ANTONY DOMINIC, J. : - Heard the learned counsel for the appellant and the learned standing counsel for the respondent.
2. This appeal is filed against Annex. D order passed by the Tribunal, Cochin Bench in IT(SSA) No. 4/Coch/2009 filed by the respondent herein.
3. Briefly stated, the facts are that on 9th Nov., 2000, a search was conducted in the premises of one Boban Jagannath Shinde. Following this, notice under s. 158BC of the IT Act ('the Act' for short) was issued to the aforesaid person on 8th March, 2001. While matters stood thus, Sri Shinde expired on 22nd Jan., 2002 and his legal heirs were brought on the party array. The AO completed the assessment as per Annex. A order dt. 27th Nov., 2002, which show that Sri Shinde was carrying on business along with one A. Rahim and that therefore, the income earned in such business should be assessed in the hands of the AOP consisting of Sri Shinde and Sri A. Rahim. It has been so stated in Annex. A order, which reads thus:
"5 As stated in the foregoing paras, late Shri Boban Jagannath Shinde has earned income in joint business with Shri A. Rahim and hence the income earned by such business should be assessed in the hands of AOP consisting of late Shri Boban Jagannath Shinde and Shri A. Rahim. Therefore, the assessment in the case of late Shri Boban Jagannath Shinde is closed as a 'nil demand case'."
On that basis, the assessment was closed as a 'nil demand case'. Thereafter, on 12th March, 2013, notice was issued to the AOP to initiate proceedings under s. 158BD of the IT Act. Accordingly, assessment was completed by Annex. Border dt. 11th March, 2014. The. assessee carried the matter in appeal before the CIT(A), who by Annex. C order allowed the appeal. Annex. C order was challenged by the Revenue before the Tribunal and the Tribunal by Annex. D order allowed the appeal. It is this order of the Tribunal, which is challenged before us.
4. The contentions raised by the counsel for the appellant are three. First contention raised was that the proceedings culminated in Annex. Border was time-barred. Second contention raised was that for initiating proceedings under s. 158BD of the IT Act, the AO should have transferred the records seized in the search to the jurisdictional AO and that he should have recorded his satisfaction that the person other than the person searched, held undisclosed income. According to the counsel, both these requirements are not satistied in this case. Thory, It was contended that quantification of income in a proceedings under s. 158BD cannot be done by way of an estimation as done in the instant case. On these grounds, the learned counsel contended that the findings in Annex. D order are incorrect and illegal.
5. The learned standing counsel for the respondent contradicted each of these contentions and canvassed to sustain Annex. D order.
6. We have considered the submissions made.
7. The first contention raised by the learned counsel for the appellant is one of time-bar. The contention of time-bar was accepted by the CIT(A) in Annex. C order. The basic premise on which this contention is raised is that the assessment completed against the AOP is under s. 158BC. However, the assessment completed against the person other than the person searched can only be under s. 158BD of the Act. Yet another contention raised is that the notice issued to the AOP mentions only s. 158BC. Though, it is factually true, the question is whether the proceedings initiated under s. 158BD by issuing notice mentioning s. 158BC is a legally tenable one or not. In our view. the answer has to be in the affirmative and our conclusion is justified by the principles laid down by a Division Bench of this Court in CIT us. Lekshmi Traders (2011) 242 CTR (Ker) 330 : (2011) 56 DTR (Ker) 291 : (2012) 344 ITR 281 (Ker) , where it has been held thus:
"5. The question to be considered is whether the notice sent under s. 158BD is invalid for the reason that the AO has not separately mentioned in the said notice that it is issued under s. 158BC also. The Tribunal's finding is that if the notice was issued 'under s. 158BD r/w s. 158BC', the assessment would have been valid. In this context, we have to examine the effect of the notice sent by the AO by correcting in the printed form s. 158BC to s. 158BD. For this purpose we have to examine the scope of block assessment under ss. 158BC and 158BD. Sec. 158BD authorises the Department to assess a person other than the searched person based on materials recovered during search. In this case search was made in the premises of one Mr. Prasad, who is one of the partners and one of the members of the respondent AOP. When evidence was recovered about the undisclosed income earned by the respondent assessee during the course of search in the premises of one of the members of the AOP, assessment has to be made on respondent under s. 158BD r/w s. 158BC. The assessee also does not dispute this position. But the only question raised is whether the notice issued by the Department based on which the block assessment was completed is valid or not. What we find from s. 158BD is that no independent notice is contemplated under the said section. because it only gives jurisdiction to the AO to assess a person other than the searched person based on materials gathered during search. What is stated in s. 158BD is that when any evidence is collected about income earned by a person other than the person searched under s. 132, the officer who conducted the search shall hand over those materials and evidence to the AO having jurisdiction over such other person to be proceeded for assessment, and once the materials are handed over, the AO having jurisdiction over the person to be assessed should issue notice and make assessment under s. 158BC. In other words, the procedure for assessment of a person other than the searched person under s. 158BO is the same procedure contained in s. 158BC. Since no notice is prescribed under s .•• 158BO, what is required is to issue an intimation about the initiation of proceedings under s. 158BO by the officer, and then to call for return in Form 2B prescribed under r. 12(1)(a) for assessment under s. 158BC (If the Act. In this case, Annex. 0 notice clearly shows that the jurisdiction (00 the AO for initiation of proceedings for assessment is by virtue of powers under s. 158BO, and the return called under the said notice is the return in Form 2B, which is the return required to by filed by the assessee for assessment under s. 158BC. While the learned counsel for the assessee specifically referred to s. 282(2)(c) and contended that there is failure in serving notice as mentioned above, learned senior counsel for the Revenue relied on s. 292B and contended that non-mentioning of s. 158BC along with s. 158BO in Annex. 0 notice will not invalidate the notice based on which the assessment w~s completed. Sees. 282 (2)(C) and 292B are extracted hereunder:
·Sec. 282. Service of notice generally: (1) A notice or requisition under this Act may be served on the person therein named either by post or as if it were a summons issued by a Court under the CPC, 1908 (5 of 1908).
(2) Any such notice or requisition may be addressed-
(c) in the case of any other association or BO!, to the principal officer or any member thereof;'
'Sec. 292B : No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. '
6. What is clear from the above provisions is that notice should be issued in the name of the assessee proposed to be assessed and in the case of an AOP, to the principal officer or any member thereof and serve notice on such person to represent the AOP. In this case, admittedly, notice was received by the respondent assessee, and one of the members of the AOP filed return pursuant to the notice, in Form 2B on behalf of the AOP. In other words, when the assessee admits receipt of notice and files its proper return in the prescribed form in terms of the notice, we do not think that the assessee is entitled to contend that the notice is not served in accordance with the procedure prescribed under the above sections. In our view, proof of the detailed procedure adopted for service of notice under sub s. (2) of s. 282 is required to be enquired into only when the assessee complains non-receipt of notice. In other words, when notice issued is accepted by the assessee and return is filed in terms of the notice, the assessee cannot contend that there is no service of notice in terms of the section. Besides the above, what we find is that Annex. 0 notice is a notice prescribed under r. 12(1)(a) of the Rules and in the said notice what is called for is return in the prescribed format Le. in Form 2B, which is for making block assessment under s. 158BC. So much so, even though the AO has corrected's. 158BC' to's. 158BO', the contents of the notice satisty the requirement of a notice under s. 158BC as well. Therefore, in our view, the notice served on the assessee has to be necessarily taken as a notice issued under s. 158BC r/w s. 158BD, and not an independent notice under s. 158BO as held by the Tribunal, As already found by us the assessee rightly understood the notice as one issued under s. 158BD r/w s. 158BC and in fact the assessee correctly responded by filing return in Form 2B. The Tribunal misdirected themselves to reach the wrong conclusion, because they have not cared to go through the contents of the notice and to find out under what provision the notice is issued. So much so, we hold that the finding of the Tribunal that the notice is one issued under s. 158BO alone is incorrect and unsustainable. On facts it is further found that after the receipt of return, the AO issued a pre-assessment notice specifically mentioning that the said notice for assessment is issued under s. 158BC r /w s. 158BO, and after considering the assessee's reply, assessment also was completed under s. 158 BC r/w s. 158BO. Further, the very purpose of the provisions made in s. 292B is to ensure that defects or minor omissions will not invalidate the return of income filed under the Act for assessment or other proceedings completed under the provisions of the Act. Strangely the Tribunal did not consider relevance of s. 292B, but allowed the appeal by merely following the devision of the Division Bench of this Court referred to above."
8. Second contention raised is that the records were not transferred to the jurisdictional AO and that satisfaction was not recorded by the AO. As far as the contention that the records were not transferred, we wonder, how such a contention can be raised by an assessee, because unless the records were transferred, the jurisdictional AO could not have issued the notice. Therefore, we are not prepared to accept this contention raised by the assessee.
9. As far as the contention that the AO has not recorded his satisfaction, as rightly found by the Tribunal in Annex. D order, Annex. A assessment order itself contains the satisfaction of the AO and the relevant part of Annex. A has been extracted in the earlier part of this judgment. Therefore, we are unable to accept this contention either.
10. The third contention raised is that the AO should not have resorted to an estimation of the income. While it is true that pure estimation of the income is impermissible in a proceedings under s. 158BD. the question as to whether such estimation has been done in this case has to be gathered from the materials before this Court. Paragraph No. 4 of Annex. A order reads thus:
"In my letter dt. 21st Oct., 2002 on p. 2 para. 3, I have called for the objections from the legal heirs on my proposal to bring to assessment a sum of Rs. 4,80,000 as profit earned by late Sri Boban Jagannath Shinde in his joint business with Shri A. Rahim in manufacturing and sale of gold ornaments on wholesale basis during the period from June, 1998 to January, 1999, as per the details available in seized books of accounts marked as 'MKA-4, MKA-5, etc. up to MKA-18. The above seized books of accounts give clear evidence regarding the profit earned by late Shri Bobban Jagannath Shinde in his joint business with Shri A. Rahim in the wholesale business referred above. On an average of Rs. 60,000 was earned per month for a period of 8 months and the proposal to bring to assessment Rs. 4,80,000 is well founded and supported by clear documents. To the above proposal. the legal heirs has confirmed the existence of such a business and requested that no assessment may be made because they are unaware of the details."
A reading of the above shows that it was based on the statement made by Sri Shinde himself that the AO concluded that for the eight months period from Jun'e 1998 to January 1999. the escaped income was Rs. 4,80,000. Therefore, the quantification has been done only based on the statement given by none other than late Sri Shinde himself. Facts being so, the AO cannot be accused of having resorted to any estimation by himself. Even apart from this, in a proceedings under s. 158BC or s. 158BD, certain amount of estimation is permissible and this has been recognised by a Division Bench of this Court in its judgment in CIT us. Hotel Meriya (2010) 45 DTR (Ker) 356 : (2011) 332 ITR 537 (Ker).
11. Therefore, we do not find any merit in anyone of the contentions raised.
The appeal fails and is dismissed .