Income Tax Appellate Tribunal - Delhi
Smt. Krishna Verma vs Assistant Commissioner Of Income Tax on 9 March, 2007
Equivalent citations: [2007]107ITD1(DELHI), [2007]292ITR88(DELHI), (2007)109TTJ(DELHI)193
ORDER
N.S. Saini, A.M.
1. The Hon'ble President, Tribunal vide order dt. 11th Sept., 2006 has constituted this Special Bench for deciding the following questions:
(i) Whether the defect in the notice under Section 158BC which gave less than 15 days to the assessee to file the return affects the validity of the assessment so that it should be annulled or quashed or whether it is a mere procedural irregularity which can be cured, with the result that the assessment may only be set aside to be reframed after curing the defect?
(ii) Entire appeal including above referred to question.
2. Since the grounds of appeal raised in both the appeals are common, facts involved are similar and as they were heard together hence, they are being disposed of by this consolidated order for the sake of convenience.
3. The brief facts of the case are that the AO vide order dt. 30th April, 2001 passed under Section 158BC(c)/143(3) determined the income at Rs. 36,22,300 and Rs. 1,50,86,100 in the hands of Smt. Krishna Verma and Shri Subash Verma respectively.
4. Before the learned CIT(A) the assessee submitted that mandatory time of 15 days had not been allowed from the date of issue of notice dt. 12th Oct., 1999. Therefore, the initiation of the proceedings under Section 158BC of the Act on the basis of alleged notice dt. 12th Oct., 1999 is not valid being illegal and bad in law because of non-compliance with the mandatory requirements of provisions of Section 158BC(a)(i) and Section 158BC(a)(ii) of the Act.
5. The AO present during the course of the hearing before the CIT(A) submitted that the notice under Section 158BC calling for return within 10 days would not invalidate entire block assessment proceedings and it was in these circumstances that Section 292B of the IT Act, deserves to be invoked. It was stated that it was only an omission which would not go to the root of the jurisdiction so as to invalidate the assessment order passed. It has also been stated that what also needs to be taken careful note of is the fact that the assessee took more than 3-1/2 months for filing the return.
6. The learned CIT(A) after considering the rival submissions held that there was no fundamental irregularity committed by the AO by calling for the return within 10 days. Moreover, such an omission or irregularity is minor and deserves to be ignored. Therefore, the plea of the assessee is rejected. Being aggrieved by this order, the assessee is in appeal before the Tribunal.
7. The learned Counsel for the assessee Shri Ajay Vohra, Advocate, submitted that pursuant to a search, the AO or the person in whose case search was carried out under Section 132 assumes jurisdiction to assess such person, invoke the provisions of Chapter XIV-B and deal with the matter under that Chapter. Jurisdiction to make an order of assessment under Section 158BC of the Act is assumed only on issuance and service of a proper and valid notice under that section.
158BC. Procedure for block assessment-Where any search has been concluded 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 AO shall-
(i) in respect of search initiated or books of account or other documents or any assets requisitioned after 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 or any assets requisitioned on or after 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 forty-five days, as may be specified in the notice a return in the 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:
Provided that no notice under Section 148 is required to be issued for the purposes of proceeding under this Chapter:
Provided further that a person who has furnished a return under this clause shall not be entitled to file a revised return;
(b) the AO shall proceed to determine the undisclosed income of the block period in the manner laid down in Section 158BB and the provisions of Section 142, Sub-sections (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply;
(c) the AO, on determination of the undisclosed income of the block period in accordance with this Chapter, shall pass an order of assessment and determine the tax payable by him on the basis of such assessment;
(d) the assets seized under Section 132 or requisitioned under Section 132A shall be dealt with in accordance with the provisions of Section 132B.
9. He pointed out that Clause (a) of Section 158BC of the Act, mandates that where, inter alia, a search is conducted the AO shall serve a notice to such person requiring him to furnish a return for the block period within the prescribed time. Since jurisdiction to make assessment under Chapter XIV-B of the Act is assumed on the basis of issue and service of a proper and valid notice issued under Clause (a) of Section 158BC of the Act, the requirement of that clause that the notice must allow 'not less than 15 days time' for furnishing the return for the block period is a mandatory requirement, non-compliance whereof would vitiate the entire block assessment and would consequently be nullity in the eyes of law.
10. He submitted that jurisdiction to invoke the provisions of Chapter XIV-B and deal with the matter under that Chapter is assumed on the basis of a valid search, but, jurisdiction to make an order of assessment under Section 158BC of the Act is assumed only on issuance and service of a proper and valid notice under that section. Similar distinction was noted by the Supreme Court in the case of R.K. Upadhyaya v. Shanabhai P. Patel . In that case the Supreme Court held that once notice under Section 148 of the Act is issued jurisdiction is vested in the officer but service of notice is a condition precedent to the making of the order of assessment. The relevant observations of the Court reads as under:
...Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation jurisdiction becomes vested in the ITO to proceed to reassess. The mandate of Section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In this case, admittedly, the notice was issued within the prescribed period of limitation as 31st March, 1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of jurisdiction on the ITO to deal with the matter but it is a condition precedent to the making of the order of assessment....
11. Elaborating the above, he submitted that once the AO issues a notice under Section 148 of the Act, within the limitation period and after properly recording reasons and satisfying the other conditions, jurisdiction to proceed to reassess is vested in him. However, jurisdiction to make an order of assessment is assumed only on service of such valid and proper notice. If for any reason there is failure to serve a proper and valid notice, the AO cannot be said to have assumed jurisdiction to make an order of assessment and consequently reassessment order passed would be nullity in the eyes of law.
12. He further submitted that the Special Bench in the case of Smt. Mahesh Kumati Batra v. Jt. CIT (2005) 95 TTJ (Asr) (TM) 461 (2005) 95 TD 152 (Asr) (TM) noticed the distinction between jurisdiction to assess and jurisdiction to make an order of assessment by observing that "by virtue of Section 158BA(1), AO obtains the power connection. Under Section 158BC, he switches on that power by issue of notice...". According to the Special Bench, the jurisdiction to assess is conferred on the AO as a result of search. The jurisdiction to make an order of assessment is "switched on" by issue of notice under Section 158BC of the Act.
13. It was his submission that the aforesaid distinction was also appreciated and recognized in the decision of the Special Bench of the Tribunal in the case of Motorola Inc. v. Dy. CIT (2005) 96 TTJ (Del) (SB) 1 : (2005) 95 ITD 269 (Del) (SB). In para 38.1 (p. 334)(reproduced infra) the Tribunal observed that "the power for initiation of proceedings as per the scheme of the Act is very different from the power of making an assessment". In that case, the Special Bench annulled the assessment completed on the basis of notice issued under Section 142(1) of the Act after the expiry of the assessment year.
14. He also submitted that the Delhi Bench of the Tribunal in the case of Dr. K.C. Verma v. Asstt. CIT (2004) 89 TTJ (Del) 129 : (2003) 84 ITD 33 (Del) held that jurisdiction to assess can be assumed only within the four corners of the provision of Section 143. In this case, assessment was made under Section 144 on the basis of returns filed in response to notices under Section 148. The Tribunal held that jurisdiction to assess income under Section 143(3) can be assumed only on issue of notice under Section 143(2) of the Act, within twelve months. It was further held that since no notice under Section 143(2) was issued within twelve months, notice issued under Section 142(1) after the expiry of the period mentioned in Sub-section (2) of Section 143, shall not be a valid notice and therefore, assessments made under Section 144 shall not be valid. The relevant observations of the Tribunal read as under:
...Before coming to the merits of the contentions of the assessee's counsel, it may be mentioned that Section 148 specifically provides that provisions of the Act shall, as far as may be, apply, as if the returns under Section 148 were returns under Section 139. Therefore, the procedural provisions of Sections 142 and 143 would also apply to such return. Coming to the merits of the assessee's contention, it is seen that marginal note to Section 142 states 'enquiry before assessment'. Sub-section (1) starts with the expression 'for the purpose of making assessment under this Act'. That means that the enquiry notice under Section 142(1) can be issued only if the AO either has validly assumed the jurisdiction to make the assessment or can validly assume jurisdiction to assess after making enquiry under Section 142(1). Therefore, it may be impliedly inferred that if the power to assess is lost by the expiry of limitation period, the notice under Section 142(1) cannot be issued. The jurisdiction to assess can be assumed only within the four corners of provisions of Section 143. The provisions of Sub-section (2) of this section clearly provides that notice for making assessment can be issued only within a period of 12 months from the end of the month in which the return is processed. That means after the expiry of such period, the AO has no jurisdiction to make the assessment under Section 143(2) or (3) and the only course open to the AO is to accept return under Section 143(1). Therefore, in my considered opinion, after the expiry of the period mentioned in Sub-section (2) of Section 143, no notice under Section 142(1) can be issued because of the lack of power to assess.
15. It was submitted by him that the Revenue's appeal against the aforesaid order of the Tribunal has been dismissed by the jurisdictional Delhi High Court in CIT v. Dr. K.C. Verma .
16. He further argued that it is now pertinent to consider the mandate of Section 158BC of the Act. Under Section 158BC(a) of the Act, the AO is directed that he, "shall...serve a notice to such person requiring him to furnish within suchtime not being less than fifteen days but not more than forty-five days."
17. The first limb of Clause (a) of Section 158BC of the Act, provides that "AO 'shall'... serve a notice...." The plain language of Clause (a) using the expression 'shall' thus makes it abundantly clear that the requirement of serving the prescribed notice is a mandatory provision and such requirement cannot merely be held to be directory.
18. In the following cases, the Courts have consistently held that-the use of the word "shall" raises a prima facie presumption that the particular provision is ordinarily mandatory:
(i) Hemalatha Gargya v. CIT
(ii)
(iii)
(iv)
(v)
19. He, however, fairly admitted that it has been held by the Courts that though the use of the word "shall" only indicates prima facie that the provision is mandatory such inference may be rebutted by other considerations, such as object and scope of the enactment and the consequences flowing from such construction.
20. He also submitted that at this stage, it is also pertinent to mention that the Revenue has not disputed the aforesaid proposition that the expression 'shall' in the context of the above provisions means that the issue and service of notice under Section 158BC(a) is mandatory. The contention of the appellant that jurisdiction to make order of assessment under Section 158BC is assumed only on issuance and service of a proper notice under that section is supported by the following judicial precedents:
(i) The Delhi Bench of the Tribunal in the case of N.K. Paiwanda v. Dy. CIT ITA No. 129/Del/2003 pp. 13-19 of the paper book reported at (2004) 89 TTJ (Del) 95-Ed. held that service of notice under Section 158BC is a condition precedent for proceeding to assess the undisclosed income. Therefore, it affects the jurisdiction of the AO. Consequently, if the assessment is made without serving such notice then such assessment would be without jurisdiction and null and void.
(ii) The Delhi High Court in ITA No. 411 of 2004 has dismissed the appeal filed by the Revenue (refer pp. 20-21 of the paper book).
The decision of Tribunal having merged with the decision of the High Court refer Nirma Industries Ltd. v. Dy. CIT , the decision of the jurisdictional High Court is binding on this Hon'ble Bench.
(iii) The Rajasthan High Court in the case of Tinwari Automobiles v. Union of India (2002) 125 Taxman 1104 (Raj)(refer pp. 10-12 of the paper book) held that service of a notice under Section 158BC of the Act, which can be termed as statutory notice, is a condition precedent for making an order under the provisions of the Act.
(iv) The Jabalpur Bench of the Tribunal in the case of Sanjay Kumar Mishra v. Asstt. CIT (2006) 100 TTJ (Jab) 862 (refer pp. 44-52 at 52 of the paper book) held that it is mandatory on AO to serve a notice under Section 158BC of the Act.
21. It was his argument that the mandate of Section 158BC(a) of the Act is not only to issue and serve a notice under that section but to issue a valid and proper notice, which must necessarily prescribe the minimum statutory period of 15 complete days for furnishing the return to the assessee.
22. It was further submitted that now the issue that arises is whether it would be sufficient if notice under Section 158BC(a) is issued even though statutory period of 15 clear days is not provided therein. The Supreme Court in Lachmi Narain v. Union of India has observed that the requirement of the notice prescribing the minimum statutory period is part of the scheme and cannot be held to be non-essential. In that case the issue before the Court was the effect of issuance of a notification issued without giving 'not less than 3 months notice'. The Court observed as under (refer paras 67-68 on pp. 726-727-pp. 1-9 of the paper book):
67. In fixing this period of notice in mandatory terms, the legislature had, it seems taken into consideration several factors. According to the scheme of the Bengal Act, the tax is quantified and assessed on the quarterly turnover. The period of not less than three months' notice conforms to that scheme and is intended to ensure that imposition of a new burden or exemption from tax causes least dislocation and inconvenience to the dealer in collecting the tax for the Government, keeping accounts and filing a proper return, and to the Revenue in assessing and collecting the same. Another object of this provision is that the public at large and the purchasers, on whom the incidence of the tax really falls, should have adequate notice of taxable items. The third object seems to be that the dealers and others likely to be affected by an amendment of the Second Schedule may get sufficient time and opportunity for making representations, objections or suggestions in respect of the intended amendment. The dealers have also been ensured adequate time to arrange their sales, adjust their affairs and to get themselves registered or get their licenses amended and bring in accord with the new imposition or exemption.
68. Taking into consideration all these matters, the legislature has, in its judgment solemnly incorporated in the statute, fixed the period of the requisite notice as 'not less than three months' and willed this obligation to be absolute. The span of notice was thus the essence of the legislative mandate. The necessity of notice and the span of notice both are integral to the scheme of the provision. The sub-section cannot therefore be split up into essential and non-essential components, the whole of it being mandatory. The rule in Raza Buland Sugar Co.'s case (supra) has therefore no application.
23. It was his submission that the sanctity of a notice issued under Section 158BC(a) of the Act, similarly lies in the fact that it must allow not less than 15 days time to the assessee to furnish the return of income. A notice not allowing such mandatory period has no legal sanctity in the eye of law. He submitted that reference, in this regard, may be made to the Mowing decisions referred in the context of similar provisions requiring the notice issued to prescribe the specified complete days for furnishing the return of income. The Courts have consistently held that if the notice does not allow such prescribed time, the notice issued is illegal and bad in law:
(i) Mir Iqbal Husain v. State of UP : Their Lordships observed as under:
We are unable to accept the contention advanced on behalf of the State. The notice under Section 25 must contain the requirements which may be included in a notice under Section 15(3). The notice under Section 15(3) requires an assessee to furnish a return. The requisition does not stop there. It proceeds further, and, indeed, must proceed further. It requires the assessee to furnish a return within a certain period. It appears to us that unless the period for furnishing the return is specified in the notice, it is an incomplete notice. The very object of the Act, which is a fiscal statute, indicates that the assessment should be completed within a definite period and, therefore, it is necessary that the assessee should be required to file a return within a specified period. An assessee who fails without reasonable cause or excuse to furnish a return in due time is liable to penalty under Section 37. The enactment of Section 37 testifies to the intention of the legislature that the return is required to be filed within a definite period, and accordingly a duty is cast upon the assessing authority to specify such period in the notice calling for the return. The notice must not merely require an assessee to furnish a return. It must require an assessee to furnish a return within a specified period, that period being not less than thirty days. It is only then a notice containing the requirements of Section 15(3).
(ii) O. Thomas Children's Benefit Trust v. Agrl. ITO : Notice issued under Section 17(2) of the Kerala Agrl. IT Act, 1950 was held to be invalid since it granted 5/7 days whereas the provisions required statutory period of 30 complete days. The Court held that such requirement cannot be dispensed with or abrogated or obliterated by pleading that after issue of notice sufficient time had been given to the assessee.
(iii) Tansukhrai Bodulal v. ITO (1962) 46 ITR 325 (Assam) (FB) : Notice issued under Section 34 of the IT Act, 1922 was held to be invalid and no notice in the eye of law since it did not allow statutory period of 30 complete days. The argument of the Revenue that sufficient time had been given to the assessee and therefore the notice issued was proper was rejected by the Court.
24. He argued that it is pertinent to mention here that Section 148 of the Act, prior to amendment in 1996 retrospectively from 1st April, 1989, also required that notice issued under that section must prescribe 30 days clear time for filing the return of income. The notices issued under that section prescribing less than 30 days were held to be nullity in the eye of law and the consequent assessment framed on the basis of such notice is illegal and bad in law Also refer CIT v. Ramsukh Motilal , Commr. of Agrl. IT v. Amalgamated Coffee Estates Ltd. (1962) 45 ITR 348 (Ker), Commr. of Agrl. IT v. Ramkuvar . The Courts have, thus, consistently held that if any notice is issued not prescribing/allowing the statutory period prescribed in the relevant statute such notice is invalid in the eye of law.
25. It was further submitted that the scheme of the Act, clearly requires that there must be strict compliance of aforesaid requirements of Section 158BC of the Act as serious consequences follow from its non-compliance, as explained hereunder:
(a) Section 158BFA grants immunity from imposition of penalty if any person furnishes return under Clause (a) of Section 158BC of the Act disclosing any 'undisclosed income'.
When a person is not served with a notice under Section 158BC(a), such person is denied a legal right to furnish the return of his undisclosed income and in such a case, such person is altogether deprived of his right to claim immunity from penalty under Section 158BFA of the Act;
(b)In a case where notice is issued and served on the assessee, but such notice does not prescribe the statutory period of 15 complete days for furnishing the return, such a notice has, as discussed supra, no legal sanctity in the eye of law. Further, by the said notice the assessee is forced to furnish return within the short time prescribed in the notice. Since the assessee is, in the process, not granted sufficient time to prepare and furnish its return, the assessee is denied proper opportunity to compute its 'undisclosed income', thereby exposing him to imposition of penalty under Section 158BFA of the Act.
It is important to note that return once filed under Section 158BC(a) of the Act cannot be revised (refer second proviso thereto). Therefore, in a case where the assessee has not been granted sufficient time to furnish a return as prescribed under the law, such assessee is forced to file his return within the time prescribed and such person will thereafter, have no recourse of filing a revised return.
(c) Under Sub-section (1) of Section 158BFA interest is levied for non-filing of the return or for filing the return within the time specified in the notice) issued under Section 158BC(a) of the Act. Such interest is imposed for the period commencing from the day immediately following the expiry of time specified in the notice. Such interest is mandatory and cannot be reduced or varied by any authority.
Issuing an invalid notice under Section 158BC(a) of the Act prescribing less than statutory period results in imposition of interest for a larger period causing prejudice to the assessee.
The aforesaid, thus, leads to an inescapable conclusion that the notice issued under Section 158BC(a) of the Act, must provide minimum statutory period of 15 days for filing the return.
(d) In the case of a person other than a person who is subjected to search, proceedings are initiated under Section 158BD of the Act. Jurisdiction in the case of such other person is clearly assumed by satisfying the prerequisites of Section 158BD (including but not limiting to satisfaction of the AO of searched person and transfer of relevant material) and also serving upon the assessee a notice under Section 158BC of the Act. In case of such other person, notice issued under Section 158BC is again a jurisdictional notice since there is no search in the case of the said other person and therefore, an invalid notice will vitiate the entire assessment.
26. He concluded that in view of the aforesaid, the inescapable conclusion that one arrives at is that the provisions of Section 158BC(a) are mandatory conferring jurisdiction to make an order of assessment under that section and, therefore, issue and service of an invalid notice will vitiate the block assessment and result in the order being declared as nullity.
27. Shri Ved Jain, chartered accountant, intervener submitted that the question before the Bench is regarding Chapter XIV-B which is a special procedure for assessment of search cases. As per provision of Section 158BC where a search has been conducted under Section 132, the AO is required to serve a notice to the person in whose case a search has been conducted asking him to furnish within such time, not being less than 15 days, return of his total income including undisclosed income for the block period. This is the requirement for making an assessment in respect of a person in whose case a search has been conducted. However, in the case of a person in whose case a search has not been conducted and the AO is satisfied that any undisclosed income belongs to such person other than the person with respect to whom the search was made under Section 132, then such AO is required to hand over the books of account and other documents to the AO having jurisdiction over such other person and then such other AO has to proceed under Section 158BC against such other person. Thus, the proceeding in respect of the person who has been searched as well as the person in whose respect the search has not been conducted, both have to be under Section 158BC whereby the AO shall serve a notice requiring furnishing of return within such time not being less than 15 days. Thus the question before this Special Bench is to be examined in the context of a notice issued in the case of a person who has been searched. It is an important issue which needs to be examined because in case the jurisdiction of the person who has been searched comes to the AO the moment the search is conducted, then by implication the AO shall also get the jurisdiction in respect of the person other than the person who has been searched.
28. He submitted that to decide the above issue it is important to make a distinction between Section 158BA and Section 158BC. The crucial point for determination will be whether Section 158BA itself gives jurisdiction to the AO so that the requirement of Section 158BC is only procedural or, in the alternative, Section 158BA makes only a classification and jurisdiction is assumed by the AO under Section 158BC. For this, one is required to read not only the main heading but also the sub-headings given under Chapter XIV-B. The main heading of Chapter XIV-B is the special procedure for assessment of search cases, followed by subheadings asunder:
(i) Definitions-Section 158B
(ii) Assessment of undisclosed income as a result of search-158BA
(iii) Computation of undisclosed income of the block period-158BB
(iv) Procedure for block assessment-158BC
(v) Undisclosed income of any other person-158BD
(vi) Time-limit for completion of block assessment-158BE
(vii) Certain interest and penalty not to be levied or imposed-158BF
(viii) Levy of interest and penalty in certain cases-158BFA
(ix) Authority competent to make the block assessment-158BG
(x) Application of other provisions of this Act-158BH
29. A cursory look at the above headings clearly indicates that Chapter XIV-B is a code in itself applicable for assessment in search cases. A comparison of the above can be made with the main Act, which is applicable in the case of a person who has not been searched.
(i) Definitions-Section 2
(ii) Taxability of income other than as a result of search-Sections 4, 5 and 6
(iii) Computation of income-Section 115
(iv) Procedure for assessment-Chapter XIV where the heading is exactly same starting from Section 139 to Section 158.
30. Hence, it was his submission that thus, the 'Procedure for block assessment' which is the heading of Section 158BC is a substitute for the heading given in Chapter XIV-Procedure for assessment in the case of regular assessment. In case the jurisdiction to assess the normal income arises under the provisions Of Section 139(2) to Section 158, then the jurisdiction to assess the undisclosed income in the case of a search will definitely arise under Section 158BC and not under any other section.
31. It was also his submission that Section 158BA provides that where a search is initiated under Section 132, then the AO proceeds to assess the undisclosed income in accordance with the provision of this Chapter only, takes the case out of the normal assessment procedure prescribed under Chapter XIV and brings the case under Chapter XIV-B. It does not give a jurisdiction per se to the AO but only makes a classification that the assessment in the case of a search shall be made under Chapter XIV-B and not under Chapter XIV. It is important to note that by this section the assessee would have got a right to contend that the assessment even after the search is to be followed under the normal procedure of assessment under Chapter XIV. Thus, Section 158BA makes only a classification between the two procedures of assessment and nowhere gives a jurisdiction. The jurisdiction gets created.
32. He further submitted that the provisions of Section 158BA are akin to the provisions of Section 4 of the IT Act. Section 4 provides that where a Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of this Act in respect of the total income of the previous year of every person. Section 4 creates a classification that it is on income that is to be charged in accordance with and subject to the provisions of this Act. But for this provision, tax on income could not have been charged under the IT Act which is levied by the Finance Act every year. Section 2 of the Finance Act every year provides that income-tax for the assessment year commencing from the 1st day of April shall be charged at the rates prescribed in Part 1 of the First Schedule. The First Schedule of the Finance Act prescribes rates for various classes of persons. As such, the charge of tax on income arises under Section 2 of the Finance Act and the provisions of IT Act including Section 4 provide that tax at that rate or those rates is to be charged in accordance with and subject to the provisions of the IT Act.
33. He therefore, argued that thus, it will not be justified to say that Section 158BA gives jurisdiction to the AO and the remaining provisions are not substantive provisions. In fact Sub-section (2) of Section 158BA itself supports the above interpretation as it provides that the total undisclosed income relating to the block period shall be charged to tax at the rate specified in Section 113 as income of the block period irrespective of the previous year or years to which such income relates and irrespective of the fact whether regular assessment of any one or more of the relevant assessment years is pending or not.
34. It was also his submission that a combined reading of the provisions of Sub-sections (1) and (2) of Section 158BA clearly demonstrates that these provisions are akin to the provision of Section 4 of the IT Act and as such this section only classifies and takes out a case in the case of a search from normal procedure to the special procedure prescribed under Chapter XIV-B which as submitted earlier is a complete code in itself.
35. He further argued that sequencing of provisions of Chapter XIV-B also supports the above contention starting from 'Definitions', then 'Charging provision to computation', then 'Procedure for block assessment'. It is also important to note that the words used in Section 158BA(1) are:
The AO shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter. The words 'shall proceed to assess' are different than the words 'shall assess'. The use of the words 'shall proceed to assess' make it very clear that it is only a classification whereby a proper clause is being created for charging as well as computation and assessment of the person in whose case search has been conducted. Had the intention of the legislature been to create an automatic jurisdiction, there would not have been any need to insert the words 'proceed to'. It would have been 'the AO shall assess'. The use of the words 'proceed to' clearly demonstrates that it is only the applicability of this Chapter which has been effected to. The whole scheme has been framed and the language of Section 158BA is to carve out the case from Chapter XIV.
36. He further submitted that the above interpretation gets also justified from the provisions of Section 158BD applicable where the undisclosed income belongs to a person other than the person in whose case the search has been conducted. As submitted earlier, the provisions of Section 158BC also apply to such other person. If the interpretation that Section 158BA gives a jurisdiction the moment a search is carried out, obviously such jurisdiction cannot be for the person in whose case the search has not been conducted. The jurisdiction of such other person shall obviously come under Section 158BC of the Act. If that be so, then the jurisdiction of the person in whose case the search has been conducted shall also flow from Section 158BC as both have to follow the same procedure. It cannot be said or interpreted that the jurisdiction in the case of a person in whose case a search has been conducted will flow from Section 158BA whereas in the case of any other person the jurisdiction will flow from Section 158BC. The above interpretation cannot be taken unless inserting some words in Section 158BC which are not there. The provisions of Section 158BC are akin to the provisions of Section 148 of the Act and there are a number of judgments whereby it has been held that a defect in the notice under Section 148 will be incurable and the proceeding in consequence to any such notice shall be null and void so that it should be annulled and no distinction whatsoever so far as the legal requirement of the notice to be issued under Section 148 or the notice to be issued under Section 158BC of the Act. Section 148 also prescribes that the AO shall serve on the assessee a notice requiring him to furnish within such period (not being less than 30 days) as may be specified in the notice, a return of his income of which he is assessable under this Act during the previous year corresponding to the relevant assessment year. The requirement of Section 158BC prescribes that the AO shall serve a notice to such person requiring him to furnish within such time not being less than 15 days a return setting forth his total income including the undisclosed income for the block period. As such, the requirement and the language of both the sections are exactly the same. Reliance in support of the above is being placed on the following judgments:
(i) CIT v. Braithwaite & Co. Ltd. ;
(ii) CIT v. Ekbal & Co. (1945) 13 ITR 154 (Bom);
(iii) Prabhat Sawmill & Timber Merchants v. ITO (1994) 51 ITD 548 (Bang);
(iv) CIT v. Ramsukh Motilal (supra).
37. It was further submitted that the issue of the notice determines the liability of the assessee as the assessee is liable to pay interest and penalty with reference to such notice only which is a very important consideration to make a distinction whether the section is machinery provision or a substantive provision. The fact that liability to pay interest and penalty is determined with reference to the notice itself supports the contention that the provisions of Section 158BC are substantive provisions. He submitted that Sub-clause (b) of Section 158BC provides that the AO shall proceed to determine the undisclosed income of the block period in the manner laid down in Section 158BC and the provisions of Sections 142(2), 142(3) and 144 shall, so far as may be apply. In case it is interpreted that Section 158BC is only a procedural requirement, then the above provisions shall become redundant.
38. It was also his argument that there is another point whether an assessment can be made without issue of notice under Section 158BC. It is also important to note that as per the provisions of Section 158BFA(2) no penalty is imposable in respect of the income disclosed in the block return filed in consequence to notice under Section 158BC and the tax on the basis of such return has been paid and evidence has been furnished along with the return of income. In case the return filed is not in compliance with the provisions of Section 158BC, i.e., if it is not filed within the period prescribed, there is a liability to penalty.
39. It was further submitted that the judgment delivered by the Amritsar Special Bench in the case of Suit. Mahesh Kumati Batra v. Jt. CIT (supra) where it has been held that the mistake in the notice issued under Section 158BC is only a procedural irregularity, which can be cured, has not considered the above arguments. In the said judgment a reference has been made to the Supreme Court judgment delivered in the case of CIT v. Pearl Mechanical Engg. & Foundry Works (P) Ltd. to make a distinction between 'error in jurisdiction' and 'error of jurisdiction'. For this a reference has been made to the judgment of the Karnataka High Court in the case of A. Premchand Ors. v. IAC and Ors. where it has been held that the jurisdiction to initiate proceedings for acquisition of immovable property is conferred on the IAC by Chapter XX-A of the Act and the error committed by the IAC in exercise of his own jurisdiction cannot be treated as outside his jurisdiction. By drawing an analogy from the above interpretation it has been held that since the jurisdiction to assess comes to the AO from the provisions of Section 158BA, as such, any error committed under Section 158BC will be 'error in jurisdiction', not 'error of jurisdiction'. According to him that the analogy drawn is not correct. In para 18 a reference has been made to the main heading of Chapter XIV-B i.e. 'Special procedure of assessment' of such cases and a distinction has been drawn that the first three sections are substantive and the remaining sections are procedural. In para 20 it has been stated that as per the provision of Section 158BA(1), it is from this provision the AO derives power to assess the undisclosed income of a person who has been subjected to search. On the basis of this interpretation it has been assumed that this provision is in consonance of the provision of Section 120 which deals with the jurisdiction of income-tax authorities and as such the AO gets the jurisdiction and what he does thereafter will be an error in executing the jurisdiction and here the fallacy lies. The provision of Section 158BA(1), as submitted earlier, only makes a classification that in the case of a search the code of Chapter XIV-B will be applicable and not the normal assessment code. This was the most important distinction which has not been considered nor argued in that case before the Special Bench. As submitted earlier, but for the provision of Section 158BA(1), the special procedure and the self-contained code in Chapter XIV-B would not have been applicable. The AO will get the jurisdiction only after he serves notice under Section 158BC and not before. Further, the inference drawn in that judgment that the provision of Section 147 and Section 148 in respect of reassessment in the case of income escaping assessment and the provision of Section 158BC in respect of assessment of undisclosed income are different, is not correct. Both are the provisions for assessing the income which has not already been subjected to tax. In para 20 while drawing the above inference again, a presumption has been made that the AO gets the jurisdiction to assess undisclosed income under Section 158BA which, as submitted earlier, is not correct. In view of the above it is submitted that the AO gets jurisdiction by issue of notice under Section 158BC and Section 158BA(1) only makes a classification and gives power to the AO to assume jurisdiction by issue of notice under Section 158BC of the Act. Any defect in the issue of such notice shall be defect of jurisdiction and shall be incurable. It is further submitted that the provision of Section 158BC are mandatory provision and in Sub-clause (a) the words used are the AO 'shall'. The words 'may' and 'shall' have been used at several places in the IT Act though it is well, established that the construction of the word 'shall' depends upon the provisions of the Act, the setting in which the direction is given and the consequences that follow from the infringement of the direction and other such considerations. The use of the word 'shall' in the ordinary manner is mandatory and raises a prima facie presumption that the provision is imperative.
40. He further argued that one of the crucial tests to determine whether a particular statutory requirement is mandatory or directory is to see whether any penal consequence will follow by non-compliance. However, if penal consequences are indicated, it will serve to infer that the statutory requirement is mandatory. In the present case, as submitted earlier, penal consequences follow as regards verification of the return, immunity from penalty, levy of interest which has a direct bearing with the issue of notice within the period prescribed and the filing of return in consequence thereof. As such, it cannot be interpreted that the word 'shall' used in Section 158BC is not mandatory.
41. Sri J.P. Gulati, advocate, intervener on behalf of Dharambir Bhadana, argued that the moot question; inter alia, is what would be the fate of the assessment where AO has served notice under Section 158BC requiring the assessee to file return of income 'within 15 days' from the receipt of notice, whereas Section 158BC mandates that time 'not less than 15 days' but not more than 45 days, as may be specified in the notice has to be allowed. He submitted that the immediate and only answer would be that such a notice is contrary to the provisions contained under Section 158BC of the Act. The next relevant question would arise as to whether such a notice suffers from a mistake, defect or omission but is in substance and effect in conformity with or according to the intent and purposes of the Act so as to invoke the provisions of Section 292B of the Act. Apparently, there is no omission in such a notice and what at the best can be said is that time-limit of 15 days was mentioned by mistake and thus it is a defective notice. Then, the pertinent question to be considered is whether such a mistake or defect in the notice which is contrary to the mandatory provisions of the statute is curable under Section 292B of the Act.
42. He submitted that Section 292B was introduced by the Taxation Laws (Amendment) Act, 1975 and in para 47 of the Explanatory Notes vide Circular No. 179, dt. 30th Sept., 1975, (1976) 102 ITR (St) 28 the Board has clarified the provisions as under:
A new Section 292B has been inserted to provide that no return of income, assessment notice, summons or other proceedings shall be invalid merely by reason of any mistake, defect or omission, if the return, assessment notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purposes of the Act. This provision has been made to provide purely technical objections without substance coming in the way of the validity of assessment proceedings, etc.
43. He urged that the words, 'technical objection' has not been clarified in the Act. As per the Law Lexicon by P. Ramanatha Aiyar, technical defect : "It is a mistake which does not go to the core of the matter".
44. He also pointed out that it would be noticed that there are no provisions whereby it can be said which defects in the notice can be covered under Section 292B of the Act, and which not. The Act, however, provides Explanation below Section 139(9) where various defects in the return of income have been detailed, which can be removed on being so pointed out by the AO and in case of failure to remove such defects the return of income has to be treated as invalid. However, in addition to the defects mentioned in Explanation below Section 139(9), there can be other circumstances where the return of income may not in accordance with the mandatory provisions of Act, for example it is not signed and verified by the assessee, and in such circumstances, such a return would be an invalid one.
45. After pointing out the above, he argued that the Chapter XIV-B of the IT Act, 1961 contains a special procedure for assessments of search cases. It does not contain any provisions whereby the assessee can file return for the block period on his own. The proceedings can be initiated only when the AO shall issue a notice as is prescribed under Section 158BC requiring the assessee to file the return of income within the time mentioned in the notice and such time shall not be less than 15 days and not more than 45 days. For understanding the true import of the provisions of Section 158BC, the provisions of Section 158BFA(1) may be considered, which lays down that where return for the block period is furnished after the expiry of the period specified in such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent of the tax on undisclosed income, for every month or part of the month comprised in the period commencing on the day immediately following the expiry of the time specified in the notice. It would thus be noticed that for charging interest, since a part of the month would be taken as one month, interest charged under certain circumstances would vary when time allowed in the notice is 15 days and not 16 days. For example, if notice under Section 158BC is served and 15 days period expired one day prior to the end of the relevant month and return is not filed within the prescribed time, then interest would be charged for one complete month, even when the delay is of only one day. However, in case time allowed in the notice under Section 158BC is of 16 days, then interest would be charged only from the next month and thus interest under Section 158BFA(1) in two situations would be different. It is an admitted position of law that interest under Section 158BFA(1) is mandatory and the same cannot be waived. It would thus be seen that when time to file the return allowed is within 15 days and not less than 15 days i.e. at least 16 days, interest under Section 158BFA(1) would be drastically different and thus such a defect cannot be said without substance. If such a defect is examined deeper and time allowed is considered ranging between 16 to 45 days, then ambiguity in the implementation of Section 158BFA(1) would be further compounded. It can thus safely be said that such a defect cannot be said to be technical or minor but it would be fatal to the provisions of Section 158BFAU) of Chapter XIV-B of the Act.
46. He also pointed out that a similar position also existed in the provisions of Section 148 prior to its amendment by the Finance Act, 1996, which required that notice under Section 148 can be issued to the assessee for filing of the return of income within a specified period not being less than 30 days. Section 148 was modified with retrospective effect from 1st April, 1989 and the Board's Explanatory Notes on Finance Act, 1996 are to the following effect:
Notices issued under Section 148 have been held to be invalid by the Tribunal on the ground that whereas the statute allows the taxpayer a time 'not being less than thirty days', the notice gives the direction to file a return 'within a period of thirty days'. The Bombay High Court in the case of CIT v. Ekbal & Co. (1945) 13 ITR 154 (Bom) decided a similar issue by laying down that the expression 'within thirty days' and 'not less than thirty days' are two quite different things. In view of the aforesaid decisions of the Bombay High Court and also of the Tribunal, the Act provides, in Section 148 that the AO may require the assessee to furnish the return within the period specified in the notice.
47. He also submitted that the Hon'ble Bombay High Court in CIT v. Sudhir S. Mehta has upheld the Tribunal's order cancelling the assessment since notice under Section 148(1) issued requiring the assessee to file the return within thirty days was held contrary to the provisions of Section 148(1) as existing at that time. The Department's plea in the application under Section 254(2) that Section 148 has been amended with retrospective effect from 1st April, 1989 was not admitted on the reason that the assent of the President was received on 28th Sept., 1996 whereas the Tribunal had already passed the order on 26th June, 1996.
48. He drew our attention to the decision of the Madhya Pradesh High Court in Khialdas & Sons v. CIT wherein at p. 962 clarifying the provisions of Section 292B and it has been opined that the idea is that if any minor defect is there which does not militate against the intent and purpose of the Act, then such minor defect can be cured but according to Section 140 which is mandatory, every return has to be signed and verified. Section 140 says that a return under Section 139 shall be signed and verified. The word "shall" has been used which shows that it is mandatory that every return should be signed and verified and if it is not signed and verified, then it is in breach of the provisions of Section 140 of the Act. Therefore, this cannot be defect which can be cured and any return which has been filed without signature and verification of the assessee, will not be treated as a valid return.
49. He urged that it seems that provisions of Section 292B can be invoked only where defects are minor in nature i.e., some irrelevant columns were not struck of but the notice, was properly served etc., and thus a pure technical objection has been raised. However, if a notice is contrary to the mandatory provisions of the statute, such a notice cannot be said to be defective, but it is no notice and the entire proceedings would be bad in law.
50. He pointed out that the Tribunal, Amritsar, Special Bench, in Smt. Mahesh Kumati Batra v. Jt. CIT (supra) have made analysis of provisions of Section 158BC vis-a-vis Section 148 and have opined that it cannot be said that notice under Section 158BC is akin to one issued under Section 148 and that any defect in the notice or with regard to its issue cannot render the block assessment proceedings to be null and void. However, in Janki Exports International v. Union of India and Ors. the jurisdictional High Court have opined that Section 158BD is analogous to Section 147 of the Act.
51. He further pointed out that the apex Court in Parashuram Pottery Works Co. Ltd. v. ITO has opined:
It has been said that taxes are the price that we pay for civilization. If so, it is essential that those who are entrusted with the task of calculating or realising that price should familiarize themselves with the relevant provisions and become well versed with the law on the subject. Any remissness on their part can only be at the cost of the national exchequer and must necessarily result in loss of revenue.
52. He argued that it needs no emphasis that a valid notice is the sine qua non for assuming jurisdiction and if for any reason, the notice is invalid insofar as it is contrary to the mandatory provisions of the section, the provisions of Section 292B cannot come to rescue such a blatant illegality and infirmity committed in the notice under Section 158BC where minimum time prescribed therein is not allowed.
53. He submitted that no doubt, on the face of it may appear that when in the notice under Section 158BC it is mentioned that the return should be furnished 'within 15 days instead of 'within 16 days', it is only a mistake, but it would be pertinent to consider as to whether such mistake could be rectified and if so, how it should be done, particularly when such a defect was not remedied by the AO by giving another corrected notice before the assessment was completed.
(i) Can such a defect be ignored by invoking the provisions of Section 292B of the Act, where the assessee had filed the return either within 15 days or after 15 days and no objection was raised at the stage of assessment proceedings; or
(ii) The assessment may be set aside with the direction that another notice under Section 158BC should be served and assessment may be made afresh in accordance with the law; or Since the notice under Section 158BC already served was an invalid one, the whole proceedings are bad in law and thus the assessment may be declared null and void.
54. He at last argued that to remedy the defect by setting aside the assessment to be made afresh would not be an appropriate remedy, as it would be premium to the Revenue for the failures committed by it. It is also felt that in case it is held that assessee cannot waive such defect in law, then appellate authority would also not be competent to condone such a defect or mistake, and the only remedy probably left over would be to cancel the assessment being bad in law, or the amendment in Section 158BC is made in the same manner as was done in regard to Section 148 of the Act, as it existed prior to its amendment by Finance Act, 1996. He also placed reliance on the following judgment of the Tribunal:
Navin Verma v. Asstt. CIT , where the following judgments have been relied upon:
Vinod Kumar v. Asstt. CIT (2005) 98 TTJ (Agra) 769 (Unreported judgment of Tribunal 'E' Bench, New Delhi dt. 9th Feb., 2005 in IT(SS)A Nos. 142 and 143/Del/2003 in Neera Agarwal and Anil Agarwal v. Dy. CIT.
55. The learned Departmental Representative Shri K.C. Jain, CIT-Departmental Representative at the outset relied on the decision of the Hon'ble Bombay High Court in Shirish Madhukar Dalvi v. Asstt. CIT (2006) 203 CTR (Bom) 621 and quoted from p. 634 para Nos. 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 appellant did not avail. He was directed to file return.
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 Rs. 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 July, 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 Section 292B of the Act.
56.The learned Departmental Representative also placed reliance on the decision of the Amritsar Special Bench of the Tribunal in Smt. Mahesh Kumaii Batra v. Jt. CTE (supra). The principles enunciated in the said decisions are as under:
(a) That the provisions of Chapter XIV-B provide for a special procedure for the assessment of undisclosed income found in the course of search;
(b) That the concept of undisclosed income under Chapter XIV-B is narrower than and different from the concept of income escaping assessment under Section 147 of the Act;
(c) Though, broadly speaking, Chapter XIV-B contains machinery provisions for the assessment of undisclosed income, it does contain provisions which are in the realm of substantive law. At least, Sections 158B, 158BA and 158BB are such provisions, whereas Section 158BC is in the realm of procedural law;
(d) Section 158BA(1) gives power to the AO to assess undisclosed income and such power is conferred on the AO at the time when search is initiated in the case of a person. Thus, the existence of the jurisdictional fact of search having been initiated gives power to the AO to assess undisclosed income.
(e) The acquisition of power by the AO is not at all related to the formation of belief by the AO that a person has not disclosed certain income.
(f) The AO can and has to activate his power only on the completion of search;
(g) Since the action of using notice under Section 158BC is within the jurisdiction and not of assuming jurisdiction, any error committed in such action cannot render the whole assessment a nullity and that such errors are rectifiable by Section 292B of the Act.
57. He further relied on the decision of the Special Bench of the Tribunal in the case of Promain Ltd. v. Dy. CIT (2005) 95 TTJ (Del) (SB) 825 : (2005) 95 ITD 489 (Del) (SB) wherein it was held that though jurisdiction to assess the undisclosed income found as a result of search initiated after 30th June, 1995 is vested in the AO under Section 158BA, the actual exercise of such power begins under Section 158BC by serving the notice on the assessee to file the return for the block period, (para 50)
58. Further reliance was placed by him in the case of Chatturam and Ors. v. CIT (1947) 15 ITR 302 (FC) wherein it was held that the income-tax assessment proceedings commence with the issue of a notice. The issue or receipt of a notice is not, however, the foundation of the jurisdiction of the ITO to make the assessment or of the liability of the assessee to pay the tax. The liability to pay the tax is founded on Sections 3 and 4 of the IT Act, which are the charging sections. Section 22 and others are the machinery sections to determine the amount of tax.
59. The learned Departmental Representative distinguishing the decisions cited by the Authorized Representative of the assessee as well as the intervenes, submitted that in those cases it has not been held that jurisdiction to assess an assessee for the block period is derived by the AO by issue of a notice under Section 158BC(a)(i) of the IT Act, 1961.
60. He submitted that the concept of jurisdiction itself heeds to be considered carefully lest the question of assuming jurisdiction and the question of following machinery provisions where jurisdiction already exists is confused. There is no dispute that the jurisdiction cannot be assumed if the same doesn't exist and the question of waiver does not arise in such cases. There are different dimensions of jurisdiction. The jurisdiction can be with reference to particular area, type of cases, with reference to a profession, monetary limit etc. or it can be with reference to specially assigned cases. In all such cases if the AO does not have jurisdiction over certain cases, no amount of waiver on the part of assessee can confer this jurisdiction on him. Similarly if time-limit for issuing notice or framing assessment is over, the AO becomes functus officio. On the other hand if the AO is having jurisdiction but it is only a case of framing assessment by following certain machinery provisions, and if these machinery provisions are not followed properly then it will be a question of irregularity which can be cured by taking the matter back to the stage where the irregularity occurred. This is so because the taxability arises by virtue of Sections 3 and 4 of the IT Act and Section 142 etc., are machinery provisions provided for the procedure to be followed while determining the amount of tax chargeable.
61. He viewed that the question of validity of notice under Section 158BC of the IT Act wherein sufficient time for filing return has not been given is to be examined in this context. It is to be noted that unlike Section 148, in case of block assessment the AO doesn't get jurisdiction consequent upon issue of a notice by him. In fact, the jurisdiction gets conferred on him by virtue of Section 158BA(1) of the IT Act which provides that in case of an action under Section 132 of the IT Act "the AO shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter." This provision firstly confers the jurisdiction on the AO and secondly makes it mandatory for him to make an assessment as per the provisions of this Chapter. It is immaterial whether any undisclosed income was found during the search or not and the AO even for determining the nil undisclosed income has to pass an assessment order. Thus the question of issue of notice under Section 158BC is only in compliance to machinery provisions and any irregularity therein doesn't go to the root of the matter and is therefore curable. Even the plain reading of Section 158BC of the Act makes it clear that where any search has been conducted under Section 132/132A of the IT Act the AO has to issue a notice and frame the assessment. It has been specifically provided that no notice under Section 148 is required to be issued in such cases. Reference to this particular provision is extremely important because, as discussed above, jurisdiction under Section 148 is acquired by virtue of a notice issued by AO whereas in the case of a search the jurisdiction is conferred by virtue of an action under Section 132 of the IT Act and is not dependent on issue of a notice. To this extent Section 158BA is more akin to Section 139 of the IT Act and similarly Section 158BC is in tune with Section 143 of the IT Act.
62. He vehemently argued that all the decisions of the various High Courts/Supreme Court cited can be seen in the light of above proposition. If it has been found that the jurisdiction was acquired by virtue of issue of a notice the Courts have held that if the notice was not validly issued, it goes to the root of the matter and such a defect is not curable. However if notice was issued merely to comply with machinery provisions then it is a question of irregularity which can be set right.
63. He pointed out that in CIT v. Gyan Prakash Gupta (1986) 54 CTR (Raj) 69 : (1987) 165 TFR 501 (Raj) the issue was that, 'If non-issue of notice under Section 143(2) vitiates the proceedings when the notice was not issued in the name of the legal heir and it was held that failure to serve notice on the assessee under Section 143(2) of the Act is merely an irregularity and the ITO, until and unless he gets the notices served, cannot complete the assessment. We find it difficult to hold that the ITO has no jurisdiction in respect of the proceedings. As soon as the return is filed, he gets seized over the case. He has jurisdiction over it, but on failure to comply with Section 143(2) of the Act, the only limited restriction is that he cannot complete the assessment. In these circumstances, the assessment orders completed without service of proper notice under Section 143(2) cannot be said to be ab initio void and when it is not so, the assessment order cannot be annulled.'
64. He submitted that on a reading of the decision in Estate of Late Rangalal Jajodia v. CIT the principle that emerges is that a defect in the service of notices provided by procedural provisions does not efface or erase the liability to pay tax where such liability is created by distinct substantive provisions (charging sections). Any such omission or defect may render the order made irregular depending upon the nature of the provision not complied with-but certainly not void or illegal.
65. He also submitted that in Dhirendra Nath Gorai v. Sudhir Chandra Ghosh , the following passage from the decision in Ashutosh Sikdar v. Behari Lal Kirtania (1907) ILR 35 Cal. 61 (FB) was cited with approval to bring about the distinction between a nullity and an irregularity:
...no hard and fast line can be drawn between a nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is proceeding that is taken without 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 validated. In Dhirendra Nath Gorai v. Sudhir Chandra Ghosh (supra), the following observations were made in this context:
Where the Court acts without inherent jurisdiction, a party affected cannot by waiver confer jurisdiction on it, which it has not. Where such jurisdiction is not wanting, a directory provision can obviously be waived. But a mandatory provision can only be waived if it is not conceived in the public interest, but in the interest of the party that waives it.
66. It would thus appear to be well settled that where an authority, who does not lack inherent jurisdiction, acts in contravention of a mandatory provision, it would be open to the aggrieved party to waive its objection to such breach if the provision is not conceived in the public interest but in the interest of the party waiving it. The underlying principle appears to be that everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy. In other words, if the statutory conditions are inserted simply for the security or benefit of the party to the proceeding and no public interests are involved, such conditions will not be considered as indispensable and either party may waive them without affecting the jurisdiction of the authority seized of the proceeding.
67. The learned Departmental Representative also relied on the decision of the Hon'ble Supreme Court in Ashok Lanka v. Rishi Dixit wherein it was held that the question as to whether a statute is mandatory or directory would depend upon the statutory scheme. Use of the expression "shall" or "may" by itself is not decisive. The Court while construing a statute must consider all relevant factors including the purpose and object the statute seeks to achieve.
68. The learned Departmental Representative relying on the decision in the case of CIT v. Bharatkumar Modi submitted that it was held it is well settled principle of law that there is a difference between lack of jurisdiction and irregular exercise of authority/jurisdiction. A proceeding is a nullity when the authority taking it has no power to have seisin over the case. The first appellate authority has come to the conclusion that there was no bias against the assessee. However, there was violation of the rule of natural justice and, therefore, the CIT(A) exercised his authority under Section 251 of the Act by remitting back to the AO after setting aside the impugned order passed by the AO. There was no justification for the Tribunal to hold that the assessment was a nullity. The learned Departmental Representative therefore submitted that not giving notice of 15 days to the assessee to file the return under Section 158BC was at most an irregularity which could be cured and not a nullity which would render the assessment order null and void.
69. The learned Departmental Representative further relied on the decision in the case of CIT v. Pearl Mechanical Engg. & Foundry Works (P.) Ltd., (supra) wherein it was held that jurisdiction always emanates directly and immediately from the law; it is a power which nobody on whom the law has not conferred it can exercise. In other words, "jurisdiction" has reference to the power of the Court ro Tribunal over the subject-matter, over the res or property in contest, and to the authority of the Court to render the judgment or decree it assumes to make. It is in this sense that the publication of the notice in the Official Gazette confers jurisdiction on the competent authority to take proceedings for acquisition of immovable properties under Chapter XX-A of the Act. The service of notice under Sub-section (2) of Section 269D upon the transferor and transferee meets the requirement of natural justice so that they may file objections in writing against the action which is proposed to be taken, namely for acquisition of property. Any error or mistake committed in the service of the notice does not in any manner affect the jurisdiction conferred upon the competent authority to take proceedings for acquisition of property. The service of notice prior to the publication in the Official Gazette is merely an irregularity committed during the course of the proceedings and cannot have the effect of nullifying the entire proceedings which are validly commenced by publication in the Official Gazette. In fact, no prejudice is occasional to the transferor or transferee by service upon them of the notice prior to the publication in the Gazette. We are, therefore, of the opinion that prior service of notice under Sub-section (2) of Section 269D is at best an irregularity but it cannot have the effect of rendering the proceedings either illegal or without jurisdiction. Hence, it was his submission that this case also supports his argument that giving of 10 days notice to the assessee for filing his return under Section 158BC(a)(i) was an irregularity which would not make the assessment order framed as null and void.
70. In the rejoinder Shri Ajay Vohra, advocate for the assessee submitted that at the outset, it is submitted that during the course of hearing and in the written submission filed, the Revenue has fairly conceded that the expression "shall" as used in Section 158BC of the Act, makes it mandatory on the AO to issue notice under that section. The sum and substance of the Revenue's argument was that the provisions of Chapter XIV-B are akin to original assessment proceedings. According to the Revenue, as in the original assessment' proceedings jurisdiction is assumed by the AO on the basis of the return filed by the assessee, similarly, in terms of Section 158BA of the Act, jurisdiction under Chapter XIV-B is assumed on the basis of a valid search on the assessee. The provisions of Section 158BC are, according to the Revenue, in tune with the procedure of assessment prescribed in Section 143 and the notice issued under Section 158BC(a) is akin to notice issued under Section 143(2) of the Act.
71. He submitted that on the basis of the aforesaid, it was contended on behalf of the Revenue that non-issuance of notice does not vitiate the proceedings, as has been held by the Supreme Court in CIT v. Jai Prakash Singh , the Rajasthan High Court in the case of CIT v. Gyan Prakash Gupta (supra) and the Third Member decision in Ashok Kumar v. ITO (2002) 74 TTJ (Asr) (TM) 702 : (2002) 80 ITD 33 (Asr) (TM).
72. He argued that in response, it is respectfully submitted that the submission of the Revenue that non-issuance of notice under Section 143(2) of the Act does not vitiate the assessment and is merely a procedural error is not correct. While so contending, the Revenue has failed to appreciate the distinction in the scheme of assessment under Section 143(3)(regular assessment) and assessment under Chapter XTV-B of the Act. In regular assessment, the AO having territorial jurisdiction over a person (jurisdiction to assess) assesses the return of income ' which an assessee is obliged to file under the provision of the Act. The jurisdiction to make an order of assessment is assumed the moment the return is filed by the assessee. The non-issue of/service of notice would, in such circumstances, amount to a curable defect. Where no return is filed, though legally due, notice under Section 142(1) of the Act calling for the return is a jurisdictional notice conferring jurisdiction on the AO to make an order of assessment. Failure to serve such notice within the time specified in the statute would vitiate the assessment. Similarly, service of notice under Section 143(2) of the Act to frame scrutiny assessment beyond the statutory period would invalidate the assessment and cannot be regarded as mere procedural irregularity.
73. It was his submission that under Chapter XIV-B notice is issued under Section 158BC of the Act calling for the return of income for the block period. Unless such notice is validly issued and served on the assessee, the assessee is not suo motu required to furnish any return for the block period unlike the scheme of regular assessment. Such notice calling for the return, therefore, confers jurisdiction on the AO for making an order of assessment.
74. It was also his submission that the Special Bench of the Tribunal in the case of Motorola Inc. v. Dy. CIT (supra) noted in detail the distinction between initiating the assessment itself and exercising powers for making an assessment. On a careful reading of the decision it is patently clear that issuing of notice calling for the return results in initiation of the assessment and therefore, any illegality in validly initiating the assessment would vitiate the entire assessment resulting in assessment being declared as nullity. It is pertinent to reproduce the following conclusions of the Tribunal arrived at after in-depth analysis of the scheme of assessment under the provisions of the Act:
38.1 On a careful consideration of the rival submissions, we are of the view that the arguments advanced for the assessees are well taken. Section 142 of IT Act, prior to its amendment had the title 'Inquiry before assessment'. It started with the words 'for the purpose of making an assessment'. It then did not have Clause (i) of Sub-section (1) authorising the AO to call for a return from the assessee. Other clauses empowered the AO to ask the assessee to produce or cause to be produced accounts and documents and give information in writing and verified in the prescribed manner. In the present appeal, there is no quarrel that as far as powers given to the AO in the provisions other than Clause (i) of Sub-section (1) of Section 142 are concerned, they can be exercised for the purpose of making an assessment at any time before the assessment is made. The AO can ask the assessee to produce accounts etc. and do every thing provided in Clauses (ii) and (iii) of Sub-section (1) up to the time of making the assessment. But it does not follow that the AO, for making an assessment, can exercise any power at any time without satisfying the conditions attached to the exercise of the power. Issue of notice calling for a return i.e. the power which was earlier exercised under Section 139(2) of IT Act for initiation of assessment proceedings, cannot be exercised after the end of the assessment year without recourse to Section 147/148 of the Act. The question of making an assessment would arise only if some proceedings have been initiated and are pending. Only then the question of exercising the powers 'for the purpose of making an assessment' would arise. The power for initiation of proceedings as per the scheme of the Act is very different from the power of making an assessment. Therefore, the contention that the power of making an assessment or reassessment can only be exercised after initiating the assessment or reassessment proceedings is well taken....
75. He argued that in the aforesaid case, it is pertinent to mention that the Tribunal was pleased to quash the assessment since the notice issued by the AO under Section 142(1) of the Act calling for the return of income was held to be bad in law. There being no return of income, there was, thus, no valid initiation of assessment and consequently the assessment was illegal and bad in law.
76. He further submitted that similarly, under the scheme of assessment under Chapter XIV-B of the Act, in the absence of a valid notice calling for the return of income, there is no valid initiation of assessment and consequently, assessment framed pursuant to invalid notice would be illegal and bad in law.
77. Further his submission was that under the amended scheme of the Act, where notice under Section 143(2) of the Act must be served on the assessee within 12 months of the filing of the return by the assessee, it has been consistently held that issue and service of a valid notice is not merely a procedural requirement but a condition precedent for assuming valid jurisdiction to make an order of assessment under Section 143(3) of the Act. Kind attention, in this regard, is invited to the following decisions:
(a) Hind Book House v. ITO (2005) 93 TTJ (Del) 224 : (2005) 92 ITD 415 (Del);
(b) World Wide Exports (P) Ltd. v. ITO (2004) 91 ITD 519 (Del);
(c) Uma Polymers (P) Ltd. v. Asstt. CIT (2002) 123 Taxman 226 (Mumbai) (Mag);
(d) Smt. Heminder Kumari v. Asstt. CIT (2002) 123 Taxman 109 (Del) (Mag);
(e) Maxima Systems Ltd. v. Dy. CIT (1999) 106 Taxman 133 (Ahd) (Mag);
(f) Arasina Hotels Ltd. v. Dy. CIT (1997) 57 TTJ (Bang) 701 : (1997) 60 ITD 667 (Bang);
(g) Sree Murugan Trading Co. v. Asstt. CIT ITA No. 901/Coch/1992
(h) Sheraton International Inc. v. Dy. CIT ITA No. 2216/Del/2001 reported at (2004) 86 TTJ (Del) 126-Ed.
(i) Smt. C. Malathy v. ITO (2004) 89 TTJ (Chennai) 938 : (2004) 88 ITD 37 (Chennai);
(j) Bhan Textiles (P) Ltd. v. Dy CIT (2005) 149 Taxman 10 (Del) (Mag).
78. He submitted that the reliance placed by the Revenue on the decision Gyan Prakash Gupta's case (supra) to contend that non-service of a valid notice under Section 143(2) of the Act will not vitiate assessment is, in our respectful submission, misplaced. In that case, notice issued by the AO against the assessee, who had died after filing the return, was received by his son, Gyan Prakash Gupta (legal heir of the assessee). On receipt of the said notice, the son intimated the ITO, names of the other legal heirs. The AO, however, without serving notice on the other legal heirs, completed the assessment in the name of Gyan Prakash Gupta. In appeal filed by the Revenue against the order of the Tribunal quashing the assessment, the High Court, after referring the various judicial precedents rendered in the context of the fate of the assessment framed without service of notice on all the legal heirs of the deceased assessee, held that though the assessment completed was invalid, the same cannot be said to be ab initio void.
79. He submitted that similarly, in the case of Jai Prakash Singh (supra), the Supreme Court held that an assessment framed without service of notice on all the legal representatives cannot be held to be void or illegal. Their Lordships referred to and relied upon the decision in Estate of Late Rangalal Jajodia (supra). In that case also, the issue before their Lordships was whether assessment completed without issue of notice on the legal representative is void or would merely render the order irregular. The Court held that the order so passed cannot be held to be void or illegal. The decision of the Third Member in Ashok Kumar (supra) is also to the same effect.
80. He stated that the aforesaid decisions relied upon by the Revenue, in our respectful submission, dealt with denial of opportunity of hearing to all legal heirs and consequent violation of principles of natural justice. The said decisions are thus not applicable and relevant for deciding the issue under consideration by the Hon'ble Bench. The aforementioned cases cannot be equated to cases of assessment made without issue and service of valid notice on the assessee.
81. It was his argument that in the aforesaid cases the defect was held to be procedural since notice was issued and served on one legal representative and not on all the legal representatives as required under law. The Court, therefore, held that non-service of notice on all legal heirs is only procedural.
82. He further argued that the aforesaid cases cannot be held to be authority for the proposition that where valid notice is either not issued and/or not served on the assessee under Section 142 or under Section 158BC of the Act calling for the return, there is only an irregularity which can be cured by setting aside the assessment order.
83. He pointed out that it is pertinent to mention that the Special Bench of the Tribunal in the case of Raj Kumar Chawla v. ITO (2005) 92 TTJ (Del) (SB) 1245 : (2005) 94 ITD 1 (Del) (SB) has held that no assessment can be made under Section 143(3) if notice under Section 143(2) of the Act is not served within the time prescribed in proviso to that section. The assessment framed without service of notice within the statutory period was held to be invalid and bad in law.
84. He also submitted that similarly, the Delhi Bench of the Tribunal in the case of Dr. K.C. Verma (supra) affirmed by the Delhi High Court in CIT v. Dr. K.C. Verma (supra) has held that jurisdiction to assess can be assumed only within the four comers of the provision of Section 143.
85. It was submitted by him insofar as the issue under consideration is concerned, it is emphatically reiterated that even though jurisdiction to deal with the matter under Chapter XIV-B of the Act is assumed on the basis of a valid search, jurisdiction to make an order of assessment under Section 158BC of the Act is assumed only on issue and service of a valid notice under that section. Jurisdiction to assess under Section 158BC of the Act is lost if a proper and valid notice under Clause (a) of that section is not served on the assessee.
86. It was his submission that the decision of the Bombay High Court in the case of Shirish Madhukar Dalvi v. Asstt. CIT (supra) (refer pp. 74 to 81 of the paper book) relied upon by the Revenue is distinguishable. In that case, a notice dt. 6th July, 1998 was issued to the assessee for filing return for the block period. The said notice did not prescribe the minimum 15 days statutory period for filing the block return. Subsequently, another notice dt. 17th September, 1998 was issued to the assessee which complied with the requirement of Section 158BC(a) of the Act (including allowing the appellant the statutory period of 15 days for filing the return). The assessee challenged the validity of the block assessment on the ground that:
(a) the original notice dt. 6th July, 1998 was not served on the assessee; and (b) in any case, the said notice did not prescribe the minimum statutory period of 15 days for filing the return, and, therefore, the block assessment was invalid.
87. He submitted that before the Hon'ble High Court, the Revenue submitted that the subsequent notice dt. 17th Sept., 1998 strictly complied with the requirements of Section 158BC(a) of the Act, the receipt of which was not disputed by the assessee and, therefore, the illegality of earlier notice dt. 6th July, 1998 stood cured and the order of assessment could not be said to be bad and illegal. During the course of hearing their Lordships asked the counsel for the assessee to specify the prejudice suffered by the assessee on account of the alleged defective notice dt. 6th July, 1998, to which a positive statement was made that no prejudice was suffered by the assessee.
88. It was his submission that in the aforesaid factual matrix and on the concession of the counsel for the assessee, their Lordships concluded that the block assessment completed in the case of the assessee was not invalid and was not bad in law. It is pertinent to reproduce the following observations of the Court:
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 appellant did not avail. He was directed to file return. 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 Rs. 1,01,33,700. The same was accordingly assessed vide assessment order dt. 30th June, 2000.
It is not in dispute that notice dt. 6th July, 1998 did not cause any prejudice to the appellant. During the course of hearing, we specifically asked Mr. Sather 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 Section 292B of the Act.
89. It was his argument that the aforesaid observations clearly reveal that the aforesaid decision of the Bombay High Court proceeded on its own peculiar facts.
90. Firstly, it was submitted that the decision of the Bombay High Court proceeded on the basis of concession of the counsel of the assessee and, therefore, cannot be held to be a binding precedent.
91. It was also submitted that kind attention of the Hon'ble Bench is invited to the following decisions wherein the Supreme Court has held that judgment proceeding on concession does not become a binding precedent:
(i) Lakshmi Shanker Srivastava v. State (Delhi Administration) (Annex. '1')
(ii) Director of Settlements v. M.R. Apparao (Annex. '2')
92. It was his submission that in the aforesaid case, the assessee was issued and served with a fresh valid and proper notice under Section 158 BC of the Act, strictly complying with the requirements of that section and the assessee was not able to state any prejudice caused due to the earlier defective notice dt. 6th July, 1998. The Court, therefore, concluded that the requirements of Section 158BC(a) of the Act, were in sum and substance complied with.
93. It was his submission on the contrary, in the present case, the appellant was only served with one notice which, undisputedly, does not conform to the requirements of Section 158BG of the Act, requiring/mandating that the assessee should be allowed 15 days clear time for filing the return. Further, the appellant has elaborately stated the prejudice that results if the requirements of Section 158BC are not complied with (i) denial of opportunity to file revised return, (ii) imposition of penalty, and (iii) imposition of interest under Section 158BFA of the Act.
94. He further submitted that the decision of the Special Bench of the Tribunal in the case of Smt. Mahesh Kumari Batia (supra) did not consider the issue referred before this Hon'ble Bench. In that case, the assessee had challenged the validity of the block assessment on the ground that the notice issued under Section 158BC of the Act, did not refer to the correct block period and was served on an advocate not holding the valid power of attorney on behalf of the assessee. The Special Bench considered the effect of issuance and service of such defective notice on the validity of the block assessment.
95. He submitted that the Special Bench held that the AO assumed jurisdiction on the basis of a valid search conducted under Section 132 of the Act. In para 23 on page 173 of the reported judgment, the Special Bench held that by using the word "shall" in Section 158BC of the Act, it has been made obligatory for the AO to issue notice under that section, which clearly supports the case of the appellant herein that issue and service of a valid and proper notice is a mandatory requirement.
The Special Bench accordingly observed:
...Section 158BC merely sets in motion the machinery to quantify the liability of the assessee. The notice served by the AO is the first step in this direction which will make the earlier three provisions which are substantive in nature to be workable. By virtue of Section 158BA(1), AO obtains the power connection. Under Section 158BC, he switches on that power by issue of notice....
96. Accordingly, it was submitted that the aforesaid correctly illustrates the legal position that, by virtue of Section 158BA(1), the AO obtains the power connection and under Section 158BC of the Act, he switches on that power by issue of notice. By not issuing the notice under Section 158BC of the Act or by issuing an invalid notice, having no legal sanctity in the eye of law, the AO does not switch on the power connection and thus fails to assume jurisdiction to make order of assessment under Section 158BC of the Act.
97. He further submitted that the aforesaid decision of the Special Bench, in our respectful submission, holds that the conduct of a valid search only confers jurisdiction on the AO to assess, invoke the provisions of Chapter XIV-B and deal with the matter under that Chapter. Jurisdiction to make order of assessment under Section 158BC of the Act is assumed only on issuance and service of a proper and valid notice under that section, which has been held to be obligatory.
98. It was also his submission that the Special Bench did not consider the aforesaid issue and dealt with defects such as incorrect mentioning of the block period and service on the advocate holding no valid power of attorney. The same were held to be mere procedural irregularities considering that:
(a) the block period is statutory defined;
(b) the assessee had participated in the block proceedings pursuant to the issue of notice under Section 158BC of the Act.
The Special Bench decision aforesaid, therefore, supports the case of the assessee rather than being viewed as against the assessee.
99. He further submitted that the observation of the Karnataka High Court in the case of B.M. Reddy v. Asstt. CIT to the effect that the machinery for passing the assessment orders in search cases commences with search itself is, in our respectful submission, not in accordance with the scheme of the Act and the judgments of the Courts where a distinction has been made between jurisdiction to assess and jurisdiction to make an order of assessment. The said observation has been made without analyzing the scheme of assessment under Chapter XIV-B of the Act and is also in direct conflict with the decisions of the Delhi High Court in the cases of N.K. Parwanda (supra) and Dr. K.C. Verma (supra).
100. It was further submitted that it will not be out of context to reproduce the following extracts from the decision of the Constitution Bench of the Supreme Court in the case of Padmasundara Rao v. State of Tamil Nadu :
Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morrin in Herrington v. British Railways Board (1972) 2 WLR 537 (HL). Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases.
101. It was his submission that based on the aforesaid, it is respectfully reiterated that the decision of the Bombay High Court in the case of Shirish Madhukar Dalvi (supra), the Kamataka High Court in the case of B.M. Reddy (supra) and the Special Bench of the Tribunal in Smt. Mahesh Kumari Batra's case (supra) cannot be said to be binding precedents.
102. It was also his submission that in any case, the decision of the Hon'ble Karnataka High Court, not being the decision of the jurisdictional High Court, is not binding on the Hon'ble Bench as held in the following cases:
Taylor Instrument Co. (I) Ltd. v. CIT (;
CIT v. Thana Electricity Supply Ltd. ;
Consolidated Pneumatic Tool Co. (India) Ltd. v. CIT ;
Patil Vijay kumar v. Union of India ;
Dr. T.P. Kapadia v. CIT .
103. It was also stated that the decision of the jurisdictional Delhi High Court in the cases of H.K. Parwanda (supra) and Dr. K.C. Verma (supra) and the Special Bench of Tribunal in Motorola Inc. (supra) clearly apply and are binding on this Hon'ble Bench.
104. Finally he concluded by saying that on the basis of the aforesaid, it is emphatically submitted that the question referred to this Hon'ble Bench must be answered in favour of the appellant to hold that the defect in the notice issued under Section 158BC of the Act giving less than 15 days to the assessee to file the return affects the validity of the assessment, leading to annulment thereof.
105. We have carefully heard the rival submissions and perused the orders of the lower authorities and the materials available on record and have deliberated upon the submissions made by the parties and the decisions cited at the Bar. The issue to be decided by us is that whether issue of a notice under Section 158BC(a) allowing a period of less than 15 days to submit the block return would render the order passed in the block assessment a nullity or an irregularity which can be cured. To answer the above question, the first and foremost question to be decided by us is whether the notice issued under Section 158BC(a) is a jurisdictional notice like notice under Section 148 (only on issuance of which the power or jurisdiction to proceed with the assessment is vested on the AO) or is a procedural notice like notice under Section 143(2) of the Act (the jurisdiction to make assessment already is conferred on the AO by the operation of law and the notice is issued in exercise of that jurisdiction).
106. Before proceeding to decide the issue, we would like to clarify that the issue raised before us relates to a person in whose case a search under Section 132 of the Act, has been carried out in contradistinction to non-searched other person referred to in Section 158BD of the Act. On a careful analysis of the provisions of Chapter XIV-B of the Act, it is discernible that Section 158BA provides that notwithstanding anything contained in any provisions of this Act, where after 30th day of June, 1995 a search is initiated under Section 132 or books of account, other documents or any assets are requisitioned under Section 132A in the case of any person, then, the AO shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter. Reading of this provision suggests that this Section 158BA empowers the AO to assess undisclosed income in accordance with Chapter XIV-B in respect of a person in whose case a search under Section 132 has been conducted. In other words, this section confers jurisdiction in favour of the AO to make the block assessment in case of a searched person. Section 158BA(2) is a charging section; Section 158BB provides for computation of undisclosed income for the block period; whereas Section 158BC provides the procedures to be followed for making the block assessment.
107. In this case few facts may be noted. Search under Section 132 was conducted at the premises of the assessee on 12th March, 1999. Notice for framing an assessment for the block period under Section 158BC(a) was issued on 12th Oct., 1999. In the said notice the assessee was directed to file return within 10 days thereafter. The assessee actually filed the return on 27th Jan., 2000. The assessment was framed on 30th April, 2001. The sum and substance of the contention on behalf of the counsel and intervenes is that since the jurisdiction was assumed for framing an assessment by issue of notice under Section 158BC(a) which gave shorter time than prescribed under the Act, such notice is illegal and consequently the assessment framed in pursuance to such notice has to be annulled which cannot be equated as an irregularity but should be treated as illegality. The contention of the learned Departmental Representative on the other hand is that it is merely an irregularity and not an illegality so that due to such defect the assessment cannot be annulled but the AO may be directed to issue fresh notice whereby sufficient time as prescribed under the Act may be given to the assessee to file return and to frame assessment thereafter.
108. Chapter XIV-B is a code by itself for computation of undisclosed income found as a result of search. Section 158BA prescribes that notwithstanding anything contained in any other provisions of the Act where after the 30th day of June, 1995 a search is initiated under Section 132, the AO shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter. Thus the jurisdiction to frame an assessment flows from provision contained in Section 158BA(1) and not by issue of notice under Section 158BC(a). Section 158BC as the title suggests is procedure to be adopted for block assessment. Thus it will be incorrect to equate the notice issued under Section 158BC(a) as akin to notice under Section 148. It is true that before framing any assessment, the assessing authority is required to assume jurisdiction for such assessment, reassessment etc. In the present case of assessment of search cases under Chapter XIV-B jurisdiction flows from Section 158BA(1), the trigger point for the same is conducting a search under Section 132 and not issue of notice under Section 158BC(a). Having once assumed jurisdiction, if there is any defect in the notice, it can be considered only as an irregularity and not an illegality. We are unable to hold that notice under Section 148 can be equated with notice under Section 158BC(a). Notice under Section 148 is issued for reassessment to be framed under Section 147 of the Act. Provision of Section 147 can be invoked once power to frame a regular assessment under Section 143 has been exhausted. Thus when the AO had power to frame an assessment under Section 143 and after exercising such power if he has reason to believe that any income has escaped assessment he may proceed to make reassessment under Section 147 by issue of notice under Section 148. Thus prior to issue of notice under Section 148, he has to form an opinion that income has escaped assessment and by virtue of such opinion formed he reassumes the jurisdiction to frame reassessment. Prior to assumption of such jurisdiction the AO becomes functus officio to assume the office of AO. He has to assume the power of reassessment. Such powers cannot be assumed mechanically. Thus it will be incorrect to equate notice under Section 158BC(a) as notice under Section 148 of the Act. Even the proviso to Section 158BC(a) makes it clear that no notice under Section 148 is required to be issued for the purpose of proceeding under this Chapter. This allays the fear that notice under Section 158BC(a) can be equated with that under Section 148 of the Act.
109. It is true that under Section 158BC(a) the AO shall issue and serve upon the assessee a notice requiring him to furnish the return for the block period within such time not being less than 15 days but not more than 45 days. However, it is to be noted that in the present case the assessee has filed the return even beyond the period of 45 days. There is no mention in the relevant provision of Chapter XIV-B that a return which was filed beyond the time mentioned in the notice, will be treated as invalid and the assessment will be completed ex parte. It is to be noted that if time was to be the essence of notice, the provision would have been to ignore the return filed beyond the time specified and complete assessment and levy interest as if no return has been filed. Thus it is clear that the legislature has contemplated situations in which return is filed beyond the time specified. Thus it is clear that it is not the intention of the legislature to make time in which the return is to be filed as the essence of notice under Section 158BC(a) and the AO has the authority to accept the return filed after the specified time. In such a situation the mentioning of a time in. which the return is to be filed as within 10 days instead of 15 days or more is only a defect in the notice. Thus there is defect in the notice insofar as the assessee was asked to file the return within 15 days but for the reasons given above, time is not the essence of notice under Section 158BC(a). The assessee filed the return much beyond 45 days' time and still the AO accepted the same and proceeded to complete the assessment within the limitation period prescribed under Section 158BE of the Act. Such defect can be only an irregularity and not an illegality.
110. Having noticed the relevant provisions of law, let us at this stage ascertain the true meaning, which the words "nullity", "illegality" and "irregularity" bear in the eye of law. A nullity results from an error which is incurable and, therefore, fatal to the proceeding (see Aiyer's Law Terms and Phrases, 6th Edn., p. 485). An illegality occurs when there is breach of some provision of law and an irregularity, which is usually, amendable, occurs when some error of procedure is committed in the course of a proceeding See Chaube Jagdish Prasad v. Ganga Prasad Chaturvedi . When there is a contravention of some provision of law, the question often arises whether the act done in the breach of such provision is perforce a nullity. If the provision is only directory, an act done in contravention thereof is manifestly not a nullity. However, if the provision is couched in a mandatory form, prima facie, it would be a nullity. Every act done in breach of a mandatory provision, however, is not necessarily a nullity. In Dhirendra Nath Gorai v. Sudhir Chandra Ghosh (supra), the following passage from the decision in Ashutosh Sikdar v. Behari Lal Kirtania (supra) was cited with approval to bring about the distinction between a nullity and an irregularity : (p. 1304 of AIR 1964 SC) ...no hard and fast line can be drawn between a nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not takeaway the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is proceeding that is taken without 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 validated.
What is a workable test to distinguish a nullity from an irregularity? The following passage from the decision in Holmes v. Russell (1841) 9 Dow 1487, which provides the clue, was cited with approval in Dhirendra Nath (supra) at p. 1304:
It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive an objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity.
A waiver, as observed in Dhirendra Nath Gorai v. Sudhir Chandra Ghosh (supra), is an intentional relinquishment of a known right. But can an objection as to jurisdiction be waived? Jurisdiction ordinarily means the authority to act in the matter and not the power to do or order an act See Anowar Hussain v. Ajoy Kumai Mukherjee . There cannot be waiver of an objection to jurisdiction, for, consent cannot give jurisdiction where there is none. In Dhirendra Nath (supra), the following observations were made in this context (p. 1305):
Where the Court acts without inherent jurisdiction, a party affected cannot by waiver confer jurisdiction on it, which it has not. Where such jurisdiction is not wanting, a directory provision can obviously be waived. But a mandatory provision can only be waived if it is not conceived in the public interest, but in the interest of the party that waives it.
It would thus appear to be well settled that where an authority, who does, not lack inherent jurisdiction, acts in contravention of a mandatory provision, it would be open to the aggrieved party to waive its objection to such breach if the provision is not conceived in the public interest but in the interest of the party waiving it. The underlying principle appears to be that everyone has a right to waive and to agree to wave the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy. In other words, if the statutory conditions are inserted simply for the security or benefit of the party to the proceeding and no public interests are involved, such conditions will not be considered as indispensable and either party may waive them without affecting the jurisdiction of the authority seized of the proceeding.
111. At this juncture it is also relevant to consider the decision of Hon'ble Supreme Court in the case of Guduthur Bros. v. ITO (1960) 40 ITR 298 (SC). In the said case the AO issued notice under Section 28(1)(a) of the Indian IT Act, 1922 to show cause why penalty should not be imposed for failure to file return in time. The AO proceeded to impose penalty without affording hearing. The AAC set aside the order imposing penalty as defective and directed refund of any penalty that have been recovered. On receipt of AAC order the AO issued further notice calling upon the assessee and afforded opportunity of being heard. The Hon'ble Supreme Court held:
As the AAC pointed out only to an illegality which vitiated the proceedings after they were lawfully initiated, the notice issued under Section 28(1)(a) did not cease to be operative and it was open to the ITO to take up the matter at the point at which the illegality supervened and to correct his proceedings. The notice under Section 28(1)(a) having still to be disposed of, the proceedings started after the order passed by the AAC could be described as during the course of the assessment proceedings, because the action would relate back to the time when the first notice was issued. The ITO had jurisdiction to continue the proceedings from the stage at which the illegality had occurred.
112. It may be stated that at this stage of discussion, we are not concerned with the question that issuance or service of notice under Section 158BC is mandatory or not before making of the block assessment; our concern is under the scheme of Chapter XIV-B of the Act, whether issuance of notice under Section 158BC confers the jurisdiction to the AO to make the block assessment or some other fact. We observed that the Hon'ble Bombay High Court in Shirish Madhukar Dalvi (supra), the Karnataka High Court in B.M. Reddy (supra), the Delhi Special Bench of the Tribunal in Promain Ltd. (supra) and the Amritsar Special Bench of the Tribunal in the case of Suit. Mahesh Kumari Batra (supra) all have held that the jurisdiction to make a block assessment, in respect of a person in whose case search has been conducted, flows from Section 158BA of the Act. No decision could be cited before us for the proposition that jurisdiction does not flow to an AO from Section 158BA to proceed for block assessment in case of a searched person. Further, the Amritsar Special Bench of the Tribunal in the case of Smt. Mahesh Kumari Batra (supra) has specifically held that in contradistinction to Section 158BC of the Act, Section 158BA bestows jurisdiction on the AO to make block assessment in case of a searched person and it has also been held that the notice under Section 158BC(a) is a step taken by the AO for exercising the jurisdiction, which has already been bestowed upon him by virtue of Section 158BA, and hence the issuance of the same does not confer jurisdiction to assess in favour of the AO. Thus, notice under Section 158BC(a) being issued after the acquisition of the jurisdiction cannot be equated with that of jurisdictional notice like notice under Section 148 of the Act.
113. We find that as per provisions of Section 153(1) of the Act, an assessment under Section 143 or Section 144 gets time-barred after the expiry of two years (twenty-one months in relation to asst. yr. 2004-05 or subsequent assessment years) from the end of the assessment year in which the income was first assessable. So it is observed that as per the scheme of the IT Act, the jurisdiction of the AO for making assessment under Section 143 or under Section 144, in normal circumstances, comes to an end with reference to the assessment year in which the income was first assessable irrespective of the date when notice under Section 143(2) was issued or served. In contrast to this, in case of a reassessment under Section 147, we find that as per the provisions of Section 153(2), the jurisdiction of the AO comes to an end after the expiry of one year or nine months, as the case may be, from the end of the financial year in which the notice under Section 148 was served. Thus, it is observed that the time-limit for making the reassessment, i.e., the ending of the jurisdiction of the AO depends upon the date of service of a notice under Section 148 of the Act. Thus, it is observed that as per the scheme of the IT Act, where the notice is a jurisdictional one, time-limit for completion of assessment, i.e. end of the jurisdiction of the AO is dependent upon the date of the service of such notice. Taking a cue from this, when we examine the provisions of Chapter XIV-B of the Act, we find that as per the provisions of Section 158BE(1) of the Act, the jurisdiction of an AO to make a block assessment comes to an end with reference to the end of the month in which the last of the authorization for search under Section 132 or for requisition under Section 132A, as the case may be, was executed. In other words, the ending date of the jurisdiction does not depend upon the date of service of notice under Section 158BC of the Act. The limitation of jurisdiction to make assessment, i.e., the time-limit after which the jurisdiction will be ousted, cannot be extended with delay in the service of notice under Section 158BC of the Act. The last date of jurisdiction depends upon the date of execution of the last of authorization for search under Section 132 of the Act. After taking into account the scheme of the IT Act, in our considered opinion, had the notice under Section 158BC would have been a jurisdictional one then the last date of completion of the block assessment i.e. the end of the jurisdiction of the AO in normal circumstances, would have been with reference to the service of such a notice.
114. In view of the above also, we find ourselves in full agreement with the decision of the Hon'ble Bombay High Court in Shirish Madhukar Dalvi's case (supra) and the Amritsar Special Bench of the Tribunal in the case of Smt. Mahesh Kumari Batra (supra) that the notice issued under Section 158BC is not a jurisdictional one and the same is procedural one i.e. the notice issued after valid acquisition of the jurisdiction.
115. We have thus found that the notice under Section 158BC in case of a person in whose case a search under Section 132 of the Act has been conducted is a procedural notice and in the instant case dispute relates to a defect in such procedural notice. It is too well established to be disputed that notice under Section 148 is a jurisdictional notice. Thus, in our considered opinion, various decisions cited at bar to the effect that where there is no service of a valid and proper notice under Section 148, the jurisdiction to make assessment has not been correctly assumed and consequently, the order passed is nullity in the eyes of law, are not applicable on the facts of the instant case which pertains to defect in a procedural notice under Section 158BC of the Act.
116. It was argued before us that proceeding in respect of person who has been searched as well as the person in whose respect the search has not been conducted (persons covered by Section 158BD) both have to be made under Section 158BC following the same procedure. Hence, it was contended that if it was held that in case of a person who has been searched, Section 158BA gives a jurisdiction the moment a search is carried out, obviously such jurisdiction cannot be for the person in whose case the search has not been conducted. The jurisdiction of such other person shall obviously come under Section 158BC of the Act. If that be so, then the jurisdiction of the person in whose case the search has been conducted shall also flow from Section 158BC as both have to follow the same procedure. It cannot be said or interpreted that the jurisdiction in the case of a person in whose case a search has been conducted will flow from Section 158BA whereas in the case of any other person the jurisdiction will flow from Section 158BC. In our considered opinion, the above proposition is not correct. Simply because assessment has to be made in respect of two different persons by following one and same procedure does not mean that jurisdiction to assess both the persons flows from the same provision of the Act. For example, in case of a person in whose case proceeding has been initiated under Section 147 by the issuance of notice under Section 148, the procedure of assessment to be followed in his case is same as prescribed under Section 143(2) and (3) as in the case of original assessment and this fact by itself does not imply that the jurisdiction to assess a person under Section 147 comes to the AO from the same provision of law as in the case of a person in respect of which original assessment is being made.
117. Our attention was also invited to the decision of the jurisdictional High Court in the case of Janki Exports International v. Union of India (supra) for the proposition that Section 158BD is analogous to Section 147 of the Act. We are in respectful agreement with the said proposition. But, in the instant case, we are concerned with the case of a person in whose case search was conducted and thus, the jurisdiction to assess flows to the AO from the provisions of Section 158BA whereas in the case of non-searched persons covered by Section 158BD the jurisdiction is dependent upon the satisfaction of the AO after taking into account the search materials. Thus, the said decision is found not applicable in the instant case.
118. As a consequence of our above view that notice required to be issued under Section 158BC in case of a searched person is a procedural notice issued after acquisition of the jurisdiction, we are of the opinion that for any curable defect in the notice served under Section 158BC on a person in whose case a search under Section 132 of the Act has been conducted cannot render the block assessment proceedings to be null and void. Thus, the defect in notice under Section 158BC(a), insofar as it did not allow time of 15 clear days for filing of the block return, in case of such a person is a curable irregularity and does not make the entire assessment proceedings to be null and void. This brings us to remaining part of the first question raised before us, which is that such an irregularity in the notice require the proceedings thereafter to be set aside and redone after curing the defect or the said defect is a mere technical defect of no consequence in view of the provisions of Section 292B of the Act?
119. We find Section 292B of the Act reads as under:
292B. No return of income, assessment, a notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such...notice...if such...notice...is in substance and effect in conformity with or according to the intent and purpose of this Act.
120. A reading of the above shows that this section provides that a notice shall not be invalid merely because of any mistake, defect or omission, if notice is in substance and effect in conformity with or according to the intent and purpose of this Act. This section, thus, covers cases where there is minor breach or lapse, which is technical, or venial in nature in the notice served upon the assessee. But for such minor or technical mistake, defect or omission if the notice is in substance and effect in accordance with the intent and purposes of the Act then, for such mistake, defect or omission the notice shall not be invalid or deemed as invalid. Thus, even without any rectification by the AO, if the notice is in substance and effect in accordance with the Act, the same shall not be deemed as invalid merely because of some technical mistake, defect or omission and will not render the proceedings taken in pursuance thereof as irregular.
121. We find that Kerala High Court in P.N. Sasikumar and Ors. v. CIT after going through the statement of objects and reasons, published in the Gazette dt. 9th May, 1973, for Bill No. 34 of 1973, and CBDT's Circular No. 179, dt. 30th Sept., 1975, held that Section 292B seeks to provide against purely "technical objections without substance" coming in way of validity of assessment proceeding, notice etc. It was further held that a fundamental infirmity cannot be called a "technical objection" or a mere "irregularity" and vital infirmity which touches upon jurisdiction cannot be cured or obliterated by relying on Section 292B of the IT Act.
122. It was also observed that in Umashankar Mishra v. CIT , the Madhya Pradesh High Court has held that the provisions of Section 292B is intended to ensure that an 'inconsequential technicality' does not defeat justice. Non-signing of notice is not merely an 'inconsequential technicality' within the meaning of Section 292B, hence, unsigned notice was not valid.
123. Keeping in view the above legal position when we examine the provisions of Chapter XIV-B of the Act, we find that Section 158BC in no uncertain terms requires an AO to serve a notice to searched person requiring him to furnish a return of income for the block period within such time not being less than 15 days, as may be specified in the notice. Legislatures do not enact anything in the statute without any intent or purpose. Hence, it cannot be held that the statutory provision specified in the Act for notice of a minimum period of 15 days for filing of the return is without any intent or purpose. Thus, in our considered opinion a notice served under Section 158BC allowing a period less than the statutory specified time period of clear 15 days is in breach of the specific provision made in this respect in the statute and that such a defective notice cannot be held to be in substance and effect in conformity with or according to the intent of the Act. Further, such a defect is also not merely inconsequential technicality. When we examine the provisions of Section 158BFA(1) it is observed that an assessee is liable to pay interest for a period which is determined with reference to the time allowed in the notice under Section 158BC of the Act and thus, a short period allowed in the notice affects the liability of an assessee.
124. In the circumstances, in our considered view, on service of such a defective notice under Section 158BC, a procedural irregularity has taken place which can be cured by serving a valid notice. It has been vehemently argued before us that the AO cannot complete the block assessment without service of a valid notice under Section 158BC of the Act and we are in full agreement with the said proposition. As the AO had the jurisdiction to make the block assessment, and after the bestowing of jurisdiction on him, a procedural irregularity has taken place, it is open to him to correct the procedural irregularity and then complete the block assessment. Hence, we also find ourselves in agreement with the contention of the learned Departmental Representative that in such a case the assessment should be set aside for being redone de novo from the stage where irregularity had occurred and the assessment proceedings cannot be declared null and void.
125. Reliance was placed on the decision in Motorola Inc. (supra) for the submission that illegality in initiating the assessment would vitiate the entire assessment resulting in assessment being declared as nullity. We find that in the said case, the Special Bench of the Tribunal after considering the scheme of the IT Act, found that notice under Section 142(1) for calling the return can be issued within the assessment year only and after the expiry of the assessment year, the AO has no jurisdiction to issue notice under Section 142(1) for calling the return. As notices under Section 142(1) were found to be issued after the end of the relevant assessment year by the Tribunal and hence, invalid and therefore, the assessment made pursuant thereto were quashed by the Tribunal. In our considered opinion, the procedural defects are of two types, i.e., curable and non-curable. In the said case before the Tribunal because of the non-issuance of a notice within the relevant assessment year a non-curable defect has taken place. Because of the expiry of the time-limit i.e. assessment year in that particular case, the defect of non-issuance of notice within time cannot be cured. Whereas in the instant case, notice under Section 158BC was issued within the time-limit for making the assessment. Undoubtedly, the said notice contained a defect insofar as it did not allow the minimum statutory period for filing the return which can be cured by issuing a fresh notice. In our considered opinion, as far as possible a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable. Thus, the above case is found distinguishable on facts.
126. Reliance was placed before us on the decision in Dr. K.C. Verma v. Asstt. CIT (supra) for the submission that jurisdiction to assess can be assumed only within four corners of the provisions of Section 143. We find that in that case it was found that the AO's jurisdiction to assess has been ousted because of non-issuance of notice under Section 143(2) within the period of limitation provided under proviso to Section 143(2) of the Act. To the same effect is the decision of the Special Bench in the case of Raj Kumai Chawla v. ITO (supra). We find that in case of a return filed under Section 139, the AO has an option to proceed to make an assessment under Section 143(3) and when he exercises such an option, then the condition precedent is that he has to serve a notice under Section 143(2) within a period of 12 months from the end of the month in which return has been filed. We find that there is no such option with the AO under Section 158BC in case of a person in whose case a search has been conducted. Further, in contradistinction of the facts of the above cases, in the instant case the fact is that notice under Section 158BC was served on the assessee within the period of limitation for serving such a notice. Service of notice within the period of limitation is not in dispute in the case before us. The dispute in the present case is that such notice is defective inasmuch as it does not allow the minimum stipulated period for filing the return which was not in dispute on the facts of the above case. In the above case a non-curable defect has taken place because of the lapse of the limitation whereas in the present case notice was issued within time with some curable defect. Hence, the above cited cases are distinguishable on facts.
127. Reliance was placed on the decision of the Delhi Bench of the Tribunal in the case of N.K. Parawanda v. Dy. CIT in IT Appeal No. 129 (Del) (supra) and also on other decisions for the proposition that service of notice under Section 158BC is a condition precedent to assess the undisclosed income. It affects the jurisdiction of the AO. Consequently, if the assessment is made without service of such notice then such assessment would be without jurisdiction and null and void. We are in full agreement with the above proposition. But, in the instant case, the facts are different inasmuch as in the instant case we find that notice under Section 158BC was served on the assessee within the period of limitation, of course with some defect therein as stated above. The instant case is not a case where no notice at all under Section 158BC was served upon the assessee before making the block assessment within the period of limitation. A question that arises here is that when there is a defect in a notice served under Section 158BC, can it be held that it is a case of no notice or it is a case of notice with some defect. We find that no authority has been cited before us to show that a defect in a procedural notice served within the period of limitation will be no notice in the eyes of law. We have already held that notice under Section 158BC(a) in the instant case is not a jurisdictional notice and hence the decisions cited to the effect that a defect in jurisdictional notice is a case of no notice in the eyes of law are not relevant here. On the other hand we find that when there was defect in a procedural notice, if the defect is curable then the proceeding subsequent to the stage when the irregularity has occurred will only be invalid and the proceeding is to be completed again from the stage of irregularity after curing the defect. Thus, in our considered opinion the aforesaid decisions are found distinguishable on facts.
128. In view of the discussion made hereinabove, we set aside the impugned order and restore the matter to the file of the AO for passing the order de novo after issuing a valid notice under Section 158BC in accordance with law.
129. In view of our above decision to set aside the entire assessment for refraining of the same afresh as per law, at this stage we refrain from adjudicating the other issues raised in the appeals under consideration on merits.
130. In the result, the appeals filed by the assessee are allowed for the statistical purposes.