ORDER
Abdul Razack, J.M.
1. These appellants assail different orders passed by the AO namely, the Asstt. CIT, Company Circle I (Inv.), Madras, on 29th August, 1996 for the block period 1986-87 to 1995-96 under s. 158BC r/w s. 143(3) of the IT Act, 1961.
2. Shri Ashok Kumbhat, Chartered Accountant appeared for all the above mentioned appellants and it was submitted by him that the facts in all these appeals are similar and identical and therefore whatever decision is given in the case of the first appellant namely Smt. Urmila Chandak, the same will be applicable to the remaining appellants herein. This was confirmed from the Departmental Representative Shri K. Satyanarayanana who also affirmed and agreed with the submissions made by Shri Kumbhat. We are therefore narrating the facts which are present in the case of Urmila Chandak (Appellant No. 1) herein since the facts are common in the remaining cases of the other appellants. We also wish to make it clear that whatever decision we will be rendering in the case of Urmila Chandak (Ap. No. 1) shall be deemed as decision given in the appeals of the remaining appellants arrayed.
3. Facts (from the case of Urmila Chandak)
There were search and seizure operations on 31st August, 1995 in the cases of S/Shri Bhojraj Chandak, father of this appellant and Madanmohan Chandak, brother of Bhojraj Chandak and uncle of this appellant. There were no search warrants issued in the name of Smt. Urmila Chandak or in the name of any of these appellants in terms of s. 132 of the Act. But the AO has mentioned in the impugned block period assessment order that various details relating to income of these appellants were found and seized. On the basis of the seized material recovered from Shri Bhojraj Chandak & Shri Madan Mohan Chandak to notice under s. 158BC(a) was issued to these appellants. However in response to such a notice return for the block period was filed declaring income which was declared by this appellant during the past ten years namely the block period and the additional undisclosed income was declared in such a return filed in pursuance to the notice issued by the AO under s. 15BBC(a) of the Act. Thereafter the AO issued notice under s. 142(1) and under s. 143(2) of the Act calling for various details in order to make the block period assessment of the undisclosed income.
4. The appellant-assessee have been regularly assessed to tax for deriving income from sources other than business or profession. The main sources are interest income, dividend income and gains/losses in share dealings. The appellant has not been maintaining any account books in relation to the income earned by her. However for some years the assessee has claimed deduction of interest payments, postage expenses, audit fees etc. from the taxable income in the returns filed for the block period. On the basis of the regular returns submitted by the appellant-assessee, assessments have been framed, copies of which have been placed from pages 32 to 79 of the paper-book filed on 16th July, 1997 by authorised representative, Shri Ashok Kumbhat. The regular assessments were never reopened on the basis of seized material found from Shri Bhojraj Chandak or Shri Madanmohan Chandak. But the AO chose to assess this appellant-assessee as well as the other appellant-assessees mentioned above for the block period in terms of s. 158BC of the Act on the ground that they are also covered, though no search warrants under s. 132 of the Act nor search operation pursuant thereto were carried on or conducted on these appellant-assessees. The AO in the impugned block period assessment order dt. 29th August, 1996 has stated as under at page 2 :
“Therefore the inadmissible deductions claimed and allowed for the various years are disallowed as under and included in the block assessment”
Again at page 3 of the impugned block period assessment order the AO has stated :
“Further, there is no proof to show that there was such a transaction carried out by the assessee, in the absence of books. Therefore, the short-term capital loss claimed and allowed for the various years are disallowed and included in the block assessment as under :
After discussing the facts of the case the AO at page 4 of the impugned block period assessment order computed the block period income at Rs. 2,56,862 stating to be undisclosed income and levied tax at 60 per cent. as provided under s. 113 of the Act. We give below the relevant portion from page 4 of the impugned order of Smt. Urmila Chandak :
“The total income included in the block assessment is computed as under :
Rs.
(i) Short-term capital loss 44,581
(ii) Income from 1995-96 42,000
(iii) Interest disallowed 17,281
-----------
Total 2,56,862
-----------
Tax thereon @ 60% 154117
4A. This has given rise to these appeals. The assessee’s authorised representative Shri Ashok Kumbhat Chartered accountant submitted that there were no search operation on any of the appellants in terms of s. 132 of the Act and there were only search operation on Shri Bhojraj Chandak, father of Smt. Urmila Chandak and Shri Madanmohan Chandak, uncle of Smt. Urmila Chandak. That being the case, the provisions of s. 158BC are not at all applicable and the AO had no jurisdiction to issue a notice under s. 158BC ceiling upon the appellant-assessee to file the block period return. Nonetheless the appellant-assessee in order not to displease the AO filed block period return in pursuance to such an illegal notice issued under s. 158BC by the AO declaring income for each assessment years covered in the block period as disclosed in the original regular returns pursuant to the provisions of s. 139 of the Act. It was further argued by the assessee’s counsel that the AO has not derived any satisfaction from the seized materials that there is undisclosed income for any of the assessment years in the block period which could empower him or give jurisdiction as provided in s. 158BD of the Act.
5. It was the contention of the assessee’s counsel that since there were search operations on the appellant-assessee’s father and uncle, the AO unnecessarily contrary to law issued notices to these appellant-assessees in terms of s. 158BC of the Act. It was further argued by the assessee’s representative Shri Kumbhat that the notices under s. 158BC were issued not upon his independent satisfaction but at the behest and upon the directions of the Asstt. Director of Investigations of IT Department, who conducted the search operation.
6. Our attention was drawn by Shri Kumbhat to the provisions of s. 158B(b) of the IT Act to satisfy us that there has been no undisclosed income detected of this appellant-assessee or any of the appellant-assessees herein pursuant to search operations and, therefore, the impugned orders in all cases are wholly illegal and without jurisdiction and liable to be cancelled. In order to convince us that there has been no undisclosed income found in search operations or assessed in the impugned orders, our attention was drawn to the observations of the AO contained in the impugned assessment, relevant portion of which we have already extracted above from page 2 & 4 of the impugned assessment order of Smt. Urmila Chandak (Appellant No. 1). Since there has been no detection of undisclosed income in search operations on appellant’s father and uncle the provisions of Chapter XIV-B were wholly inapplicable and the AO did not derive any jurisdiction whatsoever under those provisions to make or pass the impugned assessment orders of the ten year block period. He, therefore, strongly pleaded for quashing of the assessment orders passed on 29th August, 1996 by the AO in the cases of all the appellants mentioned herein-above.
7. The Departmental Representative on the other hand repelled all the arguments of the assessee’s counsel and submitted that the AO had jurisdiction to pass the impugned orders on the basis of jurisdiction conferred by the CIT through a notification as provided under the IT Act. Arguing further for the Department, the Departmental Representative submitted that on the basis of the appraisal report, the AO was satisfied that this was a case falling within the provisions of s. 158BC and, therefore, notice issued under that provisions calling for filing all the returns for the block period and which the assessee did file in compliance to the said notice, notification issued under s. 158BC(a) of the Act. According to the Departmental Representative the assessee after filing all the returns of the block period also complied with various notices issued under s. 142(1) and 143(2) and furnished details and various other information and explanation through her authorised representative Shri Kumbhat. Having responded to the notices issued under s. 158BC(a) r/w s. 142(1) and 143(2) of the Act, the assessee was estopped from questioning the jurisdiction of the AO before this Tribunal and, therefore, this Tribunal should not quash or annul the assessment of the block period as being without jurisdiction because jurisdiction has been conferred upon the AO by consent and acquiescence. To our query, the Departmental Representative fairly conceded that no search warrants and authorisations in terms of s. 132 were issued by the IT authority to conduct search operation on this appellant assessee or any of the appellant-assessees herein and that Shri Kumbhat was right that there were search operations pursuant to warrants issued under s. 132 only upon Shri Bhojraj Chandak and Shri Madanmohan Chandak. Regarding the issuance of notice under s. 158BC, the Departmental Representative contended that it was not issued at the behest and direction of the Asstt. Director of Investigations as contained in appraisal report but acted independently deriving satisfaction from the seized material recovered from the father and uncle of Smt. Urmila Chandak. The Departmental Representative fairly conceded on questioning by us that there has been no detection or recovery of any undisclosed income or asset as defined in sub-cl. (b) of s. 15BC of the Act. The Departmental Representative supported the order passed by the AO impugned by the appellants in all these appeals and wanted upholding the same by dismissing the appeals filed by different assessees.
8. After hearing the rival contentions of representatives appearing before us for the appellant-assessees and for the Revenue and after perusing the material available with us, we are of the opinion that the appeals deserve to be allowed by quashing the impugned block period assessment passed by the AO in terms of s. 158BC of the Act. We advert to our reasons as under : The provisions of Chapter XIV-B of the IT Act relates to special procedure for assessment of search or requisition cases. In order to make the procedure of assessment of search or requisition cases effective the legislature introduced new provisions for assessment of undisclosed income detected as a result of search or requisition. Under the new provisions, the undisclosed income detected as a result of search initiated or requisition made after 30th June, 1995, shall be assessed separately as income of a block of ten previous years. Where the previous year has not ended or the due date for filing a return of income for any previous year has not expired, the income recorded on or before the date of search or requisition in the books of account of other documents maintained in the normal course relating to such previous years will not be included in that block. This is evident from the speech of the Hon’ble Finance Minister to the Members of Parliament while introducing the Finance Bill, 1995 and as published in 212 ITR at pp. 306 to 309. The provisions of s. 158BA r/w provisions of s. 158BB of the Act clearly lay down that the AO not below the rank of Asstt. CIT is empowered to make assessment of the block period of ten years in respect of undisclosed income found as a result of search and seizure operation under s. 132 or requisition action under s. 132A of the Act and in accordance with the previous of Chapter XIV-B of the Act. What is undisclosed income for the purpose of block assessment has been clearly defined by the legislature in sub-s. (h) of s. 158B of the Act and for proper appreciation we reproduce the same :
“‘Undisclosed income’ includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purpose of this Act.”
The provisions of s. 158BB clearly lay down that the undisclosed income of the block period shall be aggregate of the total income of the previous years falling within the block period computed in accordance with the provisions of Chapter IV on the basis of evidence found as a result of search or requisition of the book of accounts or documents or such other material or information as available with the AO as reduced by the aggregate of the total income or as the case may be as increased by the aggregate of losses of such previous years. The Expln. to s. 158BB further clarifies the position of undisclosed income as under :
(a) the total income or loss of each previous year shall, for the purpose of aggregation, be taken as the total income or loss computed in accordance with the provisions of Chapter IV without giving effect to set off of brought forward losses under Chapter VI or unabsorbed depreciation under sub-s. (2) of s. 32;
(b) of a firm or its partners, the method of computation of undisclosed income and its allocation to the partners shall be in accordance with the method adopted for determining the assessed income or returned income for each of the previous years falling within the block period;
(c) assessment under s. 143 includes determination of income under sub-s. (1) or sub-s. (1B) of s. 143.
9. From the analysis of the above provisions and the intention of the Finance Minister for insertion of the provisions in Chapter XIV-B of the Act, it is very explicit that the procedure for assessment or undisclosed income has been hastened and there is a departure from the earlier provisions in relation to search cases. The provisions of Chapter XIV-B have been enacted for quick disposal of search cases as per s. 158BC in relation to undisclosed income as defined in sub-s. (b) of s. 158B of the Act. From the facts recorded by us above as found from the records it is very transparent and clear that there has been no detection of any undisclosed income in the shape of any money, bullion, jewellery or other valuable article or thing pursuant to any search operation conducted upon Smt. Urmila Chandak or on any appellants mentioned above in terms of s. 132 of the Act. As has been fairly conceded by the Departmental Representative, there were no search warrants or any authorisations issued by any IT authority mentioned in s. 132 of the Act authorising conduct of search of any person or premises belonging to either Smt. Urmila Chandak or any of the appellant-assessees mentioned hereinabove. The search warrants were issued by the competent IT authority under s. 132 of the Act to conduct searches in the case of Shri Bhojraj Chandak and Shri Madanmohan Chandak, father and uncle respectively of Smt. Urmila Chandak. The AO in the impugned orders has at more than one place repeatedly stated that no account books of any other record was maintained by the appellant-assessee. When that is the case, we fail to understand how these appellant-assessees can be brought into the net of Chapter XIV-B of the Act. Therefore, the AO did not derive any jurisdiction, authority or power to issue notice to any appellant herein as provided in s. 158BC of the Act. From these facts, it is very clear that the notice under s. 158BC has been issued contrary to the legal requirements and, therefore, as contended by Shri Kumbhat, the AO had no jurisdiction to issue any notice and consequently the impugned assessments made pursuant to such illegal notices cannot stand in the eye of law and have to be annulled.
10. A study of the impugned assessment order of Smt. Urmila Chandak clearly reveals that the AO has merely reappreciated the evidence in relation to the various claims made by her in respect of the interest and dividend income and also in respect of gains/losses arising on account of share transactions. Smt. Urmila Chandak as well as other appellant-assessees are regularly assessed to income-tax consequent upon returns being filed by them for each of the assessment years covering the block period of ten years. Their assessments have been completed either in a summary manner under s. 143(1) or under s. 143(3) after enquiry. These assessments have thus become final and cannot be disturbed except in accordance with the other normal and regular provisions of the IT Act. The AO cannot reappreciate the claims/deductions made by the assessee in the different assessment years by taking aid of the provisions of s. 158BC of the Act and impose tax at 60 per cent. as against the normal tax paid and collected on the basis of regular assessments already completed. We repeat the provisions contained in Chapter XIV-B are enacted for the purpose of making quick assessment and as a special procedure for search cases where there is detection of undisclosed income as defined in s. 158B(b) of the Act. If undisclosed income is not found pursuant to search operations then the provisions of Chapter XIV-B are ousted. The AO in page 2 has clearly stated that he is making disallowances and claims made earlier in the original assessments because he was not satisfied with the evidence for making such claims made earlier in the original assessments because he was not satisfied with the evidence for making such claims in the original assessments. These observations clearly demonstrate that the AO misconstrued the provisions thinking that if there are search operation on any relative of any assessee, then he can reappreciate the evidence making another block assessment under s. 158BC of the Act denying claims and disallowances which were already allowed while framing the original assessments under normal provisions of the IT Act. That is not the purpose of or intent of legislature nor the spirit or purpose of Chapter XIV-B of the Act. All these facts compel us to quash all the impugned assessments as pleaded by assessee’s counsel, Shri Kumbhat.
11. The AO had no jurisdiction whatsoever to call for the block period returns or make the impugned assessments for the block period in terms of s. 158BC of the Act merely for the reason or pretext that there were search operations on the father and uncle of Smt. Urmila Chandak. The notice issued by the AO under s. 158BC was therefore wholly invalid and without jurisdiction and as per ratio of the Hon’ble Supreme Court laid down in the case of CIT vs. Kurban Hussain Ibrahimji Mithiberwala (1972) 82 ITR 821 (SC), the impugned assessments are void for want of jurisdiction on account of irregularity in issuing notice under s. 158BC. The Hon’ble Supreme Court in that case has clearly laid down that if a notice issued by an AO is not valid for any reasons the entire proceeding is void for want of jurisdiction.
12. The impugned assessments also are not saved on the specious plea of the Departmental Representative that all the appellant-assessees submitted and acquiesced to the jurisdiction of the AO by filing block period returns pursuant to and in compliance with notice issued by the AO under s. 158 BC(a) of the Act and further in responding to and complying with various other notices issued by him to appellant-assessees in terms of s. 142(1) as well as in terms of s. 143(2) of the Act. It is well settled and established principle of law in so far as tax proceedings are concerned that consent does not confer jurisdiction on any authority or Tribunal. Reference may be made to the decision of the Hon’ble Madras High Court in the case of Continental Commercial Corpn. vs. ITO & Anr. (1975) 100 ITR 170 (Mad) wherein Their Lordships have observed that submission to the jurisdiction by an assessee will not confer any jurisdiction on an authority who had no jurisdiction at all. Further the Hon’ble Madras High Court again reiterated the same principle in the case of Mariam Aysha vs. Commr. of Agrl. IT (1976) 104 ITR 381 (Mad) at p. 384 that consent cannot give jurisdiction is an essential principle of law and the taxing authority can act only if there is a power under the statute to do so. Their Lordships of the Gujarat High Court in the well reasoned and elaborate judgment rendered in the case of P. V. Doshi vs. CIT (1978) 113 ITR 22 (Guj) have laid down after discussing the ratio and principle enunciated by the Hon’ble Supreme Court in several cases that jurisdiction can neither be waived nor conferred by consent or acquiescence. From these authorities, we have no hesitation or doubt in our mind to hold that the AO did not possess valid jurisdiction to issue notices to various appellant assessees herein in terms of s. 158BC of the Act nor he had any power, authority or jurisdiction to make or pass any orders of assessment in respect of the block period as are questioned by the appellants in these appeals. The impugned assessment orders of the block period made on 29th August, 1996 are, therefore, clearly without jurisdiction and are liable to be quashed and we hereby quash the same.
13. For these reasons we annul all the assessments impugned by all the appellant-assessees and allow their appeals.
14. The appeals are allowed.