SUNIL AMBWANI, ADITYA NATH MITTAL, JJ. - (1.) WE have heard Shri Bharat Ji Agarwal, Senior Advocate assisted by Shri Dhananjay Awasthi for the Income Tax Department. Shri Ashish Bansal appears for the respondent - assessees.
(2.) IN these Income Tax Appeals, the department has raised following questions of law for consideration by the Court: - "1. Whether Hon'ble ITAT erred in holding the asstt. to be void and illegal for want of service of notice u/s 143 (2) whereas there is no such requirement in block search asstt. proceedings because the return therein is not filed u/s 139 (1) or in response to notice u/s 142 (1) but in response to notice u/s 158BC. 2. Whether Hon'ble ITAT erred in holding the asstt. to be void and illegal for want of service of notice u/s 143 (2) whereas the requirement of issuing notice u/s 143 (2) is only procedural which may be inferred to have been acquiesced in or waived from the conduct of the assessee." The search and seizure operation was carried out under Section 132 of the Income Tax Act, 1961 (in short, the Act) on 23.8.1996 at the business and residential premises of Jindal group of cases. The notices under Section 158 -BD were issued and served on the assessees. The notices under Section 142(1) were also issued subsequently along with a questionnaire. The assessees filed return of income in response to the notices under Section 158 -BD and also complied with the notice under Section 142 (1). During the course of search the assessees had admitted having maintained some benami bank accounts. However, during the course of block assessment proceedings the statement was retracted.
(3.) THE Assessing Officer found the total undisclosed income for the block period at Rs. 1,02,000/ - in the case of M/s Parikalpana Estate Developer (P) Ltd, Kanpur; and at Rs.71,10,616/ - in the case of M/s Jindal Stocks Ltd, Kanpur. Against the orders of AO the assessees filed the appeals before the Commissioner of Income Tax (Appeals) in which an additional ground was taken that in absence of service of a valid notice under Section 143 (2), the block assessment order was illegal. The Tribunal relying upon a judgment in Bandana Gagoi v. CIT 289 ITR 28 (Gauhati), held that the requirement of a notice under Section 143 (2) cannot be dispensed with in a case where the AO proceeds to make an enquiry for the purpose of assessment under Section 158 -BC and determination of taxes payable after issuing notice under Section 142 (1). The Gauhati High Court held that even the assessments passed under Section 158 -BC (a) have to follow the provisions of sub section (2) of Section 143 of the Act.;