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2019 Supreme(SC) 857
SUPREME COURT OF INDIA
UDAY UMESH LALIT, VINEET SARAN, JJ.
Commissioner Of Income Tax - Appellant
Versus
Laxman Das Khandelwal - Respondent
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)
Decided on : 13-08-2019
For the Petitioner(s): Mrs. Anil Katiyar, AOR
For the Respondent(s): Mr. Aditya Verma, AOR
IMPORTANT POINT
Assessment – Notice cannot be completely dispensed with.
Headnote:
Income Tax Act, 1961 – Sections 143(2) and 292BB – Assessment – Notice – Waiver – 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 not served upon him; or not served upon him in time; or served upon him in an improper manner – 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 – Since facts on record are clear that no notice under Section 143(2) of Act was ever issued by Department, findings rendered by High Court and Tribunal and conclusion arrived at were correct – Appeals dismissed. (Paras 7, 9, 10 and 11)
Facts of the Case:
Present Appeals are directed against the judgment and final order dated 27.04.2018 passed by High Court1 in Income Tax Appeal No.97 of 2018 and against the order dated 14.09.2018 in Review Petition No.1289 of 2018 arising from said Income Tax Appeal.
Findings of Court:
A closer look at Section 292BB shows that if assessee has participated in the proceedings it shall be deemed that any notice which is required to be served upon was duly served and the assessee would be precluded from taking any objections that the notice was (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner.
Result : Appeals dismissed.
JUDGMENT :
Uday Umesh Lalit, J.
1. Delay condoned. Leave granted.
2. These Appeals are directed against the judgment and final order dated 27.04.2018 passed by the High Court [High Court of Madhya Pradesh at Gwalior] in Income Tax Appeal No.97 of 2018 and against the order dated 14.09.2018 in Review Petition No.1289 of 2018 arising from said Income Tax Appeal No.97 of 2018.
3. The relevant facts leading to the filing of aforementioned Income Tax Appeal No.97 of 2018 before the High Court, as culled out from the judgment and order dated 27.04.2018 presently under appeal are as under:-
“The assessee is an individual carrying a business of brokerage. Search and seizure operation was conducted under Section 132 of the Act of 1961 on 11.03.2010 at his residential premises. The assessee submitted return of income on 24.08.2011, declaring total income of Rs.9,35,130/-. The 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, the assessee filed an appeal before the Commissioner Income Tax (Appeal). The Commissioner of Income Tax (Appeal) deleted an 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 the addition of Rs.29,23,98,117/-out of Rs.29,53,52,631/-holding that the correct approach would be to apply the peak formula to determine in such transaction which comes to Rs.29,54,514/-as on 05.03.2010.
Aggrieved, Revenue filed an appeal. The Assessee filed cross objection on the ground of jurisdiction of Assessment Officer regarding non issue of notice under Section 143(2) of the Act of 1961. The Tribunal vide impugned order upheld the cross objection and quashed the entire reassessment proceedings on the finding that the same stood vitiated as the assessment Officer lacked jurisdiction in absence of notice under Section 143(2) of the act of 1961. The Tribunal observed:
“17. In conclusion, we find that there was no notice issued u/s 143(2) prior to the completion of assessment under section 143 (3) of the Act by the AO; that the year under consideration was beyond the scope of the provisions of Section 143A of the Act, it being the search year and not covered in the six year to the year of search as per the assessment scheme/procedure defined u/s 153A; that the AO has passed regular assessment u/s 143(3) of the Act; although the Id. CIT has mentioned the section as 143 r.w.s. 153A and that the department had not controverted these facts at the stage of hearing. It is noted that issue of notice u/s 143(2) for completion of regular assessment in the case of the assessee was a statutory requirement as per the provisions of the Act and non issuance thereof is not a curable defect. Even in case of block assessment u/s 158BC, it has been so held by the apex Court in the case of ‘ACIT v. Hotel Blue Moon’ (2010) 321 ITR 362 (Supra).”
4. In said appeal arising from the decision of the Income Tax Appellate Tribunal (‘the Tribunal’, for short), the issue that arose before the High Court was the effect of absence of notice under Section 143(2) of the Income Tax Act, 1961 (‘the Act’, for short). The Respondent-Assessee relied upon the decision of this Court in Assistant Commissioner of Income Tax and Another vs. Hotel Blue Moon, (2010) 3 SCC 259. On the other hand, reliance was placed by the Appellant on the provisions of Section 292BB of the Act to submit that the Respondent having participated in the proceedings, the defect, if any, stood completely cured.
5. At the outset, it must be stated that out of two questions of law that arose for consideration in Hotel Blue Moon’s case, (2010) 3 SCC 259 the first question was whether notice under Section 14
