COMMISSIONER OF INCOME-TAX AND THE DEPUTY COMMISSIONER OF INCOME TAX Vs. SRI D.S. SRINIVASA RAO AND BROTHERS

JUDGEMENT

(1.) THIS appeal is by the Revenue challenging the order passed by the Tribunal, which has set -aside the Block Assessment Order passed in respect of the assessee on the ground that the said order passed by the Joint Commissioner of Income Tax was not in accordance with the requirements of Section 158BG of the Act. A search was conducted in the residential premises of Sri. D.T.S. Rao at 3 -4 -5, Manasara road, III Cross, Indiranagar, Mysore, one of the Directors of M/s. Madhuvana House Building Co -operative Society Limited, Mysore on 06.02.1996. During the course of search, several incriminating documents, papers and books of accounts and cash were seized. It was contended by Sri. D.T.S. Rao as well as Sri. D.S. Manjunath, who were present at the time of search, that the cash of Rs. 28,65,100/ - seized during search, belong to Sri. D.S. Srinivas Rao and Brothers (HUF). The Assessing Authority passed an order of assessment in the name of the assessee Sri. D.S. Srinivas Rao and brothers (HUF). The said order was challenged by preferring an appeal to the Tribunal. The ground urged in the said order of assessment was approved by the Joint Commissioner of Income -tax, who is not the duly authorized person under Section 158BG of the Income Tax Act, 1961 and therefore, the said order is void and liable to be set -aside.

(2.) THE substantial question of law, which arises for consideration in this appeal is: Whether the assessment order passed in contravention of Section 158BG is still valid in law? Section 158BG reads as under: 158BG. The order of assessment for the block period shall be passed by an Assessing Officer not below the rank of an Assistant Commissioner 7[or Deputy Commissioner] or an Assistant Director 7[or Deputy Director], as the case may be: Provided that no such order shall be passed without the previous approval of - (a) the Commissioner or Director, as the case may be, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995 but before the 1st day of January, 1997; (b) the Joint Commissioner or the Joint Director, as the case may be, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or after the 1st day of January, 1997.

(3.) THE learned counsel appearing for the Revenue, relying on Section 292B contended that the said violation is in the nature of a mistake, defect or omission, which shall not invalidate the order. What Section 292B provides for is, no return of income assessment notice, summons or other proceeding furnished or made or issued 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 proceedings, if there is a substantial compliance of the provisions of the Act keeping in mind the purpose of the Act. Having regard to the language employed in the proviso, where the intention of the Legislature has been expressed in a negatively couched form, the said provision is mandatory. If the previous approval is not obtained by the Assessing Authority before passing the order, the said order could be a nullity. It has no effect. That is the consequence of not obtaining an order. It cannot be construed as a mistake, defect, or omission and it does also not fall within the ambit of substantial provisions of the Act. Therefore, the Tribunal was right in holding that the Block Assessment Order is one without jurisdiction.