SUNIL AMBWANI ,A.N.MITTAL, J . - (1.) WE have heard Shri Ashish Bansal, learned counsel for the petitioner. Shri R.K. Upadhyay appears for the Income Tax department. In pursuance to the search and seizure operation on the business and residential premises of the assessee/ appellant, on 14th May, 1997, a notice under section 158 BC of the Income Tax Act (the Act) was issued. In compliance of which, a "return" in the prescribed Form 2 -B was filed on 10th August, 1998 by the assessee showing an income of Rs.16,59,595/ -. On the admitted tax liability on the income so shown in the return in Form 2 -B, amounting to Rs.9,95,757/ -, was discharged by payment. On the enquiries made by the Assessing Officer, thereafter, through the notices issued under Section 142 (1) of the Act, prior to the filing of "return" as aforesaid as also thereafter, a block assessment order was passed on 25/28th May, 1999 under section 158BC, wherein the 'undisclosed income' was computed at Rs.74,22,037/ -. A chronology of 'dates' and 'events' during the intervening period, and which have got a bearing on the issues involved in this appeal is given hereunder: - This appeal was admitted on following questions of law: - "(i) Whether on a true and correct interpretation of the provisions of law as contained in Section 143 (2) as a whole read with Section 158 BC (b), the Tribunal was legally correct in holding that non -issuance/ service of notice under section 143 (2) (on the assessee) did not affect the validity of block assessment order dated 25/28th May, 1999? (ii) Whether the Tribunal was legally correct in holding that absolute non -compliance of the provision of section 143 (2) at the part of the Assessing Officer does not go to affect the validity of block assessment order dated 25th/28th May, 1999 as has been passed in the case of the assessee? (iii) Whether the Tribunal was legally correct in holding that in view of the phraseology "so far as may be" as appearing in section 158 BC (b), the applicability of section 143 (2) as a whole, to the block assessment proceedings, was optional at the end of the Assessing Officer and non -issuance (by the Assessing Officer) and non -service (on the assessee) of such a notice does not affect the validity of block assessment order? (iv) Whether the Tribunal was legally correct in holding that the Circular No.717 dated 14th August, 1995 as issued by the CBDT, whereby issuance and service of notice under section 143 (2) (on the assessee) has been made absolute, was wholly redundant having no bearing on the applicability of the said provision on the block assessment? (v) Whether on the facts and circumstances of the case, the Tribunal was legally correct in holding that the block assessment order dated 25/28th May, 1999 was not adversely affected by non -issuance/ service of notice under Section 143 (2) on the assessee and in upholding the validity of the block assessment order - Shri Ashish Bansal submits that in this case admittedly the notice under Section 143 (2) of the Act was not issued. For that purpose he relies upon the findings recorded by the Income Tax Appellate Tribunal in para 5 of the impugned judgment, which is quoted as below: - "We have given our careful consideration to the matter and we find that there is no ambiguity in the order of the Hon'ble Special Bench, on the issue. It has been clearly held by our learned brothers that non -issuance of notice under Section 143 (2) does not in principle, render the block assessment order invalid. At best, it can be said to be an irregularity which can be cured by giving appropriate directions, as are warranted on the facts of each case. Respectfully following the decision of the Special Bench (supra) in the assessee's own case, we hold that the block assessment order dated 22/28.05.1999 is a valid assessment, even on the face of undisputed fact that after filing the block assessment on 10.08.1998, no notice under Section 143 (2) was issued by the AO."
(2.) In Asstt. CIT v. Hotel Blue Moon, (2010) 321 ITR 362(SC), it was held by the Supreme Court that if the Assessing Officer for any reason repudiates the return filed by any assessee in response to the notice under Section 158 BC (a) of the Act relating to the block assessment, the Assessing Officer must necessarily issue notice under Section 143 (2) of the Act within the time prescribed. In the proviso to Section 143 (2), the issuance of notice is mandatory and that the very foundation of the jurisdiction under Section 158BC of the Act requires a notice to be served on the person, who is found to have undisclosed income. The requirement of notice under Section 143 (2) cannot be dispensed with. Shri R.K. Upadhyay, learned counsel for the department submits that in the present case the petitioner had participated in the assessment proceedings. He relies upon para 23 of the assessment order in which the assessee admitted that some of the transaction may not have been entered in the regular books of accounts. He unsuccessfully tried to explain the excess stocks of gold, which was found in his possession.
(3.) The questions of law raised in this appeal are covered by the judgment in Hotel Blue Moon's case (Supra). Once it is admitted that the assessing officer has repudiated the return filed by the assessee under Section 158BC of the Act, the entire proceedings in the absence of notice under Section 143 (2) of the Act subsequent thereto suffer from lack of jurisdiction.;