Commissioner Of Income Tax Madurai v. Shri K.m.ganesan

DATED:30.11.2009 CORAM: THE HON'BLE MR.JUSTICE K.RAVIRAJA PANDIAN ANDTHE HON'BLE MR.JUSTICE M.M.SUNDRESH T.C.(Appeal)No.1215 of 2009 Commissioner of Income TaxMadurai ...Appellant Vs. Shri K.M.Ganesan ..Respondent Tax Case Appeal filed under section 260A of the Income Tax Act, 1961 against the order of theIncome Tax Appellate Tribunal, Madras 'B' Bench dated 12th June 2009 in ITA.No.103/Mds/2007. For Appellant :Mr.J.Naresh Kumar J U D G M E N T (Order of the Court was made byK.RAVIRAJA PANDIAN, J.) The correctness of the order of the Income Tax Appellate Tribunal, Madras 'B' Bench dated 12theJune 2009 made in ITA.No.103/Mds/2007 is canvassed in this appeal at the instance of the revenueby formulating the following question of law:- " Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal wasright in holding that, proceedings under Section 158 BD are time barred when the assessment wascompleted within two years from the end of the month when the notice under the correct sectionwas issued". 2. The facts:- (i) The assessee is a real Estate broker. During the course of search in the case of oneShri M.Mayan, the residential premises of the assessee was under Section 132 was searched on23.06.1999. The Assessing Officer issued notice under section 158 BC on 27.07.1999 in the case ofthe assessee. Later, the Assessing Officer on noticing that warrant was not in the name of theassessee, issued a fresh notice under section 158 BC read with Section 158 BD on 07.02.2001. Theassessee filed block return admitting Nil undisclosed income. The Assessing Officer completed theblock assessment on 27.02.2003. (ii) Aggrieved by the same, the assessee filed an appeal before the Commissioner of Income Tax(Appeals). Before the first appellate authority, at the time of hearing, the assessee raised a groundthat the assessment was barred by the time prescribed under the statutory provision. As the saidissue is a vital issue and a mixed question of law and fact, the Commissioner of Income Tax (Appeals) has taken up the issue as a primary issue and decided the matter in favour of the assessee on thepremise that the assessment order was passed on 29.01.2003, which is beyond the period of twoyears prescribed under the statute from the date of issuance of the notice on 27.07.1999. (iii) The revenue carried the matter on further appeal to the Tribunal. The Tribunal, by reason of theimpugned order having found that the revenue could not be able to substantiate their case byproducing any material or evidence and failed to make out a case to take a different view that theone taken by the Commissioner of Income Tax (Appeal) dismissed the appeal filed at the instance ofthe revenue. (iv) Not satisfied with the concurrent orders of the authorities below, the revenue filed the presentappeal under Section 260 A of the Income Tax Act, 1961, by formulating the above statede questionof law. 3. We have heard Mr.Naresh Kumar, learned counsel appearing for the department and perused thematerials available on record. (iii) The revenue carried the matter on further appeal to the Tribunal. The Tribunal, by reason of theimpugned order having found that the revenue could not be able to substantiate their case byproducing any material or evidence and failed to make out a case to take a different view that theone taken by the Commissioner of Income Tax (Appeal) dismissed the appeal filed at the instance ofthe revenue. (iv) Not satisfied with the concurrent orders of the authorities below, the revenue filed the presentappeal under Section 260 A of the Income Tax Act, 1961, by formulating the above statede questionof law. 3. We have heard Mr.Naresh Kumar, learned counsel appearing for the department and perused thematerials available on record. 4. The facts are not much disputed. The dates of the relevant notices are as follows:- The noticeunder Section 158 BC was issued to the assessee on 27.07.1999. After noticing that the warrant wasnot issued in the name of the assessee, a fresh notice under Section 158 BC read with Section 158BD was issued on the assessee on 07.02.2001. The Assessee filed the block return on 29.01.2003admitting 'Nil' undisclosed income. The assessment was made on 27.02.2003. In this factualsituation, the question that arises for consideration is as to whether the second notice issued on07.02.2001 can be regarded as an appropriate notice under the appropriate provision as contendedby the learned counsel for the revenue so as to decide the case in favour of the revenue. No formatnotices which are required to be issued under Section 158 BC and 158 BD prescribed. Admittedly, inthis case, warrant was not issue in the name of the assessee. Hence the notice could only be issuedunder the provision of Section 158 BD and the notice issued on 27.07.1999 under Section 158 BC isthe appropriate notice. The statutory requirement for completion of block assessment under Section158 BE 2(b) is 2 years from the end of the month in which the notice under this Chapter was servedon such other person in respect of search initiated or books of account or other documents or anyassets are requisitioned on or after the 1st day of January, 1997. The explanation to that sectionprovides for exclusion of the time limit which are not germane to the facts of the case. The issuanceof notice by mere quoting of wrong provision could not vitiate the proceedings or effect of the noticeis the trite and well settled principle of law which requires no authority to be cited. 5. In Sakthivel Bankers vs. Assistant Commissioner reported in 255 ITR 114, a search was conductedin the premises of one L and certain documents were recovered during that search, which includeddocuments pertaining to eight firms in which L and his wife were partners and also certaindocuments concerning his wife. L gave a statement offering a sum of Rs.125 lakhs as undisclosedincome and pleaded inability to furnish the names of persons in whose favour credits had beenentered in the books of account of those firms. An order was passed on further appeal the Tribunalpassed an order of remand. On further appeal to the High Court, the High Court held that L knewthe purpose for which the notice was issued he being the person, who apparently was in control ofthe affairs of the firm of which he was a partner. The firms as also his wife were not in doubt as tothe purpose for which the notice was issued or the source of the authority of the officer issuing thenotice. In fact, in response to the notices returns were filed by all of them. Absence of mention ofprovision in the notice was, therefore, not a circumstance which could be said to vitiate the ultimateorder. 6. In the present case on hand also the assessee knew very well the purpose for which the noticewas issued on 27.07.1999. It is also an admitted case that warrant was not issued in the name of theassessee. In those circumstances, notice issued under Section 158 BC on 27.07.1999 is only inaccordance with the requirement of Section 158 BD. Even the notice issued under Section 158 BDon 07.02.2001 is also a notice issued under Section 158 BC read with Section 158 BD. Nonmentioning of Section 158 BD was not ipso facto invalidate the earlier notice dated 27.07.1999. Ifthat be so, the assessment made against the assessee is beyond the period prescribed under Section158 2BE 2(b). Hence we are of the considered view that the Commissioner as well as the Tribunalhas taken a correct and appropriate view which requires no interference of this Court forentertainment of the appeal. Hence the appeal is dismissed by answering the question of law inaffirmative.