Sri. FAREED A NOORANI, MUMBAI V. DCIT CENT. CIR. - 35, MUMBAI

ITSSA 236/MUM/2006

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1399 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 11-05-2015
• Assessment Year: misc
• Appeal Filed On: 18-08-2006
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Keywords: Unexplained investment; Invalid notice; Opportunity of being heard; Principle of natural justice; Validity of assessment; Procedural lapse; Assessment record; Block assessment
• Section: 143(3); 142(1); 145; 148; 132; 144; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA , A M & SHRI AMARJIT SINGH , J M IT (SS) A NO . 236 / MUM/20 06 ( BLOCK ASSESSMENT YEAR : 1 - 4 - 90 T O 16 - 9 - 2000 ) FAREED A. NOOR ANI, PROP. HAJI ALI JUICE CENTRE, LALA LAJPATRAI ROAD, HAJI ALI CIRCLE, MUMBAI - 400026 VS. ACIT, CC - 35, MUMBAI - 20 ./ ./ PAN/GIR NO. : A A APN 2909 F ( / APPELLANT ) .. ( / RESPONDENT ) AND IT (SS) A NO .248/ MUM/20 06 ( BL OCK ASSESSMENT YEAR :1 - 4 - 90 TO 16 - 9 - 2000 ) ACIT, CC - 35, MUMBAI - 20 VS. FAREED A. NOORANI, PROP. HAJI ALI JUICE CENTRE, LALA LAJPATRAI ROAD, HAJI ALI CIRCLE, MUMBAI - 400026 ./ ./ PAN/GIR NO. : A AAPN 2909 F ( / APPELLANT ) .. ( / RESPONDENT ) AND ITA NO . 5360 / MUM/20 0 7 ( ASSESSMENT YEAR : 2001 - 2002 ) ACIT, CC - 35, MUMBAI - 20 VS. FAREED A. NOORANI, PROP. HAJI ALI JUICE CENTRE, LALA LAJPATRAI ROAD, HAJI ALI CIRCLE, MUMBAI - 400026 ./ ./ PAN/GIR NO. : A AAPN 2909 F ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI SATISH R. MODY /REVENUE BY : SHRI N.P.SINGH / DATE OF HEARING : 04 / 12 / 2015 / DATE OF PRONOUNCEMENT 14 /12 /2015 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A), MUMBAI FOR THE BLOCK PERIOD 1 - 4 - 1990 TO 16 - 9 - IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 2 2000, IN THE MATTER ORDER PASSED U/S.158BC(C) OF THE ACT. THE REVE NUE HAS ALSO FILED AN APPEAL FOR THE ASSESSMENT YEAR 2001 - 02, IN THE MATTER OF ORDER PASSED U/S. 143(3) OF THE ACT. 2. THE GROUNDS TAKEN BY THE ASSESSEE IN ITS APPEAL I.E. IT(SS)A NO. 236/MUM/2006 ARE AS UNDER : - 1. THE LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) ERRED IN NOT APPRECIATING THAT THE ORDER PASSED U/S. 158BC WAS INVALID AND VOID AB INITIO AS THE NOTICE CALLING UPON THE APPELLANT TO FILE THE RETURN OF INCOME FOR THE BLOCK PERIOD WAS INVALID IN SO FAR AS IT CALLED UPON THE APPELLANT TO FILE THE R ETURN OF INCOME WITHIN 15 DAYS. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DETERMINING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD OF RS.2,11,84,004 AND WHILE DOING SO HE AMONGST OTHERS ERRED IN A. CONFIRMING THE UNDISCLOSED TURNOVER O F VARIOUS PROPRIETORSHIP ENTITIES ESTIMATED BY THE A.O. B. ESTIMATING THE NET PROFIT ON THE UNDISCLOSED TURNOVER @ 14% IN CASE OF CAFE NOORANI, HAJI ALI TEA SHOP AND EMPEROR DAIRY C. ESTIMATING THE NET PROFIT ON THE UNDISCLOSED TURNOVER @ 12.2% IN CASE OF HAJI ALI JUICE CENTRE AND BRIGHT SNACK CENTRE. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT ALLOWING DEDUCTION OF RS. 11,20,000 / - INCURRED ON REFURBISHMENT OF TENANTED PREMISES U/S. 30 OF THE INCOME TAX ACT, 1961. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND, WHICH IS AS UNDER : - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSMENT U/S. 158BC FOR THE BLOCK PERIOD 1/4/90 TO 16/9/2000 IS BAD IN LAW AS THE ASSESSMENT HAS BEEN DONE WITHOUT THE ISSUE OF NOTI CE U/S. 143(2) OF THE ACT, PURSUANT TO THE FILING OF THE RETURN BY THE APPELLANT ON 14/12/2001. THE GROUNDS TAKEN BY THE REVENUE IN ITS APPEAL I.E. IT(SS)A NO. 248 /MUM/2006, ARE AS UNDER : - 1 . 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD. CIT(A) WAS NOT CORRECT IN REDUCING THE INCOME OF THE PROPRIETARY CONCERN BY RS.2,27,91,094/ - '. IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 3 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT CORRECT IN DELETING THE INTEREST CHARGED U/S.158BFA(L) OF T HE I T. ACT'. 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT( A) WAS NOT CORRECT IN DELETING THE SURCHARGE CHARGED UNDER THE I T. ACT'. 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT CORRECT IN DELETING THE ADDITION OF RS.7,03,467/ - MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY'. 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT CORRECT IN DELETING THE ADDITION MADE BY THE A.O. ON ACCOUNT OF FIXED DEPOSITS, UNDISCLOSED BANK ACCOUNT, INTEREST, BROKERAGE, BANK CHARGES AND ON ACCOUNT OF VARIOUS LOANS/PAYMENTS'. 3. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE WITH REGARD TO ISSUE OF NOTICE U/S.143(2) OF THE ACT AFTER FILING OF RETURN IS PURELY A LEGAL GROUND AND IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD., 187 ITR 688 AND IN THE CASE OF NATIONAL THERMAL POWER CORPORATION LTD., 229 ITR 383, WE ADMIT THE ADDITIONAL GROUND FOR ADJUDICATION. 4 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT A SEARCH ACTION U/S.132 WAS CARRIED OUT AT THE RESIDENTIAL/BUSINESS PREMISES OF THE ASSESSEE ON 16/17 - 9 - 2000. AS A RESULT OF SEARCH AND THE INCRIMINATING DOCUMEN TS FOUND DURING THE COURSE OF SEARCH, THE AO MADE ADDITION ON ACCOUNT OF PROFIT EARNED BY THE ASSESSEE AND UNACCOUNTED JEWELLERY. THE AO ALSO DISALLOWED ASSESSEES CLAIM OF EXPENDITURE ON REPAIR AND FURNISHING. BY THE IMPUGNED ORDER THE CIT(A) UPHELD THE B LOCK ASSESSMENT ORDER FRAMED U/S.158BC, HOWEVER, IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 4 CIT(A) HAS MODIFIED THE AOS ORDER WITH REGARD TO ESTIMATION O F UNDISCLOSED INCOME ON THE BASIS OF SEIZED MATERIAL BY TAKING NP RATE IN PLACE OF GP RATE TAKEN BY THE AO . AGAINST THE ABOVE ORDER OF CIT(A), BO TH ASSESSEE AND REVENUE ARE IN APPEAL BEFORE US. 5. LD. AR FIRSTLY ARGUED THE LEGAL ISSUE WITH REGARD TO THE VALIDITY OF ASSESSMENT WHEN NOTICE U/S.158BC WAS ISSUED FOR FILING RETURN WITHIN 15 DAYS. THE ASSESSEE ALSO CHALLENGED THE VALIDITY OF THE ASSESSME NT ON THE PLEA THAT NO NOTICE U/S.143(2) WAS ISSUED AFTER FILING OF THE RETURN. OUR ATTENTION WAS INVITED TO THE ASSESSMENT ORDER, WHEREIN THE AO HAS ISSUED NOTICE U/S.143(2) ON 23 - 3 - 2001 AND 11 - 9 - 2001. OUR ATTENTION WAS ALSO INVITED TO THE RETURN FILED BY THE ASSESSEE ON 17 - 10 - 2001 AND IT WAS CONTENDED BY LD. AR THAT NO NOTICE U/S.143(2) WAS ISSUED THEREAFTER, THEREFORE, AS PER DECISION OF HONBLE APEX HIGH COURT IN THE CASE OF HOTEL BLUE MOON, 321 ITR 362, ASSESSMENT SO FRAMED WAS NOT TENABLE. 6. ON THE OTHER HAND, LD. CIT DR SHRI N.P.SINGH SUBMITTED AS UNDER : - NON - ISSUE OF NOTICE OR MISTAKE IN THE ISSUE OF NOTICE OR DEFECTIVE SERVICE OF NO TICE DOES NOT AFFECT THE JURISDICTION OF THE ASSESSING OFFICER, IF OTHERWISE REASONABLE OPPORTUNITY OF BEING HEARD HAS BEEN GIVEN. (2) ISSUE OF NOTICE AS PRESCRIBED IN THE STATUTE CONSTITUTES A PART OF REASONABLE OPPORTUNITY OF BEING HEARD. (3) IF PREJUDICE HAS BEEN CAUSED BY NON - ISSUE OR INVALID SERVICE OF NOTICE, THE PROCEEDINGS WOULD BE VITIATED. [CST V/ S SUBHASH & CO. (2003) STC 97, 106 (SC)] IT IS TO BE NOTED THAT THE REQUIREMENT OF 'HEARING' IS GIVEN IN CONSONANCE WITH THE PRINCIPLES OF NATURAL JUSTICE. [YOGINATH D BAGDE V / S STATE OF MAHARASHTRA JT 1999 (7) SC 62, 81] THE PRINCIPLES OF NATURAL JUSTICE, IT IS TRITE, CANNOT BE PUT IN A STRAIT - JACKET FORMULA. IN A GIVEN CASE THE PARTY SHOULD NOT ONLY BE REQUIRED TO SHOW THAT HE DID NOT HAVE A PROPER NOTICE RESULTING IN VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BUT ALSO TO SHOW THAT HE WAS SERIOUSLY IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 5 PREJUDICED TH EREBY. [SOHAMLAL GUPTA V / S SMT. ASHA DEVI GUPTA (2003) SCC 492, 506] THE HON'BLE APEX COURT IN THE CASE OF ASST. CIT VIS HOTEL BLUE MOON (2010) 321 ITR 362 (SC) HAD THE SIMILAR QUESTION BEFORE IT. THE HON'BLE SUPREME COURT OF INDIA HAS HELD AS UNDER: - ' .... 7) THE ONLY QUESTION THAT ARISES FOR OUR CONSIDERATION IN THIS BATCH OF APPEALS IS, WHETHER SERVICE OF NOTICE ON THE ASSESSEE UNDER SECTION 143(2) WITHIN THE PRESCRIBED PERIOD OF TIME IS A PRE - REQUISITE FOR FRAMING THE BLOCK ASSESSMENT UNDER CHAPT ER XIV - B OF THE INCOME TAX ACT, 1961 ? .... 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 'THAT THE A SSESSING OFFICER SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158 BB AND THE PROVISIONS 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 INDICATES 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)1142 AND COMPLETE THE ASSESSMENT U NDER 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 W ITH THE NOTICE UNDER SECTIONS 143(2)1142, 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 PROVISIONS OF SECTION 14 3(1) ARE EXCLUDED. BUT SECTION 143(2) ITSELF BECOMES NECESSARY ONLY WHERE IT BECOMES NECESSARY TO CHECK THE RETURN, SO THAT WHERE BLOCK RETURN CONFORMS TO THE UNDISCLOSED INCOME INFERRED BY THE AUTHORITIES, THERE IS NO REASON, WHY THE AUTHORITIES SHOULD IS SUE NOTICE UNDER SECTION 143(2). HOWEVER, IF AN ASSESSMENT IS TO BE COMPLETED UNDER SECTION 143(3) READ WITH SECTION 158 - BC, NOTICE UNDER SECTION 143(2) SHOULD BE ISSUED WITHIN ONE YEAR FROM THE DATE OF FILING OF BLOCK RETURN. OMISSION ON THE PART OF THE A SSESSING AUTHORITY 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 SECTION 143(2) CANNOT BE DISPENSED WITH. THE OTHER IMPORTANT FEATURE THAT REQUIRES TO BE NOTICED IS THAT THE SECTION 158 BC(B) SPECIFICALLY REFERS TO SOME OF THE PROVISIONS OF THE ACT WHICH REQUIRES TO BE FOLLOWED BY THE ASSESSING OFFICER WHILE COMPLETING THE BLOCK ASSESSMENTS UNDER CHAPTER XIV - B OF THE ACT. THIS LEGISLATION IS BY INCORPORATI ON. THIS SECTION EVEN SPEAKS OF SUB- SECTIONS WHICH ARE TO BE FOLLOWED BY THE ASSESSING OFFICER. IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 6 HAD THE INTENTION OF THE LEGISLATURE WAS TO EXCLUDE THE PROVISIONS OF CHAPTER XIV OF THE ACT, THE LEGISLATURE WOULD HAVE OR COULD HAVE INDICATED THAT ALSO. A READING. OF THE PROVISION WOULD CLEARLY INDICATE, IN OUR OPINION, IF THE ASSESSING OFFICER, IF FOR ANY REASON, REPUDIATES THE RETURN FILED BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER SECTION 158 BC(A), THE ASSESSING OFFICER MUST NECESSARILY ISSUE NOTICE U NDER 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 AMBIT 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 EXCLUDE. 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 SECTION 158 B C, THE PROVISIONS OF SECTION 142 AND SUB - SECTIONS (2) AND (3) OF SECTION 143 ARE APPLICABLE AND NO ASSESSMENT COULD BE MADE WITHOUT ISSUING NOTICE UNDER SECTION 143(2) OF THE ACT. ..... ' 17) SECTION 158 BH PROVIDES FOR APPLICATION OF THE OTHER PROV ISIONS OF THE ACT. IT READS : 'SAVE AS OTHERWISE PROVIDED IN THIS CHAPTER, ALL THE OTHER PROVISIONS OF THIS ACT SHALL APPLY TO ASSESSMENT MADE UNDER THIS CHAPTER.' THIS IS AN ENABLING PROVISION, WHICH MAKES ALL THE PROVISIONS OF THE ACT, SAVE AS OTHERWISE PROVIDED, APPLICABLE FOR PROCEEDINGS FOR BLOCK ASSESSMENT. THE PROVISIONS WHICH ARE SPECIFICALLY INCLUDED ARE THOSE WHICH ARE AVAILABLE IN CHAPTER XIV - B OF THE ACT, WHICH INCLUDES SECTION 142 AND SUB - SECTIONS (2) AND (3) OF SECTION 143 ..' BRIEFLY, THE F ACTS OF THE CASE AT HAND ARE T HAT AS A RESULT OF THE SEARCH U/ S 132(1) ON 16109/2000, A NOTICE DATED 6/1212000 U / S 158BC (COPY ENCLOSED) WAS ISSUED CALLING FOR A RETURN OF BLOCK ASSESSMENT, WITHIN 15 DAYS THEREOF. THE ASSESSEE DID NOT FILE THE RETURN IN TI ME, NOR ANY REQUEST FOR FURTHER TIME WAS MADE TO THE A.O. THE SAID NOTICE WAS DULY SERVED ON THE ASSESSEE ON 15/12/2000. HOWEVER THE ASSESSING OFFICER COMMENCED THE ASSESSMENT PROCEEDINGS AND ISSUED NOTICES U/ S 143(2) DATED 23/3/2001, 11/9/2001 AND 9/10/20 11 AS MENTIONED IN THE BLOCK ASSESSMENT ORDER. ADMITTEDLY, ALL THESE NOTICES ARE PRIOR TO .THE FILING OF THE BLOCK RETURN U/S. 158BC. IN ORDER TO ENABLE THE ASSESSEE TO FILE HIS RETURN, THE ASSESSEE WAS SUPPLIED COPIES OF THE SEIZED MATERIALS AND STATEMENT S RECORDED DURING THE SEARCH/SURVEY. THE ASSESSEE ULTIMATELY FILED THE RETURN ON 14/12/2001, DECLARING UNDISCLOSED OF R S.1,31 ,72,733/ - , WITHOUT PAYMENT OF ADMITTED SELF- ASSESSMENT TAX. HENCE, THE BLOCK RETURN WAS FILED AFTER A TIME GAP OF ONE YEAR. CHRON OLOGY OF NOTICES ISSUED: THE ASSESSMENT RECORDS OF THE ASSESSEE FOR THE BLOCK ASSESSMENT HAS BEEN EXAMINED AND THE FOLLOWING FACTS EMERGE: IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 7 I) ISSUE OF NOTICE U/S. 158BC ON 06/12/2000 SERVICE 15/12/2000 II) BLOCK RETURN FILED ON 14/12 /2001 III) NOTICES U/S. 143(2) ISSUED BEFORE 23/3/2001, 11/9/2001 THE BLOCK RETURN AND 9/10/2011 IV) LETTERS / NOTICE U/S. 142(1) AND 143(2) 27/3/2002,16/4/2002 ISSUED AFTER THE BLOCK RETURN AND 14/06/2002 IT IS CLEAR FROM THE ASSESS MENT RECORD THAT AFTER RETURN U/ S 158BC WAS FILED ON 16/12/2012, THE ASSESSING OFFICER ISSUED A NOTICE U / S 142(1) DATED 14/612002 (COPY ENCLOSED) AND ALSO ISSUED LETTERS DATED 27/3/2002 WHICH WAS FOLLOWED BY ANOTHER LETTER DATED 16/4/2002 (COPIES EN CLOSED) CALLING FOR VARIOUS DETAILS RELEVANT FOR THE COMPLETION OF THE BLOCK ASSESSMENT. THERE IS NO STATUTORY FORMAT PRESCRIBED IN THE LAW OF A NOTICE U / S 143(2), THE AFORESAID LETTERS ARE IN FACT NOTICES U/S.143(2). A NOTICE U/S. 143(2) NEED NOT BE IN IT NS - 33. A QUESTIONNAIRE CAN AMOUNT TO A NOTICE U/S. 143(2) [ITO V/S ASHOK CHADHA 2010 - TIOL - 637 - ITAT - DEL.] IN WHAT MANNER THE NOTICE SHOULD BE WORDED IS NOT IMPORTANT AS LONG AS SUCH NOTICE IN SUBSTANCE IS GIVEN BEFORE ASSESSMENT GIVING OPPORTUNITY TO THE ASSESSEE TO PROVE THE INCOME RETURNED BY HIM. IT WAS THE VIEW TAKEN BY THE HIGH COURT IN CIT V. REGENCY EXPRESS BUILDERS P. LTD. [2007] 291 ITR 55 (DELHI). THESE NOTICES ARE WELL WITHIN THE TIME LIMIT, I.E. WITHIN ONE YEAR FROM THE DATE OF FILING OF THE B LOCK RETURN. IN PURSUANCE THEREOF, THE ASSESSEE HAS ATTENDED THE VARIOUS HEARINGS BEFORE THE AO AND FILED DETAILED SUBMISSIONS VIDE HIS LETTERS. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND THE POSITION OF LAW ON THE ISSUE AS PER THE JUDGMENT OF HON' BLE SUPREME COURT OF INDIA IN THE CASE OF HOTEL BLUE MOON (SUPRA), THE AO, AFTER THE FILING OF RETURN OF BLOCK ASSESSMENT ON 14/12/2001 HAD ISSUED A NOTICE U/S 142(1) AND ALSO NOTICES U/S 143(2). THEREFORE, THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN ADHER ED TO BY THE AO. WITHOUT PREJUDICE TO THE ABOVE, IT IS SUBMITTED THAT IN RESPONSE TO THE ABOVE NOTICES U / S 142(1) AND U / S 143(2), THE ASSESSEE HAS ATTENDED BEFORE THE AO BY ACCEPTING HIS JURISDICTION OVER THE BLOCK ASSESSMENT AND NO PREJUDICE WHAT SOEVER HAS BEEN CAUSED TO HIM. THIS PROPOSITION IS SUPPORTED BY THE FOLLOWING JUDICIAL PRONOUNCEMENTS: - 'WHERE THE BASIC JURISDICTION EXISTS, THE DOING OF THINGS REQUIRED TO BE DONE IN THE EXERCISE OF THAT JURISDICTION MAY BE WAIVED AND WHERE A PARTY HAS ACQUIE SCED IN OR WAIVED AN IRREGULARITY, HE CANNOT AFTE RWARDS COMPLAIN OF IT. [MARSH V/S MARSH (1945) AC - 271. EX PARTE PRATT, IN RE PRATT, 12 QBD 334,339 ) ' IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 8 THE ADDITIONAL GROUND OF THE ASSESSEE WITH REGARD TO THE ISSUE OF NOTICE U/S 143(2) IS THEREFORE DEVOID OF MERIT AND DESERVES TO BE REJECTED. 7. IN REPLY TO THE ABOVE SUBMISSION OF LD. CIT DR, IT WAS CONTENDED BY LD. AR THAT THE LETTERS DATED 27/03/2002, 16/04/2002 AND 14/06/2002 ARE MORE IN THE NATURE OF ENQUIRY BEING CONDUCTED AND HENCE IN THE NATURE O F NOTICE UNDER SECTION 142(1) OF THE ACT AND CANNOT BE CONSIDERED AS NOTICE UNDER SECTION 143(2) OF THE ACT CONFERRING JURISDICTION TO THE ASSESSING OFFICER TO FRAME AN ASSESSMENT UNDER SECTION 143( 3 ) OF THE ACT, MORE SPECIFICALLY AS THERE IS NO INDICATION ON SUCH LETTERS THAT THEY ARE NOTIC E UNDER SECTION 143(2) OF THE ACT. 8. HE CONTENDED THAT THE HON'BLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON 321 ITR 362 HAS HELD THAT THE ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT IS MANDATORY AND IT OUGHT TO BE ISSUED WITHIN THE PRESCRIBED TIME LIMIT AFTER FILING OF THE RETURN OF INCOME PURSUANT TO THE NOTICE UNDER SECTION 158BC OF THE ACT. THE HON'BLE SUPREME COURT HAS FURTHER HELD THAT NON ISSUE OF NOTICE UNDER SECTION143(2) OF THE ACT IS NOT A PROCEDURAL IR REGULARITY AND THE SAID DEFECT IS NOT CURABLE AND THE REQUIREMENT OF THE NOTICE UNDER SECTION 143(2) OF THE ACT CANNOT BE DISPENSED WITH. THERE CAN BE NO ASSESSMENT WITHOUT THE ISSUE OF NOTICE UNDER SECTION 143(2) OF THE ACT WITHIN THE PRESCRIBED TIME AFTE R FILING OF THE RETURN OF INCOME. THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER HAS FAILED TO ISSUE ANY NOTICE UNDER SECTION 143(2) OF THE ACT AFTER THE ASSESSEE HAS FILED HIS RETURN OF INCOME AS RESULT THE ABOVE ASSESSMENT IS BAD IN LAW. IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 9 9 . LD. AR ALSO PLACED RELIANCE ON THE DECISION OF HONBL E DELHI HIGH COURT IN THE CASE OF SOCIETY FOR WORLDWIDE INTERBANK FINANCIAL COMMUNICATIONS, 232 CTR 265, WHEREIN IT HAS BEEN HELD THAT THE NOTICE UNDER SECTION 143(2) OF THE ACT ISSUED PRIOR TO THE FILING OF THE RE TURN OF INCOME IS NOT A VALID NOTICE AND THE ASSESSMENT COMPLETED ON THE BASIS OF SU CH NOTICE IS ALSO NOT VALID. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF DCIT VS MAHI VALLEY HOTELS AND RESORT S REPORTED IN 28 7 ITR 360, WHEREIN IT HAS BEEN IN CLEAR TERMS HELD THAT THERE CANNOT BE ACQUIESCE AND/OR WAIVER OF THE JURISDICTION ON PART OF THE ASSESSEE BY PARTICIPATING IN THE PROCEE DINGS. IN VIEW OF THE ABOVE JUDICIAL PRONOUNCEMENTS LD. AR CONTENDED THAT ASSESSMENT S O FRAMED DESERVES TO BE ANNULLED. 10. FURTHER THE CONTENTION OF LD. AR WAS THAT THOUGH IT HAS APPEARED BEFORE THE ASSESSING OFFICER FROM TIME TO TIME AND SUBMITTED VARIOUS DETAILS, SINCE THE ASSESSING OFFICER HAS NOT ISSUED ANY NOTICE UNDER SECTION 143(2) OF THE ACT AFTER THE FILING OF THE RETURN OF INCOME THERE COULD NOT BE ANY ACQUIESCE TO I JURISDICTION HENCE THE ASSESSMENT IS BAD IN LAW. 11. WITH REGARD TO FORMAT FOR NOTICE UNDER SECTION 143(2) OF THE ACT, LD. AR SUBMIT ED THAT THOUGH NO FORMAT IS PRESC RIBED FOR THE NOTICE UNDER SECTION 143(2) OF THE ACT, THE LETTER S ISSUED SHOULD NONETHELESS INDICATE THAT THEY ARE NOTICE UNDER SECTION 143(2) OF THE ACT. THE LETTERS OUGHT TO SPECIFICALLY MENTION THAT THE SAID LETTER IS A NOTICE UNDER SECTION 143(2) OF TH E ACT. SUCH NOTICE GIVES JURISDICTION TO THE ASSESSING OFFICER AND ALSO IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 10 INFORMS THE ASSESSEE THAT HIS RETURN OF INCOME IS BEING SCRUTINIZED. LETTERS ISSUED PURSUANT TO FILING OF RETURN OF INCOME CANNOT BE CONSIDERED AS NOTICE UNDER SECTION 143(2) OF THE AC T UNLESS SPECIFIED. THE ASSESSEE SUBMITS THAT SUCH LETTERS COULD BE ISSUED UNDER SECTION 142(1) OF THE ACT ALSO . 12. RELYING ON THE DECISION OF TRIBUNAL IN THE CASE OF JYOTI PAT RAM VS. ITO 92 ITD 423 (LUCKNOW) AND IN THE CASE OF ACIT VS. G.M.INFRASTRUCTUR E 135 TTJ 469 (INDORE) , LD. AR CONTENDED THAT THE NOTICES ISSUED UNDER SECTION 143(2) OF THE ACT PRIOR TO THE FILING OF THE RETURN OF INCOME ARE NOT VALID AND CANNOT BE CONSIDERED IN COMPLIANCE OF THE REQUIREMENT OF THE SECTION AND HENCE ARE BAD IN LAW . 1 3 . WE HAVE CONSIDERED RIVAL ARGUMENTS OF LD. AR AND DR IN THE CONTEXT OF FACTUAL MATRIX IN THE LIGHT OF JUDICIAL PRONOUNCEMENTS RELIED BY THEM. FROM THE RECORD WE FOUND THAT THE AO HAS ISSUED NOTICE U/S.143(2) BEFORE FILING OF RETURN, HOWEVER AFTER FILING OF RETURN NO NOTICE U/S.143(2) WAS ISSUED. IN THIS REGARD, LD. DR RELIED ON THE LETTER/NOTICE U/S.142(1)/143(2) ISSUED AFTER THE BLOCK RETURN WAS FILED ON DATED 27 - 3 - 02, 16 - 4 - 2002 AND 14 - 6 - 2002. 1 4 . WE HAD CAREFULLY GONE THROUGH THE SE LETTERS /NOTICES AND F OUND THAT THROUGH LETTER DATED 27 - 3 - 2002 THE AO HAD MERELY ASKED THE ASSESSEE TO FILE EXPLANATION WITH REGARD TO DEPOSIT AND WITHDRAWALS APPEARING IN THE BANK STATEMENT. LETTER DATED 15 - 4 - 2002 IS REPLY OF ASSESSEES LETTER DATED 15 - 4 - 2002, WHEREIN ASSESSEE HAS MENTIONED REGARDING OBJECTION OF AO IN GIVING COPY OF THE STATEMENT. THROUGH THIS LETTER THE AO HAS ALSO INFORMED IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 11 THE ASSESSEE REGARDING NON - ATTENDANCE OF SHRI KHALID IN RESPONSE TO THE AOS SUMMON. THE AO ALSO INFORMED THAT IN THE LETTER SUBMITTED BY HIM HE HAS DENIED TO HAVE ANY FINANCIAL TRANSACTION WITH THE ASSESSEE. LETTER DATED 14 - 6 - 2002 REQUIRES THE ASSESSEE TO FURNISH COPY OF THE RENT RECEIPTS IN RESPECT OF PROPERTIES OF ASSESSEE ALONG WITH NAME AND ADDRESS OF THE PERSONS, WHO HAD ISSUED RENT R ECEIPTS. A NOTICE U/S.142(1) WAS ALSO ENCLOSED WITH THIS LETTER. IT IS CLEAR FROM ALL THESE THREE LETTERS THAT NONE OF THEM CAN BE CONSIDERED AS NOTICE U/S.143(2). THOUGH NO FORMAT IS PRESCRIBED IN THE NOTICE U/S.143(2) OF THE ACT, THE LETTERS ISSUED OUGHT TO NONETHELESS INDICATE THAT THEY ARE NOTICE U/S.143(2). FOR PUTTING SUCH LETTERS AT PAR WITH THE NOTICE U/S.143(2), THE AO OUGHT TO HAVE SPECIFICALLY MENTIONED THAT THE SAID LETTER IS A NOTICE U/S.143(2), INSOFAR AS SUCH NOTICE GIVES JURISDICTION TO THE AO AND ALSO INFORMS THE ASSESSEE THAT RETURN OF INCOME IS BEING SCRUTINIZED. LETTERS ISSUED PURSUANT TO THE FILING OF RETURN OF INCOME CANNOT BE CONSIDERED AS NOTICE U/S.143(2) OF THE ACT UNLESS SPECIFIED . THE LETTERS HIGHLIGHTED BY LD. CIT DR ARE ISSUED U /S.142(1) AND THEY ARE MERELY IN THE NATURE OF ENQUIRY BEING CONDUCTED AND CANNOT BE CONSIDERED AS NOTICE U/S.143(2) OF THE ACT CONFIRMING THE JURISDICTION TO THE AO TO FRAME AN ASSESSMENT U/S.143(3). MORE SPECIFICALLY AS THERE WAS NO INDICATION ON SUCH LE TTERS THAT THEY ARE NOTICE U/S.143(2) OF THE ACT. 1 5 . LD. CITDR HAS ALSO ALLEGED THAT REQUIREMENT OF HEARING WAS GIVEN IN CONSONANCE WITH THE PRINCIPLE OF NATURAL JUSTICE, IN THIS REGARD, WE FOUND THAT HON BLE GUJARAT HIGH COURT IN THE CASE OF MAHI VALLEY HOTELS AND RESORTS, 287 ITR 360, HAS IN CLEAR TERMS HELD THAT THERE CANNOT BE IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 12 ACQUIESCE AND/OR WAIVER OF THE JURISDICTION ON PART OF ASSESSEE BY PARTICIPATING IN THE PROCEEDINGS. FURTHERMORE, THE MUMBAI BENCH IN CASE OF S.KUMAR ENTERPRISES(SYNFAB) LIMITED , ITA NO.1903/M/2003, DATED 27 - 7 - 2005, HAS HELD THAT THERE CANNOT BE ACQUIESCE TO JURISDICTION AND NOTICE U /S 143(2) OF THE ACT ISSUED PRIOR TO FILING OF THE RETURN OF INCOME IS NON - EST. IN THE INSTANT CASE BEFORE US, EVEN THOUGH THE ASSESSEE HAS APPEARED BEFORE THE AO FROM TIME TO TIME AND SUBMITTED VARIOUS DETAILS, SINCE THE AO HAS NOT ISSUED ANY NOTICE U/S. 143(2) OF THE ACT AFTER FILING OF RETURN OF INCOME, THERE COULD NOT BE ANY ACQUIESCE TO JURISDICTION, HENCE, THE ASSESSMENT IS BAD IN LAW. 1 6 . THE ASS ESSEE HAS ALSO CHALLENGED THE VALIDITY OF ASSESSMENT SO FRAMED BY ISSUE OF NOTICE U/S. 158BC CALLING THE ASSESSEE TO FILE RETURN WITHIN 15 DAYS. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HON BLE KARNATAKA HIGH COURT IN CASE OF MICRO LAB LTD , 248 ITR 75. MUMBAI BENCH IN CASE OF RAV E NDRA M.PATIL IN IT(SS)A NO. 143&1 96/MUM/2005, VIDE ORDER DATED 29 - 8 - 2012 , HAS DEALT WITH THE ISSUE AND HELD THAT TIME PERIOD TO BE ALLOWED FOR FURNISHING THE RETURN OF INCOME IS NOT LESS THAN 15 DAYS WHICH ME ANS THE TIME PERIOD MUST BE MORE THAN 15 DAYS BUT NOR MORE THAN 45 DAYS. P RECISE OBSERVATION OF THE TRIBUNAL WAS AS UNDER AFTER CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS INCLUDING DECISION OF JURISDICTIONAL HIGH COURT IN CASE OF SHIRISH MADHUKAR DALVI : - 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT NOTICE ISSUED BY THE AO U/S.158BC REQUIRING THE ASSESSEE TO FURNISH THE RETURN IN THE IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 13 PRESCRIBED FORM NO.2B WITHIN 15 DAYS FROM THE SERVICE OF NOTICE. WE REPRODUCE RELEVANT PART OF THE NOTICE DATED 05.02.2002 ISSUED U/S.158BC AS UNDER: THE RETURN SHOULD BE IN THE PRESCRIBED FORM 2B AND BE DELIVERED IN THIS OFFICE WITHIN 15 DAYS FROM THE SERVICE OF THIS NOTICE, DULY VERIFIED AND SIGNED IN AC CORDANCE WITH THE PROVISIONS OF SECTION 140 OF THE INCOME - TAX ACT, 1961. 8. THE LD. DR HAS ALSO NOT DISPUTED THIS FACT THAT THE TIME PERIOD MENTIONED IN THE SAID NOTICE IS WITHIN 15 DAYS. SUB - CLAUSE (II) OF CLAUSE (A) OF SEC.158BC STIPULATES SERVICE OF A NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH RETURN IN THE PRESCRIBED FORM WITHIN SUCH TIME NOT BEING LESS THAN 15 DAYS BUT NOT MORE THAN 45 DAYS. THE RELEVANT PART OF SEC.158BC READS AS UNDER: WHERE ANY SEARCH HAS 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 ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED AF TER THE 30TH DAY OF JUNE, 1995, BUT BEFORE THE 1ST DAY OF JANUARY, 1997, SERVE A NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH TIME NOT BEING LESS THAN FIFTEEN DAYS; (II) IN RESPECT OF SEARCH INITIATED OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS O R ANY ASSETS REQUISITIONED ON OR AFTER THE 1ST DAY OF JANUARY, 1997, SERVE A NOTICE TO SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH TIME NOT BEING LESS THAN FIFTEEN DAYS BUT NOT MORE THAN FORTYFIVE DAYS, AS MAY BE SPECIFIED IN THE NOTICE A RETURN IN TH E PRESCRIBED FORM AND VERIFIED IN THE SAME MANNER AS A RETURN UNDER CLAUSE (I) OF SUB - SECTION (1) OF SECTION 142, SETTING FORTH HIS TOTAL INCOME INCLUDING THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD. 9. THUS, IT IS CLEAR THAT THE TIME PERIOD TO BE ALLOW ED FOR FURNISHING THE RETURN OF INCOME IS NOT LESS THAN 15 DAYS WHICH MEANS THE TIME PERIOD MUST BE MORE THAN 15 DAYS BUT NOT MORE THAN 45 DAYS. THE WORDS USED IN THE PROVISION IS NOT BEING LESS THAN 15 DAYS AND NOT WITHIN 15 DAYS. THEREFORE, THERE IS A CLEAR DIFFERENCE BETWEEN THE TIME PERIOD ALLOWED FOR FURNISHING THE RETURN WITHIN 15 DAYS AND NOT LESS THAN 15 DAYS, WHICH MEANS MORE THAN 15 DAYS WITH A RIDER OF 45 DAYS. THE TERM NOT LESS THAN 15 DAYS HAS BEEN CLARIFIED BY THE CBDT IN CIRCULAR NO.717 I N PARA 39.3(E) AS UNDER: (E) PROCEDURE FOR MAKING BLOCK ASSESSMENT: THE ASSESSING OFFICER SHALL SERVE A NOTICE ON SUCH PERSON REQUIRING HIM TO FURNISH WITHIN SUCH TIME, NOT BEING LESS THAN 15 DAYS, AS MAY BE SPECIFIED IN THE NOTICE,A RETURN IN THE PRESC RIBED FORM AND VERIFIED IN THE SAME MANNER AS A RETURN UNDER CLAUSE (I) OF SUB - SECTION (1) OF SECTION 142 SETTING FORTH HIS TOTAL INCOME INCLUDING UNDISCLOSED INCOME FOR THE BLOCK PERIOD. THE OFFICER SHALL PROCEED TO DETERMINE THE UNDISCLOSED INCOME OF THE IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 14 BLOCK PERIOD AND PROVISIONS OF SECTION 142, SUB - SECTIONS (2) AND (3) OF SECTION 143 AND SECTION 144 SHALL APPLY ACCORDINGLY. THE ASSESSING OFFICER SHALL NOT BE REQUIRED TO ISSUE ANY NOTICE UNDER SECTION 148 FOR THE PURPOSE OF PROCEEDINGS UNDER THIS CHAPTE R. THOUGH THE BLOCK PERIOD CAN BE EXTENDED UPTO 10 YEARS IN THE CASE WHERE THE ASSESSEE HAS NOT DISCLOSED UNDISCLOSED INCOME IN ANYONE OR MORE OF THE PREVIOUS YEARS IN THE BLOCK PERIODS AND THE ASSESSING OFFICER ALSO DOES NOT FIND ANY MATERIAL INDICATING U NDISCLOSED INCOME IN ANY ONE OR MORE OF THE PREVIOUS YEARS COMPRISED IN THE BLOCK PERIOD, IT WILL NOT BE NECESSARY TO DO THE EXERCISE OF COMPUTING THE UNDISCLOSED INCOME FOR THE RELEVANT YEARS AND THE EXERCISE MAY BE LIMITED TO THE YEARS IN RESPECT OF WHIC H THE UNDISCLOSED INCOME HAS BEEN FOUND. ON DETERMINATION OF THE UNDISCLOSED INCOME OF THE BLOCK PERIOD, THE ASSESSING OFFICE SHALL ISSUE AN ORDER OF ASSESSMENT AND DETERMINE THE DEMAND PAYABLE BY HIM ON THE BASIS OF SUCH ASSESSMENT. THE ASSETS SEIZED IN T HE COURSE OF SEARCH OR TAKEN POSSESSION OF AS A RESULT OF REQUISITION UNDER SECTION 132A SHALL BE RETAINED TO THE EXTENT NECESSARY AND SHALL BE DEALT WITH IN THE MANNER LAID DOWN UNDER SECTION 132B. 10. FURTHER, THE HONBLE KARNATAKA HIGH COURT AFTER THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON (SUPRA) HAS CONSIDERED AND DECIDED AN IDENTICAL ISSUE IN CASE OF CIT VS. MICRO LABS LTD. (SUPRA) IN PARA 13 & 14 AS UNDER: 13. RELIANCE WAS ALSO PLACED BY THE ASSESSEE ON THE JUDGMENT IN THE CASE OF ASSISTANT COMMISSIONER OF INCOME TAX AND ANOTHER VS. HOTEL BLUE MOON REPORTED IN [2010] 321 ITR 362 (SC) TO CONTEND THAT THE NOTICE UNDER SECTION 158BC DEALING WITH THE BLOCK ASSESSMENT MAKES SUCH A NOTICE IS REQUIRED TO BE SERVED ON THE PERSON WHO IS FOUND TO JUDGMENT OF THIS COURT IN ITA NO.21/2003 C/W ITA NO.22/2003 DISPOSED OFF ON 03.04.2008, WHEREIN IT WAS HELD THAT WHEN ONE THE NOTICE IS HELD TO BE INVALID, THE ENTIRE PROCEEDINGS WOULD BECOME VOID FOR WANT OF JURISDICTION. FURTHER RELIANCE WAS ALSO PLACED ON THE UNREPORTED JUDGMENT OF THIS COURT IN THE CASE OF M/S. WINTER CARE PRIVATE LTD., VS. DEPUTY COMMISSIONER OF INCOME - TAX DISPOSED OFF ON 15.02.1993 PASSED IN W.P. NO.33832/1992, WHEREIN IT WAS HELD THAT WHEN THE NOTICE DID NOT CONFORM WITH THE REQUIREMENTS OF PROVISIONS OF THE ACT, THE PROCEEDING REQUIRES TO BE QUASHED. 14. THE PROCEEDINGS UNDER CHAPTER XIV - B AND THE PROVISIONS OF SECTION 139 ARE DIFFERENT. A RETURN FILED UNDER SECTION 139 IS A VOLUNTARY RETURN. A RETURN UNDER CHAPTER XIV - B CANNOT BE FILED VOLUNTARILY. IT IS ONLY WHEN A NOTICE UNDER SECTION 158BC WOULD BE ISSUED BY THE REVENUE. HOWEVER, AS AND WHEN VALIDITY ISSUED, IT IS ONLY THEN THAT A RETURN COULD BE FILED. WHEN ANY SEARCH HAS BEEN CONDUCTED UNDER SECTION IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 15 132 OR BOO KS OF ACCOUNT, OTHER DOCUMENT OR ASSETS ARE REQUISITIONED UNDER SECTION 132A, IT IS ONLY THEN, THE ASSESSING OFFICER SHALL PROCEED TO ASSESS THE UNDISCLOSED INCOME. THEREFORE, SECTION 158 BA PROVIDES FOR JURISDICTION TO THE ASSESSING OFFICER TO ASSESS THE UNDISCLOSED INCOME IN ACCORDANCE WITH CHAPTER XIV - B. SECTION 158 BA(2) IS A CHARGING SECTION, 158BB PROVIDES FOR COMPUTATION OF UNDISCLOSED INCOME FOR THE BLOCK PERIOD AND 158 BC PROVIDES FOR PROCEDURE FOR BLOCK ASSESSMENT. THEREFORE, A NOTICE UNDER SECTIO N 158 BC PROVIDES FOR A PROCEDURE TO BE ADOPTED FOR BLOCK ASSESSMENT. UNDER THIS PROCEDURE ENVISAGED, THE ASSESSING OFFICER SHALL SERVE A NOTICE REQUIRING THE ASSESSEE TO FURNISH HIS RETURN WITHIN SUCH TIME NOT BEING LESS THAN 15 DAYS BUT NOT MORE THAN 45 DAYS AS SPECIFIED IN THE NOTICE. THEREFORE, THE TIME TO BE GRANTED TO THE ASSESSEE IN TERMS OF SECTION 158 BC IS A MINIMUM OF 15 DAYS AND A MAXIMUM OF 45 DAYS. IF THE SAID PERIOD OF TIME IS NOT GRANTED, THE NOTICE IS INVALID RENDERING THE ENTIRE PROCEEDING S AS WITHOUT JURISDICTION. ADMITTEDLY IN THIS CASE, THE NOTICE UNDER SECTION 158BC CALLS UPON THE ASSESSEE TO SUBMIT ITS RETURN OF INCOME WITHIN A PERIOD OF 15 DAYS. WITHIN A PERIOD OF 15 DAYS IS LESS THAN 15 DAYS. THEREFORE, THE MANDATORY PERIOD OF TIME AS STIPULATED UNDER SECTION 158 BC HAS NOT BEEN COMPLIED WITH. THE NOTICE THEREFORE IS INVALID. AN INVALID NOTICE CANNOT CONFER ANY JURISDICTION ON THE AUTHORITY. HENCE, THE ENTIRE PROCEEDINGS ARE BAD IN LAW. THE NOTICE IS AB - INITIO VOID. 11. THE DECIS ION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHIRISH MADHUKAR DALVI IS ON THE POINT WHERE THE VALIDITY OF A NOTICE WAS TO BE EXAMINED WHEN A SUBSEQUENT NOTICE WAS ISSUED BY THE AO. THE HONBLE HIGH COURT HAS OBSERVED IN PARA 46 TO 48 AS UNDER: 46. HAVING EXAMINED FACTUAL MATRIX, STATUTORY PROVISION, LAW LAID DOWN BY VARIOUS COURTS PRESENTLY HOLDING THE FIELD, IF ONE TURNS TO THE FACTS OF THE CASE AT HAND, IT IS NOT IN DISPUTE THAT NOTICE DT. 6TH JULY, 1998 DID NOT MENTION CORRECT PROVISIONS OF THE ACT; IT DID NOT MENTION CORRECT BLOCK PERIOD FOR WHICH THE RETURN WAS REQUIRED TO BE FILED; IT DID NOT GIVE 15 DAYS CLEAR NOTICE. THOUGH THE SAID NOTICE WAS DEFECTIVE, IT DID NOT CAUSE ANY PREJUDICE TO THE APPELLANT. UNDISPUTED FACTUAL MATRIX REVEALS THAT APPELLANT WAS SERVED WITH ANOTHER NOTICE DT. 17TH SEPT., 1998 MENTIONING BLOCK PERIOD FOR WHICH THE RETURN WAS REQUIRED TO BE FILED INCORPORATING CORRECT REFERENCE TO THE SECTIONS APPLICABLE TO THE CASE IN QUESTION AND IT MENTIONED THAT THE PERIOD OF 45 DAYS FOR FILING RETURN WAS AVAILABLE TO THE APPELLANT WHICH THE RETURN WAS REQUIRED TO BE FILED INCORPORATING CORRECT REFERENCE TO THE SECTIONS APPLICABLE TO THE CASE IN QUESTION AND IT MENTIONED THAT THE PERIOD OF 45 DAYS FOR FILING RETURN WAS AVAILABL E TO THE APPELLANT WHICH THE APPELLANT DID NOT AVAIL. HE WAS DIRECTED TO FILE RETURN. IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 16 47. PURSUANT TO THE ABOVE NOTICE DT. 17TH SEPT., 1998, THE APPELLANT APPROACHED THE DY. CIT VIDE HIS LETTER DT. 28TH SEPT., 1998 AND SOUGHT FURTHER EXTENSION OF 45 DAYS FOR FILING BLOCK PERIOD RETURN. HE HAS, ACCORDINGLY, FILED HIS RETURN ON 2ND NOV., 1998, DECLARING TOTAL INCOME OF ` 1,01,33,700. THE SAME WAS ACCORDINGLY ASSESSED VIDE ASSESSMENT ORDER DT. 30TH JUNE, 2000. 48. IT IS NOT IN DISPUTE THAT NOTICE DT. 6TH J ULY, 1998 DID NOT CAUSE ANY PREJUDICE TO THE APPELLANT. DURING THE COURSE OF HEARING, WE SPECIFICALLY ASKED MR. SATHE AS TO WHAT PREJUDICE WAS SUFFERED BY THE APPELLANT ON ACCOUNT OF ALLEGED DEFECTIVE NOTICE DT. 6TH JULY, 1998. HE MADE A POSITIVE STATEMENT NO SPECIFIC PREJUDICE WAS SUFFERED BY THE APPELLANT. AT ANY RATE, THE NOTICE DT. 6TH JULY, 1998 SUFFERED FROM ONLY TECHNICAL DEFECTS, IF ANY, AND, IN OUR OPINION, IT WAS PROTECTED UNDER THE UMBRELLA OF S. 292B OF THE ACT. 12. IT IS CLEAR FROM THE FACT S OF THE SAID CASE THAT WHEN THE SUBSEQUENT NOTICE WAS ISSUED THEN THE ALLEGED DEFECTIVE NOTICE DID NOT CAUSE ANY PREJUDICE TO THE ASSESSEE. THEREFORE, THE SAID DECISION IS NOT APPLICABLE IN THE FACTS OF THE PRESENT CASE WHERE THE ONLY NOTICE ISSUED U/S.15 8BC WAS CONTRARY TO THE PROVISIONS OF SEC.158BC. 13. AS REGARDS THE SPECIAL BENCH DECISION IN CASE OF NAVIN VERMA VS. ACIT 100 ITD 73, THE SAID DECISION HAS BEEN CONSIDERED BY THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF NIRANJAN LAL VERMA (SUP RA) WHEREIN THE COUNSEL FOR THE ASSESSEE GAVE UP THE OBJECTION RAISED BEFORE THE TRIBUNAL REGARDING INVALIDITY OF THE NOTICE ISSUED U/S.158BD. THEREFORE, NO FINDING HAS BEEN GIVEN BY HONBLE PUNJAB & HARYANA HIGH COURT ON THE ISSUE OF VALIDITY OF NOTICE. 14. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE HOLD THAT THE PERIOD OF TIME STIPULATED U/S.158BC IS NOT LESS THAN 15 DAYS AND, THEREFORE, THE NOTICE ALLOWED THE ASSESSEE TO FILE THE RETURN WITHIN 15 DAYS IS CONTRARY TO THE MANDATORY CONDITION AS PROVIDED U/S.158BC. ACCORDINGLY, THE SAID NOTICE IS INVALID IN VIEW OF THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF HOTEL BLUE MOON AS WELL AS DECISION OF KARNATAKA HIGH COURT IN THE CASE OF MICRO LABS LTD. CONSEQUENTLY, THE ASSESSMENT FRAMED B Y THE AO BASED ON THE INVALID NOTICE IS VOID AND LIABLE TO BE SET ASIDE. 15. SINCE IN BOTH THE CASES THE ASSESSMENT ITSELF IS VOID AND SAME ARE SET ASIDE. WE, THEREFORE, PROPOSE NOT TO GO INTO THE MERITS OF THE CASE. IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 17 1 7 . IN VIEW OF THE ABOVE DECISION, W E HOLD THAT ASSESSMENT SO FRAMED IS ALSO VOID ON THE PLEA THAT THE AO HAS ISSUED NOTICE U/S.158BC FOR FILING RETURN WITHIN 15 DAYS. 18. ON MERIT OF THE ADDITIONS SO MADE BY THE AO AND DELETED BY THE CIT(A) , THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN THE CASE OF WIFE OF THE ASSESSEE, MRS. SALMA F NOORANI, ORDER DATED 8 - 6 - 2009, WHEREIN THE TRIBUNAL OBSERVED AS UNDER : - 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE DECISIONS CITED. THE ADMITTED FACTS OF THE CASE ARE THAT THERE IS NO DISPUTE REGARDING THE TURNOVER ESTIMATED BY THE ASSESSING OFFICER IN BETWEEN BOTH THE PARTIES. THE CRUX OF THE MATTER TO EXAMINE BEFORE US IS FAIR ESTIMATION OF UNDISCLOSED INCOME OF THE BLOCK PERIOD. CHAPTER XIV - S PROVIDES SPECIAL 'PROCEDURE FOR ASSESSMENT OF SEARCH CASES. UNDER THIS CHAPTER ONLY UNDISCLOSED INCOME IS SUBJECT TO TAX. THE UNDISCLOSED INCOME OF THE BLOCK PERIOD SHALL BE THE AGGREGATE INCOME COMPUTED IN ACCORDANCE WITH THE P ROVISIONS OF THIS ACT, ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITIONS OF BOOKS OF ACCOUNT OR OTHER DOCUMENTS AND SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILABLE WITH THE ASSESSING OFFICER AND RELATABLE TO SUCH EVIDENCE. UNDER THE SCHEME OF THE PROVISIONS FOR BLOCK ASSESSMENT IT IS, APPARENT THAT IT RELATES TO ASSESSMENT OF 'UNDISCLOSED INCOME' OF THE ASSESSEE EXCLUDING THE INCOME SUBJECTED TO REGULAR ASSESSMENT IN PURSUANCE OF RETURNS FILED BY THE ASSESSEE FOR SUCH PERIOD. IT IS A LSO APPARENT FROM THE PERUSAL OF S. 158 B B THAT THE RETURNS ARE ALSO REQUIRED TO BE FILED IN PURSUANCE OF THE NOTICE UNDER S. 158 BC (1)(A) AND THE ASSESSMENT IS TO BE FRAMED ON THAT BASIS IN THE LIGHT OF MATERIAL THAT HAS COME IN POSSESSION OF THE ASSESSING AUTHORITY DURING THE COURSE OF SEARCH WHICH IS FOUNDATION OF THE PROCEEDINGS. THAT BEING SO, THE CORRECTNESS OR OTHERWISE OF THE RETURNS FILED IN PURSUANCE OF THE NOTICE UNDER SECTION 1588C(1)(A) HAS TO BE EXAMINED WITH REFERENCE TO THE MATERIAL IN POSSESS ION OF THE ASSESSING AUTHORITY HAVING NEXUS TO ASSESSMENT OF 'UNDISCLOSED INCOME' WHICH IS WITH THE ASSESSING AUTHORITY, AND PREMISE OF SUCH PROCEEDINGS. IF THE RETURNS FILED BY THE A SSESSEE DO NOT ACCORD WITH THE MATERIALS WHICH ARE ALREADY IN POSSESSION OF THE' AUTHORITY, IT CAN BE ESTIMATED TO BEST JUDGMENT BY THE ASSESSING AUTHORITY ON THE BASIS OF THE MATERIAL IN HIS POSSESSION, HOWEVER, THE ASSESSING AUTHORITY IS NOT CONFERRED WITH POWER TO MAKE ESTIMATION OF INCOME DE HORS THE MATERIAL IN HIS POSSES SION, WHETHER WHILE MAKING REGULAR ASSESSMENT ORDER OR U/S 15888. IT HAS T O BE BORNE IN MIND THAT PROCEEDINGS U / S 15888 AND 158BC ARE THAT OF UNDISCLOSED INCOME. IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 18 THEREFORE, THE PROCEEDING CARRIES WITH A PRESUMPTION THAT RETURNS FILED IN PURSUANCE OF SUCH PROCEEDINGS ARE OF UNDISCLOSED AND NOT NECESSARILY IN ACCORDANCE WITH REFERENCE THE BOOKS OF ACCOUNTS. ITS VERIFICATION HAS TO BE SEARCHED OUTSIDE REGULAR BOOKS WITH REFERENCE TO MATERIAL THAT HAS BEEN FOUND DURING SEARCH. THAT MAKES IT IMPERATIVE TO ADJUD ICATE THE RETURN WITH REFERENCE TO MATERIAL THAT HAS COME IN POSSESSION OF ASSESSING AUTHORITY DURING THE COURSE OF SEARCH PROCEEDINGS AND ON WHICH BASIS THE BELIEF ABOUT EXISTENCE OF UNDISCLOSED INCOME IS ENTERTAINED BY THE ASSESSING AUTHORITY INVITING IN VOCATION OF SS. 15888 AND 158BC. THE ENQUIRY. INTO CORRECTNESS OF SUCH RETURNS WITH REFERENCE TO MATERIAL SO FOUND HAS NEXUS WITH THE OBJECT OF THE SPECIAL PROVISIONS, TO ADJUDGE WHETHER THE ASSESSEE IS STILL HONESTLY DISCLOSING HIS INCOME CORRECTLY AFTER INCRIMINATING MATERIAL HAS BEEN FOUND IN POSSESSION OF THE REVENUE AUTHORITY BEFORE SUCH RETURNS CAN BE REJECTED AND THEREAFTER TO FRAME ASSESSMENT ESTIMATING THE INCOME LIABLE TO TAX TO THE BEST OF JUDGMENT ON THE BASIS OF MATERIAL FOUND AT THE TIME OF SE ARCH. 7.1 SECTION 158BC(B) OF CHAPTER XIV - B PROVIDES THAT THE ASSESSING OFFICER MAY PROCEED TO DETERMINE THE U N DISCLOSED INCOME OF THE BLOCK PERIOD IN THE MANNER LAID DOWN IN SECTION 158BB AND THE PROVISIONS OF SECTIONS 142(2), 143(3), 144 AND 145 AS MAY APPLY. THUS, IT IS CLEAR THAT WHEN THE CIRCUMSTANCES REQUIRED THE BEST JUDGMENT CAN ALSO BE MADE UNDER THIS CHAPTER TO DETERMINE UN DISCLOSED INCOME BASED ON THE MATERIAL FOUND' AT THE TIME OF SEARCH. IN RESPECT OF BEST JUDGMENT THE PRIVY COUNCIL IN CIT VS . LAXMINARAYAN BADRIDAS (1937) 5 IT R 1790 HAS CONSIDERED THOSE WORDS. THERE IT OBSERVED AS UNDER: - 'HE (THE ASSESSING AUTHORITY) MUST NOT ACT DISHONESTLY, OR VINDICTIVELY OR CAPRICIOUSLY BECAUSE HE MUST EXERCISE JUDGMENT IN THE MATTER. HE MUST MAKE WHAT HE HONESTLY BELIEVES TO BE A FAIR ESTIMATE OF THE PROPER FIGURE OF ASSESSMENT, AND FOR THIS PURPOSE HE MUST, THEIR LORDSHIPS THINK, BE ABLE TO TAKE INTO CONSIDERATION LOCAL KNOW/EDGE AND REPUTE IN REGARD TO THE ASSESSEE'S CIRCUMSTANCES, AND HIS OWN KNOWLED GE OF PREVIOUS RETURNS BY AND ASSESSMENTS OF THE ASSESSEE, AND ALL OTHER MATTERS WHICH HE THINKS WILL ASSIST HIM IN ARRIVING AT A FAIR AND PROPER ESTIMATE; AND THOUGH THERE MUST NECESSARILY BE. GUESS - WORK IN THE MATTER, IT MUST BE HONEST GUESS - WORK. IN THA T SENSE, TOO, THE ASSESSMENT MUST BE TO SOME EXTENT ARBITRARY.' 7.2 THE PRIVY COUNCIL, WHILE RECOGNIZING THAT AN ASSESSMENT MADE BY AN OFFICER TO THE BEST OF HIS JUDGMENT INVOLVED SOME GUESS- WORK, EMPHASIZED THAT HE MUST EXERCISE HIS JUDGMENT AFTER TAKI NG INTO CONSIDERATION THE RELEVANT MATERIAL. CAN IT BE SAID THAT IN THE INSTANT CASE THE ORDER OF CIT(A) SATISFIED THE ABOVE TEST. WE FIND THAT THE CIT(A) HAS RIGHTLY HELD THAT NET PROFIT RATE :S THE BEST BASIS OF ESTIMATION OF UNDISCLOSED INCOME UNDER THE CIRCUMSTANCES OF THE CASE. THE CJT(A) NOTED THAT AO IS NOT CORRECT IN ESTIMATING IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 19 UNDISCLOSED INCOME ON THE BASIS OF GP RATE. THE CIT(A) RIGHTLY REJECTED AD'S PRESUMPTION THAT INDIRECT EXPENSES WERE FULLY ACCOUNTED FOR IN THE BOOKS OF A/C. THE AO CANNOT RE LIED UPON THE BOOKS OF A/ C WHICH HAS ALREADY REJECTED FOR COMPUTING UNDISCLOSED INCOME, THE CONTENTION OF THE LEARNED OR WHILE SUPPORTING AO'S ORDER IS THAT ONLY GP IS TO CONSIDERED, SUCH CONTENTION IS GOOD ONLY IN RESPECT OF JUDGING AND MAKING COMPARISON OF WORKING PERFORMANCE OF DIFFERENT BUSINESS UNITS AND NOT FOR THE PURPOSE OF COMPUTING/ ESTIMATING UNDISCLOSED INCOME FOR THE BLOCK PERIOD. PERFORMANCE OF THE ASSESSEE IS NOT SUBJECT TO ASSESSMENT OF BLOCK ASSESSMENT. UNDISCLOSED INCOME IS SUBJECT TO BLOC K ASSESSMENT . AND NET PROFIT IS' ONLY REPRESENTING INCOME: WE FIND THAT THE ASSESSING O FFICER DID NOT CONSIDER RELEVANT UNACCOUNTED EX PENDITURE REGARDING ESTIMATION OF INCOME, SUCH EXPENDITURES ARE B OUND TO BE THERE AND SAME CAN NOT BE IGNORED. THE AO FAIL ED TO APPRECIATE THE SEIZED MATERIAL WHERE IN EXPENDITURES WERE ALSO RECORDED AND NOTED ON THOSE PAPERS. THIS IS EVIDENT FROM ONE OF SEIZED PAPER FILED BY THE REVENUE MARKED AS DR(2) WHERE THE NET PROFIT IS SHOWN LESS THAN 2%.LF WE CONSIDER THE FACTS IN TO TALITY, WE FIND THAT THE AO HAS ESTIMATED UNDISCLOSED INCOME OF R S. 2 , 11 , 10 , 823 / - ON UNDISCLOSED TURNOVER OF RS . 10 , 56 , 69 , 373 / - ON WHICH CALCULATION OF NET PROFIT COMES TO 30.22% WHICH IS ABNORMAL AND NOT FOUND IN THIS LINE OF BUSINESS. THE CIT(A) HAS CONSI DERED THE COMPARABLE CASES, PROFIT RATE IN THIS LINE OF BUSINESS AND OTHER SURROUNDING CIRCUMSTANCES WHICH IS IN CONSONANCE WITH THE PRINCIPLE OF BEST JUDGMENT ASSESSMENT. THE NET PROFIT RATE OF 14% APPLIED BY CIT(A) IS BASED ON MATERIAL FACTS. THE RELEVAN T OBSERVATION OF THE CIT(A) REPRODUCED AS BELOW FROM PAGE 15 OF CIT(A)'S ORDER: 'HOWEVER, ON THE FA CTS OF THE INSTANT CASE, IN MY CONSIDERED OPINION IT WILL NOT BE APPROPRIATE TO APPLY THE NET PROFIT RATE OF 10% FOR ESTIMATING THE PROFIT OF THE APPELLANT . THE REASON IS THAT - AS PER THE APPELLANT'S WON STATEMENT AS PER SEIZED PAPERS THE NET PROFIT RATE OF CAFE GULISTAN, A RESTAURANT OF THE NOORANI GROUP AND SERVING THE SAME KIND OF FOOD, AVERAGED 13.54% FOR THE PERIOD 1998 - 99 TO 2001 - 02. SURELY, THERE CAN BE NO BETTER COMPARISON THAN A GROUP CONCERN WHICH HAS THE SAME MANAGEMENT AND MODE OF OPERATION AS THAT OF C AFE NOORANI. ACCORDINGLY, IN MY OPINION IT WOULD BE REASONABLE TO ESTIMATE THE NET PROFIT OF CAFE NOORANI FOR THE BLOCK PERIOD BY APPLYING THE NET PROFIT RATE O F 14%. THE SLIGHTLY HIGHER RATE THAN THAT OF CAFE GULISTAN HAS BEEN TAKEN TO ACCOUNT FOR THE COMPARATIVE ADVANTAGE OF LOCATION ENJOYED BY CAFE NOORANI. 7.3 CONSIDERING THE ABOVE FINDING OF THE CIT(A), WE FIND THAT THE ESTIMATION MADE BY THE CIT(A) IS A BEST ESTIMATION IN COMPARISON TO THE ESTIMATION MADE BY THE ASSESSING OFFICER AND SAME IS IN CONSONANCE WITH THE PRINCIPLES OF BEST JUDGMENT ASSESSMENT AND ALSO IN CONSONANCE WITH THE JUD GMENTS RELIED UPON BY THE REVENUE. WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) . IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 20 7.4 IN PRINCIPLE THE CONTENTION OF THE LEARNED AR THAT SET OFF - OF AMOUNT OFFERED ON ACCOUNT OF SURVE Y DURING THE BLOCK PERIOD IS ACCEPTABLE. BECAUSE WHILE ESTIMATING THE UNDISCLOSED INCOME, THE ESTIMATION OF INCOME PERTAINING T O THE PERIOD OF SURVEY FOR WHICH THE ASSESSEE HAS DISCLOSED AND OFFERED ADDITIONAL INCOME WHICH ALSO INCLUDED IN THE ESTIMATION OF UNDISCLOSED INCOME MADE IN THE BLOCK PERIOD. THEREFORE, TO THAT EXTENT THERE IS DOUBLE ADDITION AND TAXATION, HENCE, THE ASSE SSEE DESERVES FOR SET - OFF. 'WE ACCORDINGLY DIRECT AO TO CALCULATE THE AMOUNT OF UNDISCLOSED' INCOME FOR THE SURVEY PERIOD AFTER GIVING EFFECT TO THIS ORDER, IF THE AMOUNT COMES LESS THAN RS. 50.00 LAKH THEN THAT LESS AMOUNT IS REQUIRED TO BE ALLOWED FOR SE T OFF AND IF THE AMOUNT COMES MORE THAN RS 50 LAKH, THE SET OFF TO THE EXTEN T OF RS 50 LAKH IS ALLOWABLE. IT IS TO NOTE THAT WHILE ALLOWING THE SET OFF THE TOTAL UNDISCLOSED INCOME MUST NOT BE LESS THAN WHAT IS DECLARED BY THE ASSESSEE IN THE BLOCK RETURN I.E. RS. 83,93,001/ - . 8 AS REGARDS THE 2ND GROUND IN ASSESSEE'S APPEAL REGARDING LEVY OF INTEREST U/S 158BFA (1) HAS NOT BEEN PRESSED BY THE LEARNED COUNSEL AT THE TIME OF HEARING BEFORE US; THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 9. AS REGARD S GROUND NOS. 2 OF REVENUE'S APPEAL REGARDING LEVY OF SURCHARGE, WE FIND THAT SURCHARGE LEVIED BY THE ASSESSING OFFICER HAS BEEN CANCELLED BY THE CIT(A) HOLDING THAT SEARCH IN THIS CASE WAS CONDUCTED PRIOR TO 01.06.2002. THEREFORE, LEVY OF SURCHARGE IS NOT CORRECT. AFTER HEARING THE LEARNED REPRESENTATIVES OF THE PARTIES, WE REMIT THIS MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THIS ISSUE IN THE LIGHT OF LATEST JUDGMENTS AVAILABLE ON THIS ISSUE AFTER PROVIDING REASONABLE OPPORTUN ITY OF HEARING TO THE ASSESSEE. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE PAR TLY ALLOWED AS INDICATED ABOVE. 19 . IT WAS ALSO BROUGHT TO OUR NOTICE BY THE LD. AR THAT DEPARTMENT HAS NOT FILED ANY APPEAL BEFORE THE HIGH COURT A GAINST THE ABOVE ORDER OF TRIBUNAL. LD. DR ALSO CONSENTED THAT NO APPEAL WAS FILED BY THE DEPARTMENT AGAINST THIS ORDER OF THE TRIBUNAL. SINCE THE ADDITION IN THE CASE OF ASSESSEE WAS FRAMED IN RESPECT OF THE SAME SEARCH, AS DONE IN THE CASE OF ASSESSEES WIFE, MRS. SALMA F NOORANI (ITA NO.287/MUM/2005), ORDER DATED 8 - 6 - 2009 , RESPECTFULLY FOLLOWING THE IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 21 SAME, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR COMPUTING THE UNDISCLOSED INCOME BY APPLYING NET PROFIT RATE OF 14% IN CASE OF M/S CAF NOORAN I HAJI ALI TEA SHOP AND AT 12.2% IN CASE OF HAJI ALI JUICE CENTRE. IN VIEW OF THE DETAILED FINDING RECORDED BY THE CIT(A), WE DO NOT FIND ANY INFIRMITY IN HIS ORDER FOR GIVING BENEFIT OF TELESCOPING AND DELETING THE ADDITION MADE ON ACCOUNT OF INVESTMENT I N JEWELLERY AMOUNTING TO RS. 7,03,467/ - AND ALSO ON ACCOUNT OF FIXED DEPOSITS, INTEREST, BROKERAGE ETC.. THUS, EVEN ON MERIT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR DELETING VARIOUS ADDITIONS. 20. IN ITA NO. 5360/MUM/2007 , THE REVENUE HAS A LLEGED CIT(A)S ACTION IN COMPUTING THE INCOME BY APPLYING NET PROFIT RATE IN PLACE OF GROSS PROFIT RATE AS APPLIED BY THE AO. THIS ISSUE IS ALSO COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF WIFE OF THE ASSESSEE MRS. SALMA F. NOORANI, ORDER DATED 8 - 6 - 2009. RESPECTFULLY FOLLOWING THE SAME, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 20 . IN THE RESULT, WE ALLOW THE APPEAL OF THE ASSESSEE ON THE GROUND OF LEGALITY OF THE ASSESSMENT SO FRAMED AND DISMISS BOTH THE APPEAL S OF THE REVENUE . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 14 /12 / 201 5 . SD/ - SD/ - ( AMARJIT SINGH ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; D ATED 14 /12 /201 5 . . /PKM , . / PS IT (SS) A NO 236&248/06 & ITA NO.5360/M/07 22 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//