Block assessment - notice u/s 158BC(a) cannot be equated with that of notice u/s 148

THE issue before the High Court was : If a notice under Sec 158BC(a) is not issued, but the assessment order is passed, will it render the assessment illegal and without jurisdiction? And the verdict is that it is not Sec 158BC but 158BA that bestows jurisdiction on the AO to assess the undisclosed income in accordance with Chapter XIV-B. Whereas section 158-BA(2) is a charging section; section 158-BB provides for computation of undisclosed income for the block period; whereas section 158-BC provides procedure for block assessment. The Bench also held that a notice under section 158-BC(a) cannot be equated with that of notice under section 148. That notice under section 158-BC(a) only provides for procedure to be adopted for block assessment. It does not confer jurisdiction to assess in favour of the assessing officer. On the issue of technical defects in issuing notice, the High Court held that since no prejudice was caused to the appellant, and the same was admitted by the counsel, such defects are very much protected under the umbrella of Sec 292B of the Act. Brief facts of the case : The appellant is dealing in landed properties. He is regularly assessed to income-tax. Action under section 132 of the Income Tax Act for search and seizure was conducted at the residential and business premises of the appellant between 11th June, 1998 and concluded on 15th July, 1998. The assessing officer issued notice dated 6th July, 1998 calling upon the appellant to file return for the block period. However, appellant disputes the receipt of the said letter/notice. The appellant admits to have received a letter dated 17th September, 1998 from the AO reminding him to file a return for the block period 1987-88 to 1997-98 which referred to the earlier notice dated 6th July, 1998 though incorrectly and stated that the appellant did not file return for the block period in response to the said notice dated 6th July, 1998. The appellant by his letter dated 28th September, 1998 denied receipt of the notice dated 6th July, 1998, however, sought extension of time and, ultimately, filed his return for the block period i.e. assessment year 1989-90 to 1999-2000 on 2nd November, 1998. The assessing officer assessed return for the said block on 30th June, 2000 and passed an order under section 158-BC read with section 143(3) of the Act. The appellant filed an appeal before the CIT (Appeals) challenging the validity of the assessment order contending that the order was passed without serving proper notice under section 158-BC(a), as such assessment is illegal and without jurisdiction. But it was also ruled against it. The Tribunal partly deleted certain additions and remitted matter back to the assessing officer for verification of expenditure allowable under section 37. The Tribunal, however, confirmed addition of Rs.3,85,196/ -. The assessee is now before the High Court where the counsel insisted that the technical defects in the notice dated 6th July, 1998 go to the root of the jurisdiction of the assessing officer to initiate proceedings for bloc assessment much less to assess the total income including undisclosed income for the block period under section 158- BC. According to him, service of legal and valid notice under section 158-BC(a) is a condition precedent for assumption of jurisdiction to assess the return for block period. He submits that the issue and service of notice under section 158-BC(a) is not a procedural requirement; the compliance of the mandatory provision of section 158-BC cannot be by-passed or waived. The counsel further pleaded that the provision of section 158-BC is synonymous and pari materia with that of section 148 of the Act. He, thus, submits that the validity of the notice issued under section 158-BC(a) must be tested with the same rigour with which the validity of notice under section 148(a) is required to be examined. Having perused the matrix of facts the HC observed that ++ it is not in dispute that the notice dated 6th July, 1998 did not cause any prejudice to the appellant. However, such defects are well protected under the umbrella of section 292-B of the Act; ++ a perusal of the provisions of sections 148(1) and 158-BC, side by side, reveals that the section 148(1) opens with words "Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him......" This very opening sentence, unequivocally, goes to suggest that in order to assume jurisdiction for assessment under section 147, notice under section 148(1) is a condition precedent; whereas scheme of Chapter XIV-B of the Act suggests that section 158- BA is a section which provides that notwithstanding anything contained in any other provisions of this Act, where after 30th day of June, 1995 a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of any person, then, the assessing officer shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter; ++ section 158-BA is the provision which provides for jurisdiction in favour of the assessing officer to assess undisclosed income. Whereas section 158-BA(2) is a charging section; section 158-BB provides for computation of undisclosed income for the block period; whereas section 158-BC provides procedure for block assessment. Section 158-BA bestows jurisdiction on the assessing officer and not section 158-BC as submitted by the appellant's counsel. ++ Thus, notice under section 158-BC(a) cannot be equated with that of notice under section 148. That notice under section 158-BC(a) only provides for procedure to be adopted for block assessment. It does not confer jurisdiction to assess in favour of the assessing officer