Civil Appeal Nos. of 2019 @ SLP (Civil) Nos .of 2019 @ SLP(C)No.Diary No. 7708 of 2019 Commissioner of Income Tax vs. Laxman Das Khandelwal 1 Reportable IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL Nos.6261-6262 OF 2019 (Arising out of Special Leave Petition (Civil) Nos.19320-19321 of 2019) (Arising out of Special Leave Petition (Civil)D.No.7708 of 2019) COMMISSIONER OF INCOME TAX Appellant VERSUS LAXMAN DAS KHANDELWAL Respondent JUDGMENT Uday Umesh Lalit, J. 1. Delay condoned. Leave granted. 2. These Appeals are directed against judgment and final order dated 27.04.2018 passed by High Court1 in Income Tax Appeal No.97 of 2018 and against order dated 14.09.2018 in Review Petition No.1289 of 2018 arising from said Income Tax Appeal No.97 of 2018. Signature Not Verified Digitally signed by VISHAL ANAND Date: 2019.08.13 17:03:44 IST Reason: 1 High Court of Madhya Pradesh at Gwalior Civil Appeal Nos. of 2019 @ SLP (Civil) Nos .of 2019 @ SLP(C)No.Diary No. 7708 of 2019 Commissioner of Income Tax vs. Laxman Das Khandelwal 2 3. relevant facts leading to filing of aforementioned Income Tax Appeal No.97 of 2018 before High Court, as culled out from judgment and order dated 27.04.2018 presently under appeal are as under:- assessee is individual carrying business of brokerage. Search and seizure operation was conducted under Section 132 of Act of 1961 on 11.03.2010 at his residential premises. assessee submitted return of income on 24.08.2011, declaring total income of Rs.9,35,130/-. assessment was completed under Section 143(3) read with Section 153(D) of 1961 Act. Rupees 9,09,110/- was added on account of unexplained cash under Section 69 of 1961 Act. Rs.15,09,672/- was added on account of unexplained jewellery. Rupees 45,00,000/- was added on account of unexplained hundies and Rs.29,53,631/- was added on account of unexplained cash receipts. Aggrieved, assessee filed appeal before Commissioner Income Tax (Appeal). Commissioner of Income Tax (Appeal) deleted amount of Rs.7,48,463/- holding that jewellery found in locker weighing 686.4 gms stood explained in view of circular No.1916 and further deleted addition of Rs.29,23,98,117/- out of Rs.29,53,52,631/- holding that correct approach would be to apply peak formula to determine in such transaction which comes to Rs.29,54,514/- as on 05.03.2010. Aggrieved, Revenue filed appeal. Assessee filed cross objection on ground of jurisdiction of Assessment Officer regarding non issue of notice under Section 143(2) of Act of 1961. Tribunal vide impugned order upheld cross objection and quashed entire reassessment proceedings on finding that same stood vitiated as assessment Officer lacked jurisdiction in absence of notice under Section 143(2) of act of 1961. Tribunal observed: 17. In conclusion, we find that there was no notice issued u/s 143(2) prior to completion of assessment under section Civil Appeal Nos. of 2019 @ SLP (Civil) Nos .of 2019 @ SLP(C)No.Diary No. 7708 of 2019 Commissioner of Income Tax vs. Laxman Das Khandelwal 3 143 (3) of Act by AO; that year under consideration was beyond scope of provisions of Section 143A of Act, it being search year and not covered in six year to year of search as per assessment scheme/procedure defined u/s 153A; that AO has passed regular assessment u/s 143(3) of Act; although Id. CIT has mentioned section as 143 r.w.s. 153A and that department had not controverted these facts at stage of hearing. It is noted that issue of notice u/s 143(2) for completion of regular assessment in case of assessee was statutory requirement as per provisions of Act and non issuance thereof is not curable defect. Even in case of block assessment u/s 158BC, it has been so held by apex Court in case of ACIT v. Hotel Blue Moon (2010) 321 ITR 362 (Supra). 4. In said appeal arising from decision of Income Tax Appellate Tribunal ( Tribunal , for short), issue that arose before High Court was effect of absence of notice under Section 143(2) of Income Tax Act, 1961 ( Act , for short). Respondent-Assessee relied upon decision of this Court in Assistant Commissioner of Income Tax and Another vs. Hotel Blue Moon2. On other hand, reliance was placed by Appellant on provisions of Section 292BB of Act to submit that Respondent having participated in proceedings, defect, if any, stood completely cured. 2 (2010) 3 SCC 259 Civil Appeal Nos. of 2019 @ SLP (Civil) Nos .of 2019 @ SLP(C)No.Diary No. 7708 of 2019 Commissioner of Income Tax vs. Laxman Das Khandelwal 4 5. At outset, it must be stated that out of two questions of law that arose for consideration in Hotel Blue Moon s case2 first question was whether notice under Section 143(2) would be mandatory for purpose of making assessment under Section 143(3) of Act. It was observed:- 3. Appellate Tribunal held, while affirming decision of CIT (A) that non-issue of notice under Section 143(2) is only procedural irregularity and same is curable. In appeal filed by assessee before Gauhati High Court, following two questions of law were raised for consideration and decision of High Court, they were: (1) Whether on facts and in circumstances of case issuance of notice under Section 143(3) of Income Tax Act, 1961 within prescribed time- limit for purpose of making assessment under Section 143(3) of Income Tax Act, 1961 is mandatory? And (2) Whether, on facts and in circumstances of case and in view of undisputed findings arrived at by Commissioner of Income Tax (Appeals), additions made under Section 68 of Income Tax Act, 1961 should be deleted or set aside? 4. High Court, disagreeing with Tribunal, held, that provisions of Section 142 and sub- sections (2) and (3) of Section 143 will have mandatory application in case where assessing officer in repudiation of return filed in response to notice issued under Section 158-BC(a) proceeds to make inquiry. Accordingly, High Court Civil Appeal Nos. of 2019 @ SLP (Civil) Nos .of 2019 @ SLP(C)No.Diary No. 7708 of 2019 Commissioner of Income Tax vs. Laxman Das Khandelwal 5 answered question of law framed in affirmative and in favour of appellant and against Revenue. Revenue thereafter applied to this Court for special leave under Article 136, and same was granted, and hence this appeal. 13. only question that arises for our consideration in this batch of appeals is: whether service of notice on assessee under Section 143(2) within prescribed period of time is prerequisite for framing block assessment under Chapter XIV-B of Income Tax Act, 1961? 27. case of Revenue is that expression so far as may be, apply indicates that it is not expected to follow provisions of Section 142, sub-sections (2) and (3) of Section 143 strictly for purpose of block assessments. We do not agree with submissions of learned counsel for Revenue, since we do not see any reason to restrict scope and meaning of expression so far as may be, apply . In our view, where assessing officer in repudiation of return filed under Section 158- BC(a) proceeds to make enquiry, he has necessarily to follow provisions of Section 142, sub-sections (2) and (3) of Section 143. 6. question, however, remains whether Section 292BB which came into effect on and from 01.04.2008 has effected any change. Said Section 292BB is to following effect:- 292BB. Notice deemed to be valid in certain circumstances. Where assessee has appeared in any proceeding or cooperated in any inquiry relating to 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 Civil Appeal Nos. of 2019 @ SLP (Civil) Nos .of 2019 @ SLP(C)No.Diary No. 7708 of 2019 Commissioner of Income Tax vs. Laxman Das Khandelwal 6 provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that notice was (a) Not served upon him; or (b) Not served upon him in time; or (c) Served upon him in improper manner: Provided that nothing contained in this section shall apply where assessee has raised such objection before completion of such assessment or reassessment. 7. closer look at Section 292BB shows that if assessee has participated in proceedings it shall be deemed that any notice which is required to be served upon was duly served and assessee would be precluded from taking any objections that notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in improper manner. According to Mr. Mahabir Singh, learned Senior Advocate, since Respondent had participated in proceedings, provisions of Section 292BB would be complete answer. On other hand, Mr. Ankit Vijaywargia, learned Advocate, appearing for Respondent submitted that notice under Section 143(2) of Act was never issued which was evident from orders passed on record as well as stand taken by Appellant in memo of appeal. It was further submitted that issuance of notice under Section Civil Appeal Nos. of 2019 @ SLP (Civil) Nos .of 2019 @ SLP(C)No.Diary No. 7708 of 2019 Commissioner of Income Tax vs. Laxman Das Khandelwal 7 143(2) of Act being prerequisite, in absence of such notice, entire proceedings would be invalid. 8. law on point as regards applicability of requirement of notice under Section 143(2) of Act is quite clear from decision in Blue Moon s case2. issue that however needs to be considered is impact of Section 292BB of Act. 9. According to Section 292BB of Act, if assessee had participated in proceedings, by way of legal fiction, notice would be deemed to be valid even if there be infractions as detailed in said Section. scope of provision is to make service of notice having certain infirmities to be proper and valid if there was requisite participation on part of assessee. It is, however, to be noted that Section does not save complete absence of notice. For Section 292BB to apply, notice must have emanated from department. It is only infirmities in manner of service of notice that Section seeks to cure. Section is not intended to cure complete absence of notice itself. 10. Since facts on record are clear that no notice under Section 143(2) of Act was ever issued by Department, findings rendered Civil Appeal Nos. of 2019 @ SLP (Civil) Nos .of 2019 @ SLP(C)No.Diary No. 7708 of 2019 Commissioner of Income Tax vs. Laxman Das Khandelwal 8 by High Court and Tribunal and conclusion arrived at were correct. We, therefore, see no reason to take different view in matter. 11. These Appeals are, therefore, dismissed. No costs. ..J. [Uday Umesh Lalit] ..J. [Vineet Saran] New Delhi; August 13, 2019. Commissioner of Income-tax v. Laxman Das Khandelwal