.15/BANG/2012 PAGE 10 OF 14 AS MAY BE SPECIFIED IN THE NOTICE A RETURN IN THE P RESCRIBED FORM AND VERIFIED IN THE SAME MANNER AS A RETURN UNDER C L (I) OF SUB-S. (1) OF SECTION 142 , SETTING FORTH HIS TOTAL INCOME INCLUDING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD : (B) THE AO SHALL PROCEED TO DETERMINE THE UNDISCLOS ED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PROVISIONS OF SECTION 142 , SUB-SS. (2) AND (3) OF SECTION 143 AND SECTION 144 AND SECTION 145 SHALL, SO FAR AS MAY BE, APPLY; 19. A PERUSAL OF THE ABOVE PROVISIONS OF SEC.158BC OF THE ACT SHOWS THAT IT DOES NOT LAY DOWN THE CONSEQUENCES OF THE A SSESSEE NOT FILING RETURN OF INCOME WITHIN THE TIME ALLOWED BY THE AO IN THE NOTICE U/S.158BC OF THE ACT. A PERUSAL OF PROVISIONS OF SEC.158BC( B) SHOWS THAT THE AO HAS THE POWER TO PROCEED U/S.144 OF THE ACT. U/144 (1)(B) OF THE ACT READ WITH FIRST PROVISO TO SEC.144(1) OF THE ACT, THE AO ON FAILURE ON THE PART OF THE ASSESSEE TO COMPLY WITH A NOTICE U/S.142(1) OF THE ACT CAN ISSUE A SHOW CAUSE NOTICE TO THE ASSESSEE INFORMING THE ASS ESSEE WHY AN ASSESSMENT SHOULD NOT BE COMPLETED TO THE BEST OF H IS JUDGMENT. IN THE PRESENT CASE THE AO HAS NOT CHOSEN TO DO SO BUT HAS TAKEN COGNIZANCE OF RETURN OF INCOME FILED BY THE ASSESSEE. THERE IS N O PROHIBITION IN THE ACT FOR SUCH A COURSE OF ACTION BEING FOLLOWED BY THE A O. WE THEREFORE HOLD THAT THE RETURN OF INCOME FILED BY THE ASSESSEE WAS A VALID RETURN OF INCOME THOUGH FILED BEYOND THE TIME GIVEN BY THE AO IN THE NOTICE U/S.158BC OF THE ACT. IT(SS)A NO.15/BANG/2012 PAGE 11 OF 14 20. THE PROVISIONS OF SEC.249(4)(A) OF THE ACT PROV IDES THAT NO APPEAL UNDER CHAPTER XX OF THE ACT WHICH DEALS WITH APPEAL S AND REVISION, SHALL BE ADMITTED UNLESS AT THE TIME OF FILING OF THE APP EAL, WHERE A RETURN HAS BEEN FILED BY THE ASSESSEE, THE ASSESSEE HAS PAID T HE TAX DUE ON THE INCOME RETURNED BY HIM. THE PROVISIONS ARE MANDAT ORY AND IS A CONDITION PRECEDENT FOR ADMISSION OF APPEALS. THE HONBLE KA RNATAKA HIGH COURT IN THE CASE OF D. KOMALAKSHI VS. DCIT 292 ITR 99 (KARN) HELD THAT THE PROVISIONS OF SEC.249(4)(A) ARE MANDATORY AND IN TH E EVENT OF ADMITTED TAX ON RETURNED INCOME IS NOT PAID THEN THE APPEAL BEFO RE THE FIRST APPELLATE AUTHORITY CANNOT BE ADMITTED. THE DECISION RENDERE D BY THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF P. GOVINDAPPA SETTY (SUPRA), IN OUR VIEW, HAS TO BE RESTRICTED TO THE FACTS OF THE SAID CASE. IT WAS A CASE WHERE AN APPLICATION FOR RECTIFICATION WAS FILED U/ S.154 OF THE ACT BY THE ASSESSEE FOR RECTIFICATION OF AN INTIMATION U/S.143 (1)(A) OF THE ACT. THE HONBLE COURT FOUND THAT FACTUALLY THE REVENUE DID NOT DISPUTE THAT THE ASSESSEE ANNEXED A NOTE TO THE RETURN FILED BRINGIN G TO THE NOTICE OF THE AO THAT ONE OF THE MEMBERS OF THE HUF I.E., SMT. G HAD EXPIRED ON 19TH SEPT., THEREFORE, IT WOULD BE MANIFEST THAT SMT. G HAD EXP IRED DURING THE MIDDLE OF THE ASST. YR. 1991-92 AND THERE WAS NO HUF EITHER O N THE DATE OF COMPLETION OF THE ASSESSMENT OR ISSUANCE OF INTIMAT IONS TO THE ASSESSEE. THE HONBLE COURT TOOK COGNIZANCE OF THE SAID NOTE AND HELD THAT THE NOTE IT(SS)A NO.15/BANG/2012 PAGE 12 OF 14 FILED CLEARLY DEMONSTRATED THAT THE HUF HAD CEASED TO BE AN HUF LONG PRIOR TO THE COMMENCEMENT OF THE ASST. YR. 1992-93 CONSEQUENT UPON THE DEATH OF SMT. G. THE HONBLE COURT HELD THAT WHEN A NOTE IS ANNEXED TO THE RETURN FILED, THE SAID NOTE OR A STATEMENT FILED AL ONG WITH THE RETURN MUST BE TREATED AS A PART AND PARCEL OF THE RETURN FILED, E SPECIALLY WHEN THE ASSESSING AUTHORITY PROCEEDS UNDER S. 143(1)(A). IT IS NOT PERMISSIBLE FOR THE ASSESSING AUTHORITY TO IGNORE THE STATEMENT OR NOTE FILED ALONG WITH THE RETURN OF INCOME FILED BY THE ASSESSEE AND PROCEED UNDER S. 143(1)(A). THE HONBLE COURT OBSERVED THAT WHEN THE ASSESSING AUTH ORITY IS PROCEEDING TO ASSESS UNDER S. 143(1)(A) HE DOES NOT GIVE AN OPPOR TUNITY TO THE ASSESSEE AND HEARING TO THE ASSESSEE AND THEREFORE THE ASSES SING AUTHORITY MUST CONSIDER THE RETURN FILED ALONG WITH THE NOTE, EXPL ANATION OR STATEMENT ANNEXED TO THE RETURN FILED. THE HONBLE COURT THER EAFTER OBSERVED THAT THERE WAS NO MACHINERY PROVIDED UNDER THE ACT TO AS SESS THE ERSTWHILE HUF AND THEREFORE IT WAS NOT POSSIBLE TO ASSESS EIT HER THE ERSTWHILE HUF OR A MEMBER OF THE ERSTWHILE HUF. THE HONBLE COURT TH EREAFTER CONCLUDED THAT UNDER THESE CIRCUMSTANCES, THE AO PURSUANT TO THE APPLICATIONS FILED BY THE ASSESSEE UNDER S. 154 OUGHT TO HAVE RECTIFIE D THE MISTAKE THAT HAD CREPT IN WHICH WAS APPARENT FROM THE RECORDS. THE H ONBLE COURT FINALLY QUASHED THE INTIMATION U/S.143(1)(A) OF THE ACT AS WELL AS THE ORDERS PASSED REJECTING THE APPLICATIONS FILED BY THE PETI TIONER SEEKING RECTIFICATION OF THE INTIMATIONS ISSUED. ON THE QUESTION WHE THER THE VIEW TAKEN BY THE CIT(A) THAT THE APPEAL FILED BY THE ASS ESSEE WAS NOT IT(SS)A NO.15/BANG/2012 PAGE 13 OF 14 MAINTAINABLE WAS JUSTIFIED HAVING REGARD TO THE PRO VISIONS OF S. 249(4) OF THE ACT, THE HIGH COURT NO DOUBT QUASHED THE ORDER OF CIT(A), BUT THE DECISION RENDERED BY THE HONBLE HIGH COURT HAS TO BE CONFINED TO THE FACTS OF THAT CASE WHERE THE PROCEEDINGS ARISE OUT OF AN INTIMATION U/S.143(1)(A) OF THE ACT WHERE THE ASSESSEE DOES NOT GET ANY OPPO RTUNITY OF BEING HEARD. 21. IN THE PRESENT CASE, AS WE HAVE ALREADY SEEN, T HE ASSESSEE FILED A RETURN OF INCOME AND DECLARED A SUM OF RS.40 LACS A S UNDISCLOSED INCOME FOR THE BLOCK PERIOD. THE RETRACTION OF SUCH DECLA RATION OF INCOME WAS ONLY IN THE FORM OF A LETTER IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSEE ALSO DID NOT PURSUE HIS CLAIM BEFORE THE A O PROPERLY BY RESPONDING TO THE QUERIES OF THE AO. IN THESE CIRC UMSTANCES, WE ARE OF THE VIEW THAT THE RATIO LAID DOWN BY THE HONBLE KARNAT AKA HIGH COURT IN THE CASE OF P. GOVINDAPPA SETTY (SUPRA) CANNOT BE APPLIED TO THE FACTS OF THE CASE OF THE ASSESSEE. WE ARE THEREFORE OF THE VIEW THAT THE CIT(A) WAS JUSTIFIED IN NOT ADMITTING THE APPEAL OF THE AS SESSEE FOR ADJUDICATION FOR VIOLATION OF THE PROVISIONS OF SEC.249(4)(A) OF THE ACT. WE, HOWEVER, GIVE LIBERTY TO THE ASSESSEE TO PAY THE TAX DUE ON THE I NCOME RETURNED WITHIN A PERIOD OF TWO MONTHS FROM THE DATE OF THIS ORDER AN D ON SUCH PAYMENT, THE CIT(A) WILL ADMIT THE APPEAL OF THE ASSESSEE FOR AD JUDICATION ON MERITS. WITH THE ABOVE OBSERVATIONS/DIRECTIONS, THE APPEAL OF THE ASSESSEE IS DISMISSED. IT(SS)A NO.15/BANG/2012 PAGE 14 OF 14 22. THE APPEAL OF THE ASSESSEE IS ACCORDINGLY DISM ISSED. PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF SEPTEMBER , 2014 . SD/- SD/- ( ABRAHAM P. GEORGE ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEM BER BANGALORE, DATED, THE 19 TH SEPTEMBER , 2014 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.