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2. On the facts and circumstances whether the Ld. CIT(A) was right in quashing the assessment when the Hon'ble ITAT Agra Bench in the case of Chandra Bhan Bansal vs. DCIT 79 ITD 659 has held that the law makers have made it abundantly clear that the limitation period imposed in provision to section 143(2) was not applicable to the returns filed in response to notice u/s 148 of the Income Tax Act, 1961.

3. On the facts and circumstances whether the Ld. CIT(A) was right in quashing the assessment when no such opportunity has been given to the Assessing Officer during appellate proceedings to give his views in this matter.

4. The applicant craves to amend or add any one or more grounds of appeal."

2. The brief facts in the appeal of the Revenue are that earlier the case of Hotel Moti Mahal was decided by the A.O. under Section 144/147 of the Income Tax Act, 1961 vide order dated 10.12.2009. The assessment was made in the status of firm. The main reason for making the ex parte assessment was that statutory notices issued from time to time were not complied by the assessee at all. After the receipt of assessment order, Hotel Moti Mahal did not file any appeal before the learned CIT(A). It has , however, filed a petition u/s 264 of the Income Tax Act, 1961 before the Commissioner of Income Tax, J&K, Jammu challenging the assessment order passed by the undersigned. The worthy Commissioner of Income Tax vide his office F.No. CIT/JMU/ITO(T)/264-12/R-11/10-11/9804 dated 29.10.2010 has cancelled the order passed by the A.O. with the directions to

3

make fresh assessment as per law. The main reasons for cancelling the assessment order passed u/s 144/147 were, as strongly contended by assessee's counsel, that proper reasons for issuing notice u/s 148 were not recorded and the assessment was wrongly made in the status of "firm". The counsel of Hotel Moti Mahal, has strongly contended that the assessee was the sole Legal Heir of Late Sh. Sudesh Gupta, her husband who died on 08- 08-2005 and who was the owner of Hotel Moti Mahal. Hence the present assessment proceedings have been taken on the assessee. Accordingly, a notice under Section 148 was issued to the assessee on 17-03-2011 requiring her to file your return of income upto 15.04.2011. The assessee has however not filed the return by the said date. It has however been filed on 18.11.2011 which was treated as nonest. The notice u/s 148 was issued only after recording proper reasons. The notice was duly served upon the assessee through speed post vide Post Office receipt No. EE837169050 IN dated 17.03.2011. The reasons for issuing the notice are reproduced as under:

"Reasons for issuing notice u/s 148 of the Income-tax Act, 1961, in the case of Smt. Promila Gupta legal heir of late Shri Sudesh Gupta alias Faju Shah Prop. M/s Hotel Moti Mahal, Tringla, Batote for the assessment year 2006-07 - regarding-

________________________________________________________

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1. The assessee Shri Sudesh Gupta Prop. M/s Hotel Moti Mahal, Tringla Batote, (Jammu & Kashmir) had constructed a Hotel at Batote but had not disclosed any details of the investment made in the construction of the Hotel Building. A Tax Evasion Petition was received in this office on 07.04.2008 wherein it was mentioned that:-

That the assessee had constructed Hotel at cost of Rs.

1.50 crores and had also taken loan of Rs. 9 lakhs from SBI Bank, Batote.

That the assessee also owned three storey house building which was also rented for Rs. 20,000/- per month. That the assessee sold land located at Jammu Narwal Main Bazar for Rs. 40,000/- but no income tax has been paid by the assessee.

2. In order to verify the contents of the complaint, Inspector of this office was deputed and a copy of his report dated 15.07.2009 is placed on records. It was found that the assessee had constructed a Hotel Building at Batote. The records of assessee also showed that no returns of income are being filed since beginning and hence the investment in hotel remains unaccounted.

3. The matter was accordingly reopened u/s 148 of the I.T. Act, 1961 by recording reasons as per order sheet entry dated 19.09.2008. The assessment was completed ex parte u/s 144 as the assessee failed to file any information and co-operate with the valuation of Hotel Building also. The income was determined at Rs. 68,87,285/- as the entire investment of Rs. 83,28,100/- reduced by loan of Rs. 14,40,815/- was taken for addition (Rs. 68,87,285/-) in the Assessment Year 2006-07. However, the assessee contended before the CIT, Jammu u/s 264 of the I.T. Act, 1961 that the same was bad in law as status of the assessee was mentioned as Firm whereas the status was Individual. The CIT Jammu vide his Order No. CIT/Jmu/ITO(T)/264-12/R-11/201-11/9807 dated

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29.10.2010 cancelled the assessment u/s 144 made vide Assessment Order dated 10.12.2009.

4. The matter has been thoroughly gone into by me and facts of the case are that the assessee had constructed the Hotel which was valued at Rs. 83,28,100/- as per valuation report dated 18.11.2009. The assessee has not furnished any information with regard to the Value of Unaccounted Investment in the said Hotel Building for the Financial Year 2005-06 relevant to the Assessment Year 2006-07. As per report of the Valuation Officer the construction started from June, 2000 and continued upto June 2005. Considering the totality of the facts and circumstances of the case and also the fact that the assessee has never furnished any details at any point of time either before the Assessing Officer or before the Valuation Officer. I have reason to believe that income pertaining to Assessment Year 2006-07 amounting to Rs. 68,87,285/- i.e. the Amount of Cost of Construction as reduced by the amount of Loan from SBI Bank, as determined by the Valuation Officer, has escaped assessment within the meaning of Section 147 r.w.s. 148 of the Income Tax Act, 1961.

5. Further the assessee has also been receiving rent from house property @ Rs. 2000/- per month as per the report of the Inspector but no information was filed. I have reason to believe that the assessee has also received unaccounted rent of Rs. 24,000/- during the relevant period. Similarly, the assessee had also started hotel business during year. Accordingly, to be fair and reasonable, I estimate net income of Rs. 60,000/- as the hotel was newly started.

6. I have carefully examined the records of the assessee Shri Sudesh Gupta alias Faju Shah who died on 08.08.2009 and after above facts and material on records. I have reason to believe that Income to the tune of Rs. 69,71,285/- (Rs. 68,87,285 + 24,000 + 60,000) has escaped assessment within the meaning of Section 147 of the I.T. Act, 1961. Since no return of income was ever filed by the assessee, the above income of Rs. 69,71,285/- has escaped assessment due

6

to fault on the part of the assessee as he failed to disclose true particulars of above investment to the Revenue. Therefore, Notice u/s 148 is issued to the assessee to assess the above income and also any other income which comes to the notice of the undersigned during the course of assessment proceedings in this case."

7. I, therefore, propose to access your income for the assessment year 2006-07 at Rs. 69,71,285/- (Rs. 68,87,285/- + 24,000 + 60,000)"

3. The assessee, however, did not file any return of income. The detailed questionnaire dated 22/07/2011 alongwith a statutory notice u/s 142(1) of the Act was issued and hearing was fixed for 08.08.2011. The reasons were recorded for issuing notice under section 148 and were communicated by the AO when the assessee was requested to furnish information/details as available at page 4 of AO's order. No one attended the office nor any application for adjournment was received on that date. A fresh notice under section 142(1) was issued on 12.08.2011for hearing on 26.08.2011 and none attended. Again a notice u/s 142(1) was issued on 12.03.2011 fixing the case for 6.10.2011 when the notice was served upon the son of the assessee on 22.09.2011. Further notices and letters were issued and a written reply dated 02.12.2011 was filed as mentioned in para 6 & 7 of AO's order. Thereafter, the AO after considering the reply of the assessee

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concluded vide para 8 to 14 which for the sake of convenience is reproduced as under:

1. On receipt of the above reply and its annexure, the case was again referred vide this office letter No. 1400 dated: 02.12.2011 to the Departmental Valuation Officers. Aayakar Bhawan, Amritsar, for further consideration at his end. This was quite necessary in order to make correct and fair assessments in this case.

The Valuation Officer vide his office letter No:

VO/IT/ASR/2009/CC-09/140 dated 23.12.2011 has reported that the assessed cost already conveyed to this office vide earlier valuation report is correct and that the name of the assessee may be considered as Smt. Promila Gupta.

As per the valuation report received from the Valuation Officer vide his office No: VO/IT/ASR/200/CC -09/150 dated 18.11.2009, the valuer has valued the total cost of construction at Rs. 83,28,100/-. As per para 2.3 of the Valuation Report, the assessee has not supplied any details to the Valuation Officer for the purpose of valuing the cost of construction in the hotel building. As per his forwarding letter No:

VO/IT/ASR/200/CC-09/150 dated 18.12.2009, the Valuation Officer has stated that "the assessee has only verbally told period of construction from June, 2000 to June, 2005 and accordingly valuation report has been prepared. No other details/ documents have been supplied by assessee". Thus, keeping in view the Valuation Report, the relevant assessment year in which investment in the hotel building is to be considered is the assessment year 2006-07. This is also for the reason that no year-wise break-up of the investment made has been given in the valuation report and hence I am left with no alternative but to consider the same in the assessment year 2006-07. While making the assessment of the Hotel Moti Mahal in the status of the firm, information was called for from the Branch Manager, SBI, Batote regarding details of the loan obtained for construction of the Hotel etc. This information had been received from the bank vide its letter dated 09.10.2009 and is placed on the assessment records of Hotel Moti Mahal (available on the asstt order

8

for a.y. 06-07 in that case). As per this information, the bank has released various installments of the loans on different dates. The aggregated of the loan installments for construction of the hotel building comes to Rs. 14,40,815/-. Besides, a further loan of Rs. 40,000/- for purchase of generator set was released by the bank. Thus, the unexplained investment of Rs. 68,87,285 ( cost of construction determined by the VO Rs. 83,28,100 minus bank loans of 14,40,815) is being taxed in the assessment year 2006-07 as was done while making the assessments of the Hotel Moti Mahal in the status of

"firm".

Before doing so, an opportunity of being heard was afforded to the assessee vide this office letter No. 1446 dated 19.12.2011. The contents of the said letter read verbatim as under:-

"Please refer to the assessment proceedings in your case for the above said assessment years and also your consolidated written reply received in this office on 02.12.2011 filed for all the four assessment years wherein you have given the year-wise break-up of the amount spent on the construction of the Hotel Moti Mahal.

This is to intimate you that on receipt of your reply, it was immediately forwarded to the Valuation Officer along with its enclosures of his reconsideration. However till date nothing has been heard from him. Since the cases for all the years are getting barred by limitation 30.12.2001, these cannot be kept pending any longer. I, therefore, propose to make the assessments for all the years keeping in view the Valuation already made by the Valuation Officer which was forwarded to the undersigned vide his office No: VO/IT/ASR/200/CC-09/150 dated 18.11.2009 dated 1811.2009 and also propose to assessee the entire unexplained investment of Rs. 68,87,285 (cost of construction determined by the VO Rs. 83,28,100 minus bank loans of Rs. 14,40,815/-). This is to further intimate you that your case now stands fixed for hearing on 26.12.2011 at 4.00 P.M. in my office at Dhar Road, Udhampur and you are requested to please give your objections, if any to the proposed action. If you fail to attend the office, I will be left with no alternative but to complete the best

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judgment assessment as envisaged u/s 144 of the Income Tax Act, 1961 and the entire amount of unexplained investment will be assessed in the assessment year 2006-07". On 26.12.2011, none attended, as usual. In the facts and circumstances of the case, I am left with no alternative but to complete best judgment assessment u/s 144 on the basis of material available on record.

In view of the above, total income of the assessee for the current assessment year is computed as under:-

Income as per return of income : Rs. 50,000/- Addition on account of unexplained

investment as discussed above : Rs. 68,87,285/- Add: Rental income as discussed above : Rs. 24,000/- Total taxable income : Rs. 69,61,285/-"

4. Not being satisfied with the order of the A.O. the assessee challenged before the ld. CIT(A) and various grounds were raised, as available at page 1 & 2 of CIT(A)'s order, which are reproduced for the sake of convenience as under:

"2.1. That having regard to the facts and circumstances of the case the order passed by the Ld. A.O. is bad in law.

2.2. That having regard to the facts and circumstances of the cases the AO has erred in law by not issuing mandatory notice u/s 143(2) of the I.T. Act, 1961.

2.3. That having regard to the facts and circumstances of the cases the Ld. AO. Has erred in law and facts by making an addition of Rs.68,87,285/- on account of unexplained investments.

2.4. That having regard to the facts and circumstances of the cases the Ld. A.O. has erred in law and facts by making an addition of Rs.68,87,285/- on account of unexplained investments.

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2.5. That having regard to the facts and circumstances of the case the Ld. AO has not recorded the reasons on his own, he just relied on the tax evasion petition received on 07.04.2008, he himself have no reason to believe that the assessee has escaped income, the A.O's order is illegal, unlawful and void.

2.6. That having regard to the facts and circumstances of the cases the Ld. A.O. has erred in law and facts, the Ld. A.O. has mentioned that the period of construction of Hotel is for the period from June 2000 to June 2005 but while making assessment, the Ld. A.O. has filed to spread over the alleged unexplained investment on the construction of the hotel building and the entire difference has been accounted for & charged to tax in the year under consideration, which is against the law & principles of accountancy.

2.6.1. That having regard to the facts and circumstances of the cases the Ld. A.O. has erred in law and facts, by relying on the Valuation Report of the Valuer which is not based on the facts & evidence as the investment made by assessee in each year not carried by the Valuer which is against the law.

2.6.2 That the addition made is purely on surmises, conjectures and suspicion and without any documentary evidences.

2.7. That the appellant carves the leave to add, amend, modify deleted any of the grounds of appeal before or at the time of hearing and all the above grounds are without prejudice to each other."

5. During the appellate proceedings before the Ld. CIT(A), detailed submissions were made by the assessee which are reproduced by the Ld. CIT(A) in para 3 at pages 2 to 9 which are not being reproduced. But at the same time, the same have been noticed and considered by us which in sum and substance addressing to the various provisions of the Act, decisions of various coordinate Benches of the Tribunal and principle of law noticed by various courts of law on the subject that issuance of service of notice u/s

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143(2) is mandatory and not procedural without which assumption by the AO is illegal and void ab initio.

6. Having convinced with the submissions raised by the assessee, the Ld. CIT(A) called for the records of the A.O. and found that there was an order sheet entry according to which notice u/s 143(2) was issued on 22/07/2011 and the said letter was used which revealed that notice was not found and the relevant findings of the ld. CIT(A) in para 4.1 at page 9 of his order are reproduced for the sake of convenience as under:

"5. I have carefully considered the submission made by the appellant, the assessment order and relevant case laws. Admittedly, the appellant had filed a return pursuant to the notice u/s 148 though beyond the period mentioned in the said notice, and this was done before the completion of assessment. Return pursuant no notice u/s 148 was filed by the appellant on 18.11.2012 and accordingly the assessment was completed on 28.12.2011. The A.O. has failed to issue notice u/s 143(2) of the Act before completing the assessment. I have called the records of the proceedings and found that on 22.07.2011 there was an order sheet entry that notice 142(1)/143(2) was issued, however on perusal of letter dated 22.07.2011 and case records no notice u/s 143(2) was found."

7. It is relevant to mention that the issuance of notice with reference to computation of income under section 143(2) of the Act is mandatory for which relevant findings of ld. CIT(A) at page 9 & 10 are reproduced for the sake of clarity as under:

"6. The A.O. having such return for finalizing the assessment was duty bound to comply with the requirement of the Act for issuing

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notices. Issue of a notice under Section 143(2) was considered mandatory in re-assessment proceedings u/s 148 by Madras High Court in the case of CIT Vs. M Chellappan (2005) 198 CTR 490 & CIT Vs C Palaniappan (2006) 284 ITR 257 and by Punjab & Haryana High Court in the case of Vipin Khanna Vs. CIT (2002) 175 CTR

335.

Issue of a notice under section 143(2) was considered mandatory in a block assessment proceeding as held by the Hon'ble Apex Court in the case of Hotel Blue Moon. No doubt, where a return is filed in pursuance of a notice under section 148(1) of the Act, it clearly says that provision of the would apply 'so far as may be' to it as though it was a return required to be furnished under section 139 of the Act. The term 'so far as may be' has been interpreted by Hon'ble Apex Court in the case of Hotel Blue Moon, though in relation to section 158BC(b) of the Act, as no to exclude the requirements of section 143(2).

Provision contained in section 143(2), is mandatory in nature and it is obligatory for the A.O. to apply his minds to the contents of the return filed in response to the notice u/s 148. Non issue of notice u/s 143(2) after filing of return by assessee vitiated the reassessment proceedings as held in CIT Vs. Rajeev Sharma (2010) 232 CTR 303 (All).

The fact of the present case is similar to the facts in the case of Indo Swiss Exports Ltd., Chennai Vs. Department of Income Tax decided by the Hon'ble I.T.A.T., Chennai in the favour of assessee. In the said case, a notice u/s 148 of the Act was issued to the assessee on 28.02.2007 proposing a re-assessment. Pursuant to such notice, assessee filed a return on 19.12.2007. A.O. was of the opinion that the return filed pursuant to notice u/s 148 of the Act was belated since it was beyond the period mentioned in the said notice. He, therefore, proceeded to complete the assessment on best of judgment basis u/s 144 of the Act without issuing a notice u/s 143(2) of the Act. The return was filed before the completion of assessment and was considered for the purpose of assessment. Hon'ble tribunal held that A.O. having considered such return for finalizing the assessment was duty bound to comply with the requirement of the Act for issuing notices. Hon'ble tribunal also held that the requirement of section

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143(3) of the Act would also apply where reassessment proceedings are initiated. No doubt, proviso to section 148(1) of the Act do mention certain situations where a notice served even after the expiry of twelve months would not be considered invalid. However, these are cases where a notice was served though late. Here admittedly no notice was issued u/s 143(2) of the Act at all. The Hon'ble Tribunal, therefore, quashed the order for non-issuance of notice u/s 143(2) of the Act.

The first and second proviso to section 148, specially mentions the time for issuing notice u/s 143(2) of the Act. Thus, I am of the opinion that the requirement of section 143(2) of the Act would apply even where re-assessment proceeding are initiated. In the decision of Hon'ble Delhi High Court in the case of Ashok Chaddha Vs. ITO (2011) 337 ITR 399, it is held that there is no specific provision in the Act requiring the issue of notice u/s 143(2) and the words 'so far as may be' cannot be stretched to the extent of mandatory issue of notice u/s 143(2). However, first and second proviso to section 148 specifically mentions that in case notice is not issued within time prescribed u/s 153(2), it must be issued before the expiry of time limit for making assessment or reassessment to be deemed as valid notice. Thus, it is clear from the section itself that the issue of notice u/s 143(2) is mandatory in the case of assessment u/s 148 of the Act."

9. The Ld. CIT(A) allowed the appeal of the assessee vide para 4.3 & 4.4 and the relevant findings are extracted hereinbelow:

"On perusal of the provisions of section 292BB, it is observed that the provisions of section comes into play when a notice is issued but not served, served late or served in improper manner. However, if a notice is not issued, the provisions of the section are not applicable. The Hon'ble High Court of Delhi in Writ Petition (Civil) no. 7632/2010 decision dated 24^thJanuary, 2012 in the case of Alpine Electronics Asia PTE Ltd. has clarified the applicability of the provisions of section 292BB of the Act 'what is the effect of the failure to issue notice under Section 143(2) within the period

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stipulated in the proviso to clause (ii) and effect of Section 292BB of the Act. As per Hon'ble High Court, it is now well settled that service of notice under Section 143(2) of the Act within the statutory time limit is mandatory and is not a procedural requirement, which is inconsequential.'

The A.O. treated the return of income as nonest only on the ground that return was field by the appellant after the time prescribed in the notice u/s 148 of the Act. Admittedly, the A.O. neither pointed out any defect in the return of income nor provided any opportunity to the appellant before treating the return as nonest as prescribed u/s 139(9) of the Act. I am of the considered opinion that return cannot be treated nonest only on the pretext of late filing of return. The A.O. on the one hand is treating the return nonest while on the other hand incorporating returned income as basis for his assessment u/s 144. The belated return should not have been rejected without giving proper opportunity to the appellant. The observation is also supported by the provisions of section 234A(3) of the Act which clearly states that if appellants files the return after the expiry of the time prescribed is notice u/s 148 of the Act, he should be penalized by charging an interest till the date of filling of return.

Provision of section 234A(3) is reproduced below;

Where the return of income for any assessment year, required by a notice under Section 148 [or section 153a] issued [after the determination of income under sub-section (1) of section 143 or ]after the completion of an assessment under sub-section (3) of section 143 or section 144 or section 147, is furnished after the expiry of the time allowed under such notice, or is not furnished, the assessee shall be liable to pay simple interest at the rate of [one] per cent for every month or part of a month comprised in the period commencing on the day immediately following the expiry of the time allowed as aforesaid, and,-

(a) Where the return is furnished after the expiry of the time aforesaid, ending on the date of furnished the return; or

(b) Where no return has been furnished, ending on the date of completion of the reassessment or re-computation under section 147 [or reassessment under section 153A],

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On the amount by which the tax on the total income determined on the basis of such reassessment or re-computation exceeds the tax on the total income determined [under sub-section (1) of section 143 or] on the basis of the earlier assessment aforesaid.

The Hon'ble I.T.A.T., Bangalore has also considered this issue of belated return in pursuance to notice u/s 148 of the Act in the case of H Gouthanchand Vs. Additional Commissioner of Income Tax (2011)

8 ITR 269, in which the Hon'ble Tribunal has held that section 234A(3) mentions that interest can be charged u/s 234A when the return is furnished after expiry of the time provided in the notice. It will end on the date of furnishing of return. This, therefore, squarely suggests that an assessee can file a return beyond the time prescribed in the notice issued u/s 148 of the Act.

Based on the provisions of the Law and several judgments, I am of the considered opinion that the assessment was made without assuming proper jurisdiction which is void ab initio and assessment is thus quashed on legal issue.

The merit of addition on account of unexplained investment is no longer required to be considered in view of the above findings. In the result, the appeal is allowed."

10. The Ld. DR, Mr. Tarsem Lal argued that the appeal has been allowed wrongly by the ld. CIT(A) vide his order dated14.01.2013 for the reasons that the ld. CIT(A) has gone wrong in allowing the appeal without even recording the findings that firstly whether challenge is assumption of jurisdiction/or application thereof, secondly, even before this Bench, the said aspect remained unaddressed, thirdly, there being non service of notice during the proceedings has been made for which notice u/s 142 has been

16

served and the present appeal arises, fourthly, furnishing of partial information then what is the fate of reasons to believe and which material fact containing material particulars is available on record in the case proceedings and fifthly the initiation of the assessment is nullity because of subsequent defect in the service of notice.

11. The Ld. counsel for the assessee strongly relied upon the decision of the Ld. CIT(A) and made a prayer for upholding the said on the principle of law extracting that further prayer for dismissing the departmental appeal contending that the service of mandatory notice under section 143(2) is a defect which is a procedural lapse and is not curable and thus, the order of the ld. CIT(A) is sustainable in accordance with law. He relied upon the decisions of various courts of law as under:

i) CIT vs. Cebon India Ltd. (2012) 347 ITR 583 (P&H) dated 7^th July, 2009.

ii) Alpine Electronics Asia PTE Ltd. vs. Director General of Income Tax & Others in Writ Petition (Civil) No.7932/2010 dated 24^thJanuary, 2012.(Delhi)

iii) Indo Swiss Exports Ltd. Chennai vs. Department of Income Tax , ITA No.922/Mds/2011 dated 21.06.2012. Copies of all the decisions were placed on record by the ld. counsel for the assessee.

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12. We have heard the rival contentions and erused the facts of the case. As regards the arguments of the ld. counsel for the assessee that reassessment is nullity that there being a jurisdictional defect in continuation of proceedings, we are of the view that the word 'jurisdiction' does not have a fixed meaning and in one sense it means an entitlement to enter upon the enquiry in question and in wider sense it implies right to conduct enquiry into the matter in lawful manner.

12.1 In the aforesaid context, there is no argument on behalf of the assessee as to what nature of challenge is being made to the proceedings i.e. on the assumption of jurisdiction/ or application thereof and further to state that no pleadings have been raised of whatsoever kind which addresses the point that the AO do not have any right to conduct enquiry.

12.2. The another issue which leads to be considered is the challenge to the jurisdiction is determinable at the commencement and not at the conclusion of the proceedings and this aspect has been very clearly noticed by the Hon'ble Supreme Court in the case of M.L. Sethi vs. R.P. Kapur reported in (1972) 2 SCC 427 in para 12 at pages 434 & 435 which for the sake of convenience is reproduced as under:

The "jurisdiction" is a verbal coat of many colours Jurisdiction originally seems to have had the meaning which Lord Reid ascribed to it in Anisminic Ltd. v. Foreign

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Compensationommission, namely, the entitlement "to enter upon the enquiry in question". If there was an entitlement to enter upon an enquiry into the question, been any subsequent error could only be regarded as an error within the jurisdiction. The best known formulation of this theory is that made by Lord Darman in R. v. Bolton. He said that the question of jurisdiction is determinable at the commencement, not at the conclusion of the enquiry. In Anisminic Ltd. case (supra), Lord Reid said:

"But there are many cases where, although the tribunal had jurisdiction to enter on the enquiry it has done or failed to do something in the course of the enquiry which is of such a nature that its decision is a nullity. It may have given its decision in bad faith. It may have made a decision which it had no power to make. It may have failed in the course of the enquiry to comply with the requirements of natural justice. It may in perfect good faith have misconstrued the provisions giving it power to act so that it failed to deal with the question remitted to it and decided some question which was not remitted to it. It may have refused to take into account something which it was required to take into account. Or it may have based its decision on some matter which, under the provisions setting it up, it had no right to take into account. I do not intend this list to be exhaustive."

In the same case, Lord Pearce said

"Lack of jurisdiction may arise in various ways. There may be an absence of those formalities or. things which are conditions precedent to the tribunal having any jurisdiction to embark on an ,enquiry. Or the tribunal may at the end make an order that it has no jurisdiction to make. Or, in the intervening stage while engaged on a proper enquiry, the tribunal may depart from the rules of natural justice; or it may ask itself the wrong questions; or it may take into account matters which it was not directed to take into account. Thereby it would step outside its jurisdiction. It would turn its inquiry into something not directed by Parliament and fail to make the inquiry which the Parliament did direct. Any of these things would cause its purported decision to be a nullity."

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The dicta of the majority of the House of Lords in the above case would show the extent to which `lack' and 'excess' of jurisdiction have been assimilated or, in other words, the extent to which we have moved away from the traditional concept of "jurisdiction". The effect of the dicta in that case is to reduce the difference 'between jurisdictional error and error of law within jurisdiction almost to vanishing point. The practical effect of the decision is that any error of law can be reckoned as jurisdictional. This comes perilously close to saying that there is jurisdiction it the decision is right in law but none if it is wrong. Almost any misconstruction of a statute can be represented as "basing their decision on a matter with which they have no right to deal", "imposing an unwarranted condition" or "addressing themselves to a wrong question". The majority opinion in the, case leaves a Court or Tribunal with virtually no margin of legal error. Whether there is excess of jurisdiction or merely error within jurisdiction can be determined only by construing the empowering statute, which will, give little guidance. It is really a question of how much latitude the Court is prepared to allow. in the end it can only be a value judgment (see H.W.R. Wade, "Constitutional and Administrative Aspects of the Anismanic case", Law Quarterly Review, Vol. 85, 1969, p. 198). Why is it that a wrong decision on a question of limitation or res judicata 'was treated as a jurisdictional error and liable to be interfered with in revision ? It is a it difficult to understand how an erroneous decision on a question of limitation or res judicata would oust the jurisdiction of the Court in the primitive sense of the term and render the decision or a decree embodying the decision a nullity liable to collateral attack. The reason can only be that the error of law was considered as vital by the Court. And there is no yardstick to determine the magnitude of the error other than the opinion of the Court."

12.3. The aforesaid principle of law with greatest respect we are bound to follow.

12.4. Even as per records before us, it has been noticed that the assessee has been diligent in pursuing the remedy available through attending to the case

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proceedings before the AO and it is a settled law that objection regarding jurisdiction be raised at the earlier possible opportunity. Thus, there is no reason for coming forward for the assessee waiting for such long for raising said objection (legal ground) after completion of reassessment. Another issue to be addressed is that challenge is not to the continuation of proceedings by the A.O. whereas the purpose of issuance notice u/s 143(2) of the Act cannot be lost sight and we are supported by the principle of law as noticed in the case of Dhirendra Nath Goari ( In CA No.85 of 1961), Subal Chandra Nath Saha And Others ( In CA No.86 of 1961) vs. Sudhir Chandra Ghosh And Others (1964) 6 SCR 1001 : AIR 1964 SC 1300. In para-7 where the difference between a 'nullity' and an 'irregularity' has been noticed, which has been extracted hereinbelow:

"Even then, the question arises whether an act done in breach of the mandatory provision is per force a nullity. In Ashutosh Sikdar v. Behari Lal Kirtania(1), Mookerjee, J., after referring to Macnamara on "Nullity and Irregulari- ties", observed :

"no hard and fast line can be drawn between a nullity and an irregularity; but this much is clear, that an irregularity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is a proceeding that is taken without any foundation for it, or is so essentially defective as to be of no avail or effect whatever, or is void and incapable of being validated." Whether a provision falls under one category or the other is not easy of discernment, but in the ultimate analysis it depends upon the

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nature, scope and object of a particular provision. A workable test has been laid down by Justice Coleridge in Holmes v. Russell(2), which reads: "It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity." A waiver is an intentional relinquishment of a known right but obviously an objection to jurisdiction cannot be waived, for consent cannot give a court jurisdiction where there is none. Even if there is inherent jurisdiction, certain provisions cannot be waived. Maxwell in his book "On the (1) (1908) I.L.R. 35 Cal. 61, 72. (2) [1841] 9 Dowl.

487. 1012.

Interpretation of Statutes", 11th Edn., at p. 375, describes the rule thus:

"Another maxim which sanctions the non- observance of a statutory provision is that cuilibet licet renuntiare juri pro se introducto. Everyone has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity, which may be dispensed with without infringing any public right or public policy." The same rule is restated in "Craies on Statute Law", 6th Edn., at p. 269, thus :

"As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the court."

12.5 Having noticed material facts, we consider it appropriate with great respect in accordance with the principle of law that at the most the present kind of grievance is 'merely an error within jurisdiction', which can be

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determined only by construing the empowering statute, which will give guidance on the subject and in the present case. Further we are supported by the decision of ACIT vs. Hotel Blue Moon decided by the Hon'ble Supreme Court reported in (2010) 321 ITR 362 dated 2^ndFeb., 2010. Thus, the purpose is to give opportunity to the assessee for bringing to the knowledge the proceedings being undertaken in accordance with law which too has been done by the A.O. The relevant part of the decision in the case of ACIT & Anr. Vs. Hotel Blue Moon reported in (2010) 321 ITR 362 (SC) in para 15 is reproduced as under:

"But s. 143(2) itself becomes necessary only where it becomes necessary to check the return, so that where block return conforms to the undisclosed income inferred by the authorities, there is no reason, why the authorities should issue notice under s. 143(2). However, if an assessment is to be completed under s. 143(3) r/w s. 158BC, notice under s. 143(2) should be issued within one year from the date of filing of block return. Omission on the part of the assessing authority to issue notice under s. 143(2) cannot be a procedural irregularity and the same is not curable and, therefore, the requirement of notice under s. 143(2) cannot be dispensed with. The other important feature that requires to be noticed is that the s. 158BC(b) specifically refers to some of the provisions of the Act which requires to be followed by the AO while completing the block assessments under Chapter XIV-B of the Act. This legislation is by incorporation. This section even speaks of sub- sections which are to be followed by the AO. Had the intention of the legislature was to exclude the provisions of Chapter XIV of the Act, the legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion, if the AO, if for any reason, repudiates

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the return filed by the assessee in response to notice under s. 158BC(a), the AO must necessarily issue notice under s. 143(2) of the Act within the time prescribed in the proviso to s. 143(2) of the Act. Where the legislature intended to exclude certain provisions from the ambit of s. 158BC(b) it has done so specifically. Thus, when s. 158BC(b) specifically refers to [sic-s. 143(2)] applicability of the proviso thereto cannot be excluded. We may also notice here itself that the clarification given by CBDT in its Circular No. 717. dt. 14th Aug.. 1995, has a binding effect on the Department, but not on the Court. This circular clarifies the requirement of law in respect of service of notice under sub-s. (2) of s. 143 of the Act. Accordingly, we conclude even for the purpose of Chapter XIV-B of the Act. for the determination of undisclosed income for a block period under the provisions of s. 158BC. the provisions of s. 142 and sub-ss. (2) and (3) of s. 143 arc applicable and no assessment could be made without issuing notice under s. 143(2) of the Act. However, it is contended by Sri Shekhar. learned counsel for the Department that in view of the expression "So far as may be" in s. 153BC(b), the issue of notice is not mandatory but optional and are to be applied to the extent practicable. In support of that contention, the learned counsel has relied on the observation made by this Court in Dr. Partap Singh's case (supra). In this case, the Court has observed that s. 37(2) provides that "the provisions of the Code relating to searches, shall so far as may be, apply to searches directed under s. 37(2). Reading the two sections together it merely means that the methodology prescribed for carrying out the search provided in s. 165 has to be generally followed. The expression "so far as may be"

has always been construed to mean that those provisions may be generally followed to the extent possible. The learned counsel for the respondent has brought to our notice the observations made by this Court in the case of Maganlal v. Jaiswal Industries & Ors. [1989] 4 SCC 344, wherein this Court while dealing with the scope and import of the expression

"as far as practicable" has stated "without anything more the expression 'as far as possible' will mean that the manner provided in the code for attachment or sale of property in execution of a decree shall be

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applicable in its entirety except such provision therein which may not be practicable to be applied."

13. The Ld. counsel for the assessee has strongly relied upon the decision in the case of CIT vs. Cebon India Ltd. (2012) 347 ITR 583, Indo Swiss Exports Ltd; Chennai vs. Department of Income Tax dated 21^stJune, 2012 (ITAT, Chennai), decision of Hon'ble Delhi High Court in the case of Alpine Electronics Asia PTE Ltd. vs. Director General of Income Tax & Others, dated 24^thJanuary, 2012 in Write Petition (Civil) No.7932/2010 quo proposition in the absence of service of notice u/s 143(2) and with great respect the decision of CIT vs. Cebon India Ltd. (supra) was confirmed finding of fact as recorded. We are in agreement with the decision stating therein that merely giving of dispatch number will not render the finding to be perverse and absence of notice cannot be held to be curable under section

292 BB of the Act.

14. As regards the decision in the case of Alpine Electronics Asia PTE Ltd. vs. Director General of Income Tax & Others (supra) the Hon'ble Court referred to the decision of Hotel Blue Moon (supra) and having considered the principles involved therein held that the final assessment order has not been passed whereas only a draft assessment order is passed and the principle of estoppel under section 292BB will not apply and in those circumstances, the reliance by the Department upon the provisions of

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section 292BB cannot be relied upon and the claim for notice under section 143(2) admitting to have been served within the stipulated time will not apply wherein question falling consideration was in consequence to the prayer for obtaining 'no objection certificate' from the Income Tax Department in terms of Master Circular No.2/2008-09 dated 01.07.2008 for being submitted to the Reserve Bank of India and in accordance with the fact in para 6, there were initiation of reassessment proceedings. Thus, in consequence the Hon'ble Court's allowed the petition quashing the reassessment proceedings with a direction in the writ of Mandamus to issue that 'no objection certificate' as prayed for which relevant findings are extracted hereinbelow:

"Accordingly, the writ petition is allowed and a Writ Certiorari is issued quashing the assessment proceedings pursuant to the notices under section 148 of the Act. A Writ of Mandamus is issued to the respondents to issue 'no objection certificate' to the petitioner as per the needs and requirements of the Reserve Bank of India. The no objection certificate will be issued within 6 weeks from today. There will be no order as to costs."

15. We may refer to the judgment of Hon'ble Jurisdictional High Court of Punjab & Haryana which is binding in nature titled as CIT vs Ram Narain Bansal reported in ITA No.814 of 2010 dated 13^thJuly, 213 reported in 202 Taxman 213 (placed on record) pertaining to assessment year 2002-03

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wherein the question falling consideration is the same as raised before this Bench in the present appeal, which is extracted hereinbelow:

"Whether on the facts and circumstances of the case, the Tribunal was right in law in concurring with the finding of CIT

(A) in holding the assessment bad in law, made pursuant to the issue of notice u/s 148 without appreciating that no prejudice was caused to the assessee by non-issuance of notice u/s 143(2), particularly, when the assessee was participating in the assessment proceeding without objecting to the assessment proceedings on this account at the assessment stage?"

16. The Hon'ble High Court noticing the provisions of law has answered the question against the assessee and in favour of the revenue with the direction of remanding the matter to the Tribunal for decision on merit afresh in accordance with law. The relevant portion of the judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Ram Narain Bansal (supra) is reproduced hereinbelow for the sake of convenience as under:

9. Learned counsel for the Revenue submitted that notice under Section 148 of the Act was issued to the assessee which was duly served. In pursuance to the said notice, the assessee appeared before the assessing authority and participated in the re-assessment proceedings on 30.11.2007, 6.12.2007, 12.12.2007, 13.12.2007, 18.12.2007, 24.12.2007, 27.12.2007, 28.12.2007 and 31.12.2007 and also cross-examined the witnesses who were summoned and their statements were recorded. The counsel drew support from a judgment of the Kerala High Court in K.J. Thomas vs. CIT (2008)

301 ITR 301 to submit that non-service of notice under Section 143

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(2) of the Act was not fatal to re-assessment proceedings. Reference was made to Section 292 of the Act and according to the counsel the said provisions were applicable to all pending proceedings. Reliance was also placed on a judgment of this Court in Commissioner of Income Tax, Bathinda v. M/s Panchvati Motors (P) Ltd. (ITA 292 of 2008) decided on 3.5.2011.

10. We find considerable force in the submission of the learned counsel. The Kerala High Court in K.J.Thomas's case (supra), while considering similar issue, had held as under:

"The procedure under S. 143(2) of the Act is to ensure that an adverse order is issued only after proper opportunity is given to the assessee. In this case, it is conceded that the assessee got opportunity to file reply and detailed reply was in fact filed and reassessment notice and final order were also issued within the time- limit prescribed under the Act."

11. Further, this Court in M/s Panchwati Motor (P) Ltd.'s case (supra) while examining the scope of Section 292 BBof the Act and its applicability had noted as under:

"Section 292BB of the Act was inserted by Finance Act, 2008 w.e.f. 1.4.2008. It reads thus:-

"292BB: Where an assessee has appeared in any proceeding or co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of the Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act 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.

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Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment."

A presumption has been raised under the said provision relating to service of notice upon the assessee in respect of assessment or reassessment proceedings. According to this provision, where an assessee appears in any proceedings or cooperates in any enquiry relating to assessment or reassessment proceedings, it shall be presumed that the assessee has been validly served and it shall not be open to the assessee to object that the notice was not served upon him or was not served in time or was served upon him in an improper manner. However, an exception to the aforesaid presumption has been made in a case where such objection has been raised before completion of assessment or reassessment. The provision has been made effective from 1.4.2008 and therefore, shall apply to all pending proceedings. The Central Board of Direct Taxes issued the circular No.1 of 2009 dated 27 March, 2009 (2009) 310 ITR (St.) 42 giving explanatory notes on the provisions relating to direct taxes contained in Finance Act, 2008. Clause 42.7 (at page 86 of the report) is relevant which relates to applicability of this provision and reads thus:

"42.7 Applicability - This amendment has been made applicable with effect from 1st April, 2008. This means that the provision of new-section 292 shall apply in all proceedings which are pending on 1st April, 2008."

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12. It is not disputed that the assessee had appeared before the assessing officer on various dates and participated in the re- assessment proceedings before the finalization and no objection regarding issuance and service of notice under Section 143(2) of the Act was raised before the assessing officer. The CIT(A) and the Tribunal were, thus, in error in nullifying the re-assessment proceedings and declaring the re-assessment order to be invalid.

13. In view of the above, the substantial question of law is answered in favour of the Revenue and against the assessee. Consequently, the matter is remanded to the Tribunal for decision afresh on merits in accordance with law. "

17. Thus, under the aforesaid facts and circumstances and the decision of the Hon'ble Court, restored the matter to the Tribunal and we are bound to follow the decision of the Jurisdictional High Court of Punjab & Haryana which is directly on the question involved in the present case and the decisions as relied upon by the ld. counsel which are not directly on the issue does not support the case of the assessee and likewise the decision of Chennai Bench of Tribunal relied upon by the Ld. AR cannot prevail on the decision of Hon'ble Punjab & Haryana High Court in the case of Ram Narain Bansal (supra). In view of the matter and our findings hereinabove, the matter is set aside to the file of the A.O. who is directed to issue notice u/s 143(2) of the Act to the assessee for a decision in accordance with law. Thus, grounds raised by the Revenue are allowed for statistical purposes.

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18. In the result, the appeal filed by the Revenue in ITA No.184(Asr)/2013 is allowed for statistical purposes. Order pronounced in the open court on 16th July, 2013. Sd/- Sd/-

(H.S. SIDHU) (B.P. JAIN)

JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated: 16th July, 2013

/SKR/

Copy of the order forwarded to:

1. The Assessee:Smt. Promila Gupta, Distt. Ramban ( J & K)

2. The ITO Udhampur.

3. The CIT(A), Jammu.

4. The CIT, Jammu

5. The SR DR, ITAT, Amritsar. True copy

By order

(Assistant Registrar) Income Tax Appellate Tribunal, Amritsar Bench: Amritsar.