The Commissioner of Income Tax Alld and Another vs Sh. Mukesh Kumar Agrawal

We have heard Shri A.N. Mahajan, learned counsel for the Commissioner of Income Tax. Shri Siddharth Pathak appears for the respondent-assessee.

This income tax appeal has been preferred by the revenue on the following questions of law:

(1) Whether on the facts and in the circumstances of the case, the CIT (A) and the Tribunal have erred in law in not taking into consideration the provisions of Section 292-BB of the Act while allowing the assessee to raise the additional ground of appeal and in deciding the same in assessee''s favour by completely ignoring the fact that the assessee had participated in the assessment proceedings?

(2) Whether the judgment of the Hon''ble Supreme Court in the case of Assistant Commissioner of Income Tax and Another Vs. Hotel Blue Moon, relied upon by the CIT (A) and the Tribunal in deciding the issue of non-issuance/ service of notice u/s 143(2) of the Act in favour of the assessee, is not at all applicable to the facts of the present case as the judgment of the Apex Court has not taken into consideration the provisions of Section 292-BB of the Act and is silent in respect of the same despite the fact that the said Section had been brought on the statute book by the Finance Act, 2008 w.e.f. 1.4.2008 and the orders of CIT (A) and the Tribunal have been passed after 1.4.2008?

(3) Whether the assessee ever objected to/ raised the issue of non issuance/ service of notice u/s 143(2) of the Act before the A.O. during assessment proceedings and fully participated in the same as such the CIT (A) has erred in law in allowing the assesse to raise this issue for the first time before it without appreciating the fact that the assessee had participated in the Assessment Proceedings and the order of the CIT (A) has been confirmed by the Tribunal?

Shri A.N. Mahajan, learned counsel appearing for the revenue states that though the case appears to be covered by the judgment in Assistant Commissioner of Income Tax and Another Vs. Hotel Blue Moon, the Supreme Court did not have the occasion to consider Section 292BB as inserted by the Finance Act, 2008 w.e.f. 1.4.2008.

We have gone through the judgment in Hotel Blue Moon (Supra) and Section 292BB as inserted in the Income Tax Act by the Finance Act, 2008 and do not find that the consideration of Section 292BB would have made any difference to the reasoning and the conclusions in the judgment.

The Supreme Court held in Hotel Blue Moon''s case that if the Assessing Officer, for any reason, repudiates the return filed by an assessee in response to notice u/s 158BC(a) of the Act relating to a block assessment, the Assessing Officer must necessarily issue notice u/s 143(2) of the Act within the time prescribed in the proviso to Section 143(2). It was further held that by making the issue of notice mandatory, Section 158BC, dealing with block assessments, makes such notice the very foundation for jurisdiction. Such notice is required to be served on the person, who is found to have undisclosed income. The requirement of notice u/s 143(2) cannot be dispensed with.

Section 292BB is a rule of evidence, which validates the notice in certain circumstances. The newly inserted Section 292BB provides that where an assessee has appeared in any proceedings or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was not served upon him or not served upon him in time or served upon him in an improper manner.

In the present case the Tribunal has returned the findings that the notice u/s 143(2) of the Act was admittedly not issued in this case. The Assessing Authority thus did not have jurisdiction to proceed further and make assessment.

We do not find that the non-consideration of Section 292BB, which is rule of evidence, and a deeming provision to validate the notice in certain circumstances, will have any effect on the judgment in Hotel Blue Moon (Supra). It was held in Hotel Blue Moon''s case that the very foundation of the jurisdiction of the Assessing Officer is on the issuance of the notice u/s 143(2).

The income tax appeal is dismissed.