Delhi High Court

M.K. Parwanda vs Dy Cit on 16 January, 2004

Equivalent citations: (2004) 89 TTJ Del 95

ORDER

K. C. Singhal, J.M.

This appeal is directed against the order of Commissioner (Appeals) confirming the block assessment order passed by Deputy Commissioner Circle-23(1), New Delhi dated 31-12-2001, wherein the undisclosed income of Rs. 40,26,200 was made.

2. At the outset, the learned counsel for the assessed has challenged the validity of the assessment on the ground that the notice under section 158BC was never served upon the assessed. According to him, such assessment is null and void since service of notice under section 158BC is a condition precedent for assuming jurisdiction to proceed to assess the undisclosed income under the provisions of Chapter XIV-B. To substantiate his contention, he drew our attention to the factual aspects with reference to the material on record. He invited our attention to the copy of the Panchnama appearing at page 1 of the paper book to point out that the search was carried out at the residential premises of the assessed, i.e., D-9, Pamposh Enclave, New Delhi-48 with telephone No. 6292348. He then referred to p. 32 of the paper book which is the copy of the notice issued by the assessing officer under section 158BC asking the assessed to file the return to point out that notice was sent at the old address, i.e., B-13D, Gangotri Enclave, Alaknanda, New Delhi-18. It was pleaded by him that despite the fact that the search was carried in at D-9, Pamposh Enclave, which is the residence of the assessed, the assessing officer did not send the notice at such address. On the other hand, the notice was sent at the old address where the assessed was not residing. It was also stated by him that the search was conducted on 17-12-1999 but the department did not bother to send the notice in time and kept sleeping for about two years and just before the time barring limit, the notice was issued on 9-11-2001. It was further pleaded that the said notice was returned by the postal authorities. To substantiate this submission, he referred to page 160 of the paper book which is the copy of the application of the assessed addressed to the post master, Post Office Kalkaji, New Delhi, wherein it was requested to inform the date of returning the above letter and the address to which it was returned. In reply, the post office informed the assessed that the said letter was returned to the sender on 15-11-2001 with the remarks "addressee left". This reply is placed at page 157 of the paper book. So it was submitted by him that despite the fact that the notice was returned unserved to the sender, the assessing officer did not bother to send fresh notice at the correct address of the assessed. He then drew our attention to the assessment order para 2 wherein the assessing officer has stated that letter dated 13-12-2001 was served by the notice server by hand at the address of the assessed and finally, the assessed attended on 18-12-2001 along with his counsel Shri S.P. Chadha, Chartered Aaccountant who maintained that he had not received the notices and the letter. However, the photocopies of the same were supplied to that. In this connection, it has been submitted by the learned counsel for the assessed that the so-called letter had never been served upon the assessed. In support of his contention, he also relied upon the decision of the Tribunal in the case of Dr. K. C. Verma v. Asstt. CIT (2003) 84 ITD 33 (Del-Trib) which has been confirmed by the Hon'ble Delhi High Court CIT v. Dr. K.C. Verma (2003) 185 CTR (Del) 231 wherein it has been held that assessment was bad in law for want of service of notice.

3. On the other hand, the learned Departmental Representative has heavily relied on the orders of lower authorities wherein it has been held that issue of notice is sufficient for assuming jurisdiction under section 158BC. It was also stated by him that assessed was filing his income-tax return at the old address which perhaps prompted the assessing officer to send the notices at the old address. It was also submitted that the defect in notice is curable by section 292B and reliance was placed on two judgments reported as B.B. Indeerjeet Kaur v. Union of India & Anr. (1979) 119 ITR 254 (Punj) and CIT v. Jaiprakash Singh (1996) 219 ITR 737 (SC). It was also pleaded by him that letter dated 13-12-2001 was duly served upon the assessed by hand by the notice server as mentioned in the assessment order and, therefore, the assessed could not be said to be aggrieved particularly when he participated in the assessment proceedings by attending the hearing on 18-12-2001. The Departmental Representative asked some time to produce the record. The Departmental Representative was allowed to produce the record by 31-12-2003 and subject to that the hearing was completed. In the rejoinder, the learned counsel for the assessed has submitted that jurisdiction cannot be conferred by consent. For this proposition, he relied on certain decisions reported as Fatechand Agarwal v. CWT (1974) 97 ITR 701 (Ori), Hajarilal Yishori Lal v. CIT (1967) 64 ITR 563 (MP) and Venkat Naicken Trust & Anr. v. ITO (2000) 242 ITR 141 (Mad).

4. At this stage, it may be mentioned that on 31-12-2003, the learned Department Representative informed that there is no evidence in the record to prove the service of the letter dated 13-12-2001.

5. Rival submissions of the parties have been considered in the light of the material placed before us. In our opinion, there is a substantial merit in the legal contention raised by the learned counsel for the assessed. The special provisions have been enacted by the legislature for assessing the undisclosed income of the assessed in cases where the search is initiated after 13-6-1995. Such provisions are contained in Chapter XIV-B. Section 158BA provides that in such cases the assessing officer shall proceed to assess the undisclosed income in accordance with the provisions of this chapter. Section 158BC lays down the procedure for making the block assessment. Clause (a) of this section provides that assessing officer shall serve a notice to the assessed requiring him to furnish within such time, not being less than 15 days but not more than 45 days, as may be specified in the notice, a return in the prescribed from 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. Clause (b) provides that assessing officer shall proceed to determine the undisclosed income in the manner laid down in section 158BB. This clearly reveals that service of notice under section 158BC clause (b) is a condition precedent for proceeding to assess the undisclosed income. Therefore, it affects the jurisdiction of the assessing officer consequently, in our opinion, if the assessment is made without serving of such notice then such assessment would be without jurisdiction and null and void.

6. In the present case, the revenue has not been able to establish the service of notice under section 158BC upon the assessed. Admittedly, the notice was sent by registered post by the assessing officer on 9-11-2001 not at the address where the assessed was living but at the old address. This is apparent from the copy of the notice appearing at page 32. Admittedly, the search was carried out at D-9, Pamposh Enclave, New Delhi-48 where the assessed was living. This is apparent from panchnama appearing at page 1. No search was conducted at the old address since the assessed had left that place. The factum of search itself shows that the revenue was well aware of the new address where the assessed was residing. In such circumstances, the assessing officer was duty bound to issue the notice at the correct address. It is also surprising to note that the search was conducted on 17-12-1999 but the assessing officer did not issue any notice till October, 2001. It was only when the assessment was getting time-barred that the assessing officer issued notice perhaps in a hurry at the old address. According to the evidence placed on the record, it is clear that the said notice was returned to the sender by the postal authorities as is apparent from letter of the Senior Superintendent of the Post Office, New Delhi, copy of which is placed at page 157 of the paper book. If such notice had been sent unserved to the sender, the assessing officer should have served a fresh notice at the correct address. Instead of sending the fresh notice at the correct address, the assessing officer issued a letter dated 13-12-2001 which, according to the assessed, was never served. Despite proper opportunity given to the learned Departmental Representative, the revenue has not been able to establish that even such letter was served upon the assessed. The learned Departmental Representative has informed that as per the original record, there is no evidence to prove the fact of service of such letter. At this stage, a question may arise how the counsel of the assessed attended the proceedings on 18-12-2001. The submission of the assessed is that the counsel of the assessed was called by the assessing officer and it is in response to such call that the counsel of the assessed attended the proceedings. However, in our opinion, the fact that the counsel for the assessed appeared on 18-12-2001 is not relevant for deciding the legal contention of the assessed inasmuch as it is the settled legal position that consent of assessed cannot confer jurisdiction on the assessing officer. Reference can be made to the judgment of the jurisdictional High Court in the case of Swaran Yash v. CIT (1982) 138 ITR 734 (Del) wherein it has been held that where there is lack of jurisdiction, it is not possible for a party to confer jurisdiction by consent. As mentioned above, the revenue has not been able to establish that any notice under section 158BC was served upon the assessed. Mere issuing of notice under section 158BC, in our opinion, does not confer jurisdiction upon the assessing officer to make the assessment inasmuch as service of such notice is a condition precedent to proceed to make the assessment of undisclosed income. Since the revenue has not been able to establish the service of notice, it is held that assessment made by the assessing officer was without jurisdiction and consequently, null and void.

7. Before parting with this order, we would like to dispose of the plea of learned Departmental Representative regarding applicability of section 292B. In our considered opinion, section 292B has no application to the facts of the present case. It is nobody's case that notice issued was invalid. It only provides that if there is any mistake, defect or omission in notice then it shall not be invalid on that account. But in the present case, it is not the contention of assessed that the notice was invalid. What is contended is that notice was not served upon the assessed. Therefore, section 292B does not help the case of revenue.

8. In view of the above decision, the orders of Commissioner (Appeals) as well as the assessing officer are hereby quashed. Since the assessed succeeds on the above ground, we need not adjudicate upon the additions made by the assessing officer.

9. In the result, appeal of the assessed is allowed.