The Hindu Business Line : Irregular vs illegal

In tax assessment, violation of the prescribed procedure would result in irregular assessment. If the initiation of assessment procedure is in contravention of statutory requirements then it would be illegal and, hence, void ab initio.

In R. Giridhar vs CIT (136 ITR 774), the computation of tax due on assessment was made below the signature of the assessing officer (AO) and it was held that it could be presumed that the AO had signed the assessment order after che cking the tax computation. Accordingly, the order of assessment was not irregular or defective.

In Kalyankumar Ray vs CIT (191 ITR 634), the apex court held that the statute has not prescribed any form for drafting the assessment order and, hence, the computation of income and tax need not be on the same sheet of paper and it could be done on separate sheets.

The Krishna Verma case

The Delhi Special Bench of the Tribunal (107 ITD 1 (SB)) discussed the validity of search assessment where the notice issued under Section 158 BC had provided less than 15 days for filing the return for the block period. In this case, the AO granted only 10 days for filing the return for the block period and the assessee exceeded the time limit granted by the AO. The assessee contested that the assessment was illegal because of non-compliance with the mandatory requirement of Section 158BC, that is, 15 days time for filing the return.

The assessee contended that the entire block assessment proceeding would be invalidated, as the notice under Section 158 BC did not comply with the basic requirements of the statute. The tribunal held that Section 158 BC is a procedural provision for block assessment and is not akin to notice issued under Section 148.

It was held that the assessee had filed the return beyond the time given by the AO and the statute and, hence, the notice issued by the AO would not affect the assessment made subsequently. Also, it was held that the statute has not provided the consequence of filing the return late or its treatment as invalid return for completing the assessment on ex parte basis.

Directory and mandatory

If an authority lacks jurisdiction to initiate proceedings then the proceedings would be a nullity, which is void ab initio. If the statutory provision is directory, any act done in contravention thereof may be irregular but not a nullity. If the statutory provision is mandatory then any act in contravention thereof would be illegal and hence nullity.

The apex court, in Dhirendra Nath Gorai vs Sudhir Chandra Ghosh AIR (1964 SC 1300), cited the following observation in the Ashutosh Sikdar vs Behari Lal Kirtania (1907 ILR 35 Cal. 61 FB) case: “An irregular ity is a deviation from a rule of law which does not take away the foundation or authority for the proceeding or apply to its whole operation, whereas a nullity is a proceeding that is taken without any foundation for it or so essentially defective so as to be of no avail or effect whatever, or is void and incapable of being validated”.

If an act of contravening the statutory requirement can be waived of objections by the party it becomes an irregularity. However, there cannot be waiver of objection to a jurisdiction by the party when the authority exercising to jurisdiction has no legal sanction.

(The author is an Erode-based chartered accountant.)

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