IN HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. INCOME TAX APPEAL NO.494 OF 2017 Pr. Commissioner of Income Tax - 19 Appellant Vs Shri Fareed A. Noorani Respondent Mr.Sham Walve for Appellant Mr.S.R. Mody with Ms.Aasifa Khan for Respondent CORAM: AKIL KURESHI & S.J. KATHAWALLA, JJ. DATED: JULY 22, 2019 P.C.: 1. This Appeal is filed by Revenue to challenge judgment Income Tax Appellate Tribunal (for short, Tribunal ). following questions are presented for our consideration: i) Whether on facts and circumstances of case and in Law, Tribunal erred in holding that assessment was bad in law not appreciating provisions of section 143(2) mandate that AO served on assessee notice Page 1 of 6 ITXA.494.2017_29.doc calling for evidence on which it may rely in support of return of income and, in instant case, letter dated 29.05.2002 had been issued to assessee, subsequent to filing of return of income which substantially complies with aforesaid provisions inasmuch as additions to total income made in assessment order relate to issues raised in said letter, on which explanation of assessee had been sought? ii) Whether on facts and circumstances of case and in Law, Tribunal has erred in holding assessment as void for purported failure of AO in not granting minimum of 15 days for filing of return of income in response to notice under section 158-BC not appreciating that term within period of 15 days does indeed provide for period of 15 days, further that, in case of Shirirsh Madhukar Dalvi, High Court held that where error in statutory notice suffered only from technical defect, it was protected under provisions of section 292B of Income Tax Act, 1961 and that said error did not cause prejudice to assessee? Page 2 of 6 ::: Uploaded on - 24/07/2019 ::: Downloaded on - 25/07/2019 10:52:00 ::: ITXA.494.2017_29.doc 2. respondent assessee is individual. subject matter is order of assessment passed under section 158-BC of Income Tax Act for block period between 1.4.1990 to 16.9.2000. assessee contended that entire assessment was completed without issuing notice under section 143 (2) of Act. Tribunal upheld contention and deleted assessment. Therefore, before Tribunal as also this Court, Revenue argued that such notice was issued, however, without specifying provisions under which notice is issued. According to Revenue, therefore, there was sufficient compliance on part of Assessing Officer of requirements of section 143 (2) of Act. Tribunal, therefore, ought to have upheld assessment. 3. materials on record, however, show that as per Tribunal, no notice under section 143 (2) of Act was issued. previous notice to which reference is made by Revenue was only for collecting general information. 4. Tribunal noted that after filing of return, no scrutiny assessment notice was issued. That being position, Page 3 of 6 ::: Uploaded on - 24/07/2019 ::: Downloaded on - 25/07/2019 10:52:00 ::: ITXA.494.2017_29.doc appellant would be covered by Supreme Court decision in case of Assistant Commissioner of Income Tax, Hotel Blue Moon reported in [2010] 188 Taxman 113 (SC) in which it was held as under: 15) We may now revert back to Section 158 BC(b) which is material provision which requires our consideration. Section 158 BC(b) provides for enquiry and assessment. said provision reads "that assessing officer shall proceed to determine undisclosed income of Block period in manner laid down in Section 158 BB and provisions of Section 142, sub-section (2) and (3) of Section 143, Section 144 and Section 145 shall, so far as may be, apply." analysis of this sub section indicates that, after return is filed, this clause enables assessing officer to complete assessment by following procedure like issue of notice under Sections 143(2)/142 and complete assessment under Section 143 (3). This Section does not provide for accepting return as provided under Section 143(i)(a). assessing officer has to complete assessment under Section 143(3) only. In case of default in not filing return or not complying with notice under Sections 143(2)/142, assessing officer is authorized to complete assessment ex-parte under Section 144. Clause (b) of Section 158 BC by referring to Section 143 (2) and (3) would appear to imply that provisions of Section 143(1) are excluded. But Section 143(2) itself becomes necessary only where it becomes necessary to check return, so that where block return conforms to undisclosed income inferred by authorities, there is no reason, why authorities should issue notice under Section 143 (2). However, if assessment is to be completed under Section 143 (3) read with Section 158-BC, notice under Section 143 (2) should be issued within one year from date of filing of block return. Omission on part of assessing authority to issue notice under Section 143(2) cannot be procedural irregularity and same is Page 4 of 6 ::: Uploaded on - 24/07/2019 ::: Downloaded on - 25/07/2019 10:52:00 ::: ITXA.494.2017_29.doc not curable and, therefore, requirement of notice under Section 143 (2) cannot be dispensed with. other important feature that requires to be noticed is that Section 158 BC(b) specifically refers to some of provisions of Act which requires to be followed by assessing officer while completing block assessments under Chapter XIV-B of Act. This legislation is by incorporation. This Section even speaks of sub- sections which are to be followed by assessing officer. Had intention of legislature was to exclude provisions of Chapter XIV of Act, legislature would have or could have indicated that also. reading of provision would clearly indicate, in our opinion, if assessing officer, if for any reason, repudiates return filed by assessee in response to notice under Section 158 BC(a), assessing officer must necessarily issue notice under Section 143(2) of Act within time prescribed in proviso to Section 143 (2) of Act. Where legislature intended to exclude certain provisions from ambit of Section 158 BC(b) it has done so specifically. Thus, when Section 158 BC(b) specifically refers to applicability of proviso thereto cannot be exclude. We may also notice here itself that clarification given by CBDT in its circular No.717 dated 14th August, 1995, has binding effect on department, but not on Court. This circular clarifies requirement of law in respect of service of notice under sub-section (2) of Section 143 of Act. Accordingly, we conclude even for purpose of Chapter XIV-B of Act, for determination of undisclosed income for block period under provisions of Section 158 BC, provisions of Section 142 and sub- sections (2) and (3) of Section 143 are applicable and no assessment could be made without issuing notice under Section 143 (2) of Act. However, it is contended by Sri Shekhar, learned counsel for department that in view of expression "So far as may be" in Section 153 BC(b), issue of notice is not mandatory but optional and are to be applied to extent practicable. In support of that contention, learned counsel has relied on observation made by this Court in Dr. Pratap Singh's case [1985] 155 ITR 166(SC). In this case, Court has observed that Section 37(2) provides that "the provisions of Code relating to Page 5 of 6 ::: Uploaded on - 24/07/2019 ::: Downloaded on - 25/07/2019 10:52:00 ::: ITXA.494.2017_29.doc searches, shall so far as may be, apply to searches directed under Section 37(2). Reading two sections together it merely means that methodology prescribed for carrying out search provided in Section 165 has to be generally followed. expression "so far as may be" has always been construed to mean that those provisions may be generally followed to extent possible. learned counsel for respondent has brought to our notice observations made by this Court in case of Maganlal Vs. Jaiswal Industries, Neemach and Ors., [(1989) 4 SCC 344], wherein this Court while dealing with scope and import of expression "as far as practicable" has stated "without anything more expression `as far as possible' will mean that manner provided in code for attachment or sale of property in execution of decree shall be applicable in its entirety except such provision therein which may not be practicable to be applied." 5. Non-issuance of notice under section 143 (2) of Act is thus seen as jurisdictional error vitiating assessment. In view of this discussion, second discussion presented by Revenue becomes one of academic nature. 6. In result, appeal is dismissed. (S.J. KATHAWALLA, J.) (AKIL KURESHI, J.) Page 6 of 6 Pr. Commissioner of Income-tax-19 v. Fareed A. Noorani