R.K. Bali, A.M. - (1.) THESE three appeals by the assessees who are real brothers and directors in various companies of Mardia Group involve common points and are, therefore disposed of by a common order for the sake of convenience. 2. All the three brothers viz. Rakesh Section Mardia, Rajeev Section Mardia and Rasiklal Section Mardia who are Directors in Mardia group of companies derive income from salary, share from partnership firm, dividend, interest, etc. There was a search and seizure operation at the residential premises of all the assessees on 9th Jan., 1997, when certain papers, jewellery, etc, were seized. Subsequently, the assessees were served with notices under Section 158BC of the IT Act, 1961, which required them to file returns of total income including undisclosed income for the block period comprising of earlier ten previous years and part of the year from 1st April, 1996 to 9th Jan., 1997. The assessees accordingly filed their returns for the block period as under : JUDGEMENT_1485_TLIT0_20000.htm
(2.) 1. Thereafter, the AO issued notices under Section 143(2) of the Act on 15th Dec., 1998, for the first time requiring the assessees to attend the hearing on 18th Dec., 1998, and on the basis of information gathered in the course of assessment proceedings for the block period, the AO determined the total income of these three assessees by passing orders under Section 158BC/143(3) on 29th Jan., 1999 as under : JUDGEMENT_1485_TLIT0_20001.htm which inter alia included various additions which were challenged in appeals by the assessees before the learned CIT(A). One of the grounds taken by the assessees before the CIT(A) was validity of the assessment framed by the AO relating to the block assessment years which was challenged by the assessees by taking a specific ground as under : "That the AO has erred in making block assessment without having jurisdiction over the same, on account of issuance of notice under Section 143(2) of the Act beyond the prescribed time-limit of one year provided in the proviso to Section 143(2) of the Act." 2.2, Besides this, the assessees have also challenged various additions made by the AO on account of undisclosed investments for the acquisition of jewellery, valuable items found at the time of search, interest not accounted for etc. The learned CIT(A) after considering the submissions of the assessees dismissed the ground with regard to the validity of the assessments framed by the AO under Section 158BC r/w Section 143(3) for the reasons given in detail in the impugned orders but he allowed partial relief to the assessee in respect of various additions made under Section 69A/69B/69C of the Act and other additions vide his separate orders dt. 10th March, 2000, 6th March, 2000 and 3rd March, 2000 in the cases of Rakesh S. Mardia, Rajeev S. Mardia and Rasiklal S. Mardia respectively. Against the above separate orders of the CIT(A), the assessee have filed these three appeals by taking the following substantial grounds : IT(SS)A No. 30/Ahd/2000 in the case of Rakesh S. Mardia (1) The learned CIT(A) erred in law and on facts in rejecting the assessee's contention founded on the ground that the notice under Section 143(2) was invalid and without jurisdiction. He erroneously rejected the claim of the assessee that provisions of Section 143(2) read with proviso appended thereto apply fully to the block assessment proceedings and as a corollary and consequence, notice under Section 143(2) of the Act issued by the learned AO beyond the period of one year must be held to the without jurisdiction. Accordingly, it was prayed that the block assessment proceedings may kindly be quashed. (2) The CIT(A) has erred in retaining an addition of Rs. 49,000 out of Rs: 66,350 made by the AO on account of valuable items as undisclosed income for the asst. yr. 1997-98. (3) The CIT(A) has erred in not allowing rebate under Section 88 of the Act. (4) The CIT(A) has erred in law and on facts in not quashing the initiation of penalty proceedings under Section 158BFA(2)/158BFA(3). IT(SS)A No. 31/Ahd/2000 in the case of Rajeev S. Maidia (1) The learned CIT(A) erred in law and on facts in rejecting the assessee's contention founded on the ground that the notice under s. 143(2) was invalid and without jurisdiction. He erroneously rejected the claim of the assessee t hat provisions of Section 143(2) r/w proviso appended thereto apply fully to the block assessment proceedings and as a corollary and consequence, notice under Section 143(2) of the Act issued by the learned AO beyond the period of one year must be held to be without jurisdiction. Accordingly, it was prayed that the block assessment proceedings may kindly be quashed. (2) The CIT(A) has erred in sustaining an addition of Rs. 1,74,632 on account of expenditure of furnishing of the residential house. (3) The CIT(A) has erred in sustaining an addition of Rs. 3,11,000 on account of diamond jewellery belonging to the assessee's wife by treating it as undisclosed income of the assessee. (4) The CIT(A) has erred in sustaining an addition of Rs, 15,000 on account of furniture items treated as undisclosed income for asst. yr. 1997-98. (5) The CIT(A) has erred in sustaining an addition of Rs. 1,16,000 out of Rs. 1,43,000 made by the AO on account of valuable items as undisclosed income of the assessee for asst. yr. 1997-98. (6) The CIT(A) has erred in law and on facts in not allowing rebate of the Act. (7) The CIT(A) has erred in law and. on facts in not quashing initiation of penalty proceedings under Section 158BFA(2)/158BFA(3). IT(SS)A No. 32/Ahd/2000 in the case of Rasiklal S. Mardia : (1) The learned CIT(A) erred in law and on facts in rejecting the assessee's contention founded on the ground that the notice under Section 143(2) was invalid and without jurisdiction. He erroneously rejected the claim of the assessee that provisions of Section 143(2) r/w proviso appended thereto apply fully to block assessment proceedings and as a corollary and consequent notice under Section 143(2) of the Act issued by the learned AO beyond the period of one year must be held to be without jurisdiction. Accordingly, it was prayed that the block assessment proceedings may kindly be quashed. (2) The CIT(A) has erred in sustaining an addition of Rs. 59,229 on account of gold jewellery treating it as undisclosed income of the assessee. (3) The CIT(A) has erred in sustaining an addition of Rs. 2,34,650 on account of silver utensils and other items of silver by treating as undisclosed income of the assessee. (4) The CIT(A) has erred in sustaining an addition of Rs. 73,744 on account of diamond jewellery by treating it undisclosed income of the assessee. (5) The CIT(A) has erred in sustaining an addition of Rs. 1,50,093 on account of interest income on primary issue loans as undisclosed income of the assessee for asst. yr. 1995-96. (6) The CIT(A) has erred in sustaining an addition of Rs. 74,000 or account of valuable items as undisclosed income of the assessee for asst. yr. 1997-98. (7) The CIT(A) has erred in law and on facts in not allowing rebate under Section 88 of the Act. (8) The CIT(A) has erred in law and on facts in not quashing initiation of penalty proceedings under Section 158BFA(2)/158BFA(3).
(3.) BEFORE us the learned authorised representative of the assessees while arguing ground of appeal No. (1) which is common in all the three appeals submitted that the assessments framed by the AO under Section 158BC r/w Section 143(3) for the block period is without jurisdiction and time-barred. In support of the ground taken, the learned authorised representative of the assessee submitted the following undisputed facts : JUDGEMENT_1485_TLIT0_20002.htm 21-5-1997 Returns of income filed. 15-12-1998 Notice issued under Section 143(2). JUDGEMENT_1485_TLIT0_20003.htm 4.1. It was pleaded that in view of the fact that the assessees have filed the returns for the block period on 21st May, 1997, in response to notices under Section 158BC dt. 3rd April, 1997 and the AO having issued first notice under Section 43(2) on 15th Dec., 1998 which is more than one year from the date of filing, the returns, which is not permitted in terms of proviso to Section 143(2), the assessments made in consequence upon issue of such notice under Section 143(2) must be held to be invalid and consequently without jurisdiction. Reliance was placed on the decisions of the Hon'ble Supreme Court in the cases of CIT v. Kurban Hussain Ibrahimji Mithiborwala (1971) 82 ITR 821 (SC) and Y. Narayana Chetty v. ITO (1959) 35 1TR 388 (SC) as well as CIT v. Thayaballi Mulla Jeevaji Kapasi (1967) 66ITR 147 (SC). It was submitted that the reliance of the AO as well as CIT(A) on the non obstante clause in Section 158BA(1) does not lead to a conclusion that the proceedings of Chapter XIV-B are independent of the provisions of Chapter XIV inasmuch as till there is a conflict between the two sets of provisions so that they cannot coexist, the operation of Chapter XIV cannot be curtailed merely because of non obstante clause. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of R.S. Raghunath v. State of Karnataka AIR 1992 SC 81. 4.2. It was further submitted that the phrase "so far as may be only means that if the context specifically excludes application of some rule/provision while interpreting another provision, the same may be excluded. But if the same can be read as an addition to the normal provision, the same must also be read while interpreting the other provision. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of R. Dalmia and Anr. v. CIT (1999) 236 ITR 480 (SC). Accordingly, it was pleaded that the usage of the phrase "so far as may be" in Section 148(1) and Section 158BH must receive the same interpretation being a part of the same statute. Accordingly, it was pleaded that the impugned assessments having been framed in pursuance of notice under Section 143(2) which was admittedly issued beyond the period of one year from the date of filing the returns by the assessees, is without jurisdiction and is required to be quashed. Reliance was placed on the Board's Circular No. 717, dt. 14th Aug., 1995 reported in (1995) 215 ITR (St) 70 in para 39.3 (e) 'Procedure for making Block Assessment'--it is mentioned that "The AO shall proceed to determine the undisclosed income of the block period and provisions of Section 142, Syb-sections (2) and (3) of Section 143 and Section 144 shall apply accordingly". Reliance was also placed on the decision of the Ahmedabad Bench of the Tribunal in the case of Maxima Systems Ltd. v. Dy. CIT (1999) 106 Taxman 133 (Ahd) and the decision of the Cochin Bench of the Tribunal in the case of Sree Murugan Trading Co. v. Asstt. CIT (ITA No. 901/Cochin/1992, dt. 29th Dec., 1997).;