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IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI
, ,
BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM
./I.T.A. No. 6213/Mum/2011
( / Assessment Year: 2005-06)
Asst. CIT-1(1) Blue Star Ltd.
Room No. 579, Aayakar Bhavan, / Kasturi Building,
Mumbai-400 020 Vs. Mohan T. Advani Chowk,
J. Tata Road, Mumbai 400 020
. / . /PAN/GIR No. AAACB 4487 D
( /Appellant) : ( / Respondent)
/ Appellant by : Shri Akhilendra Yadav
/Respondent by : Shri Firoz Andhiyarjina &
Shri Laxmikant Kothari
/ : 19.02.2015
Date of Hearing
/
: 18 .03.2015
Date of Pronouncement
/ O R D E R
Per Sanjay Arora, A. M.:
This is an Appeal by the Revenue directed against the Order by the Commissioner
of Income Tax (Appeals)-I, Mumbai (`CIT(A)' for short) dated 20.06.2011, allowing the
Assessee's appeal contesting its assessment u/s.143(3)/147 of the Income Tax Act, 1961
(`the Act' hereinafter) for the assessment year (A.Y.) 2005-06 vide order dated
29.12.2010.
2. The principal issue arising in the instant case is the maintainability or otherwise in
law of the assessment proceedings initiated vide notice u/s.148 dated 30.03.2010; the ld.
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Asst. CIT vs. Blue Star Ltd.
CIT(A) having quashed the said proceedings on the basis that the said notice is bad in
law.
Cases of the respective parties
3. The assessee's case, which found acceptance by the ld. CIT(A), is that he
impugned notice u/s.148 cannot be considered as valid for want of satisfaction of the
condition of section 148(2) in-as-much as the reason/s for its issue were recorded on
31.03.2010 (copy on record). Clearly, therefore, the same cannot form the basis for the
issue of notice on 30.03.2010. The Revenue, on the other hand, contends that the said
reason/s, which is per a typed written document, were in fact dictated by the Assessing
Officer (A.O.) to his stenographer on 30.03.2010, though actually typed and signed on
31.03.2010. Further, even considering the notice to be dated 31.03.2010, the same would
be in time, i.e., within four years of the end of the relevant assessment year and, besides,
not vitiated for having been purportedly issued without recording the reasons for the
same.
4. We have heard the parties, and perused the material on record.
The assessment proceedings in the instant case were initiated vide notice u/s.148
dated 30.03.2010. This is borne out of the fact of not only the notice (copy on record)
being dated 30.03.2010, but also the said date subscribed thereto by the A.O. in his hand
below his signature thereon, signifying that the said notice was not only processed, but
also signed on that dated (i.e., 30.03.2010). The said notice, thus, irrespective of the date
when the steps for its issue may have been initiated, has been issued only on 30.03.2010.
Likewise, irrespective of the date when the `reason/s' informing the A.O.'s belief for the
issue of the said notice may have come to his notice or belief as to escapement of income
in its respect formed by him, which may well be prior to 31.03.2010, their recording is
complete on being signed by him on 31.03.2010, i.e., the date subscribed to the sheet
recording the same. This is why an affidavit by the A.O. to the effect that the reason/s
were in fact dictated on 30.03.2010, sought to be placed on record by the ld.
Departmental Representative (DR), was considered irrelevant and, accordingly, denied
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Asst. CIT vs. Blue Star Ltd.
permission by the Bench during hearing. The same rather proves the assessee's case
against the Revenue's action. It is only upon affixing his signature on the said sheet of
typed paper that renders it as a valid document in law. For all we know, the A.O. may
have been in possession of the relevant information or the material, and may thus have
had valid grounds to infer escapement of income, forming his reason/s to believe, i.e., in
his mind, for long, but it is only upon affixing his signature thereto, recorded in writing,
that the process of recording of reasons becomes complete, and could be recognized as
such in law, in satisfaction of the mandate of section 148(2). The law, per section 148(2),
does not stipulate a procedural requirement of satisfaction by the A.O. (as to escapement
of income), but that of recording of the reason/s to believe, and before the issue of notice
u/s. 148(1). Again, the assumption of jurisdiction for assessment u/s.147 is by issue of
notice u/s.148, and not its service (R. K. Upadhyaya vs. Shanabhai P. Patel [1987] 166
ITR 163 (SC)) which in the present case is on 31.03.2010. The assumption of jurisdiction
is thus also not dependent on its subsequent service. A valid service, though mandatory
for a valid assessment, is yet procedural, not disturbing the initiation of otherwise legally
valid proceedings in law, i.e., where the jurisdiction for assessment stands validly
assumed, with the law being amended since, so that w.e.f. 01/4/2010 service could only
be agitated where challenged in the assessment proceedings. What has been served on
31.03.2010, a matter subsequent, is not a legally valid notice, so that its service is of no
consequence in law. The same, i.e., a valid assumption of jurisdiction u/s. 147, is,
accordingly, missing in the present case.
True, the notice u/s. 148, if signed by the A.O. on 31.03.2010 instead of
30.03.2010, i.e., a day later, would have conferred validity to its' issue and, resultantly, to
the reassessment proceedings. The same may though appear odd in-as-much as a later
action, i.e., in time, would be valid, as against the earlier one, which is not, yet would not
in any manner, to our mind, bestow validity in law to the notice issued without adhering
strictly to the procedural requirements of the provision. That is, the same cannot be
regarded as an irregularity, concern as to it does with the deficiency in the very process of
assumption of jurisdiction to assess (or reassess). It was open for the A.O. to issue a fresh
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ITA No. 6213/Mum/2011 (A.Y. 2005-06)
Asst. CIT vs. Blue Star Ltd.
notice u/s. 148(1) on 31.03.2010, that dated 30.03.2010 being bad in law and, thus, not
valid. The requirement, though procedural, which generally renders the proceedings as
irregular, so that they would need to be restored to the stage at which the same, i.e., the
said irregularity, occurred (Guduthur Bros. vs. ITO [1960] 40 ITR 298 (SC)), is strict in-
as-much as it concerns a jurisdictional notice. A comparison could be made with the time
limitation for the issue of such notice or for the completion of (say) assessment
proceedings. The requirement, though procedural, directly impacts the very foundation or
edifice on which the legal validity of the ensuing proceedings or document rests.
We are conscious that the apex court in Pooran Mal vs. DIT [1974] 93 ITR
505 (SC) clarified that the test of admissibility of evidence under the Indian jurisprudence
lies in its relevance, so that even materials or information found during or as a result of an
illegal search could also be put to use or relied on in framing an assessment. Why, even
independent of the said decision, an assessment could only be on the strength of the
materials and, further, upon duly confronting the same to the assessee, and the validity of
the reliance would not be impacted on the process or the manner in which the
information/material has came in the possession of the Revenue. So, however, it is the
validity of the assessment proceedings itself that is at stake in the present case. The
proceedings initiated without a valid notice u/s. 148(1) cannot be recognized in the eyes
of the law.
5. In view of the foregoing, we declare the impugned notice u/s.148 and,
consequently, the assessment proceedings initiated thereby, as bad in law. The quashing
of the assessment is consequently upheld. We decide accordingly.
6. In the result, the Revenue's appeal is dismissed.
Order pronounced in the open court on March 18 , 2015
Sd/- Sd/-
(Amit Shukla) (Sanjay Arora)
/ Judicial Member / Accountant Member
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ITA No. 6213/Mum/2011 (A.Y. 2005-06)
Asst. CIT vs. Blue Star Ltd.
Mumbai; Dated :18 .03.2015
. ../Roshani, Sr. PS
/Copy of the Order forwarded to :
1. / The Appellant
2. / The Respondent
3. () / The CIT(A)
4. / CIT - concerned
5. , , / DR, ITAT, Mumbai
6. / Guard File
/ BY ORDER,
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai
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