2004 (2) TMI 57 - HC - Income Tax

Notice of reassessment pendency of assessment proceedings - validity of the notice dated March 18, 1994 under section 148 - once the Commissioner of Income-tax (Appeals) passed an order of remand on March 15, 1994 the assessment proceedings became pending before the Assessing Officer Held that notice of reassessment can not be issued when assessment proceedings are pending

Summary

Issues:
Challenge to the validity of notice under section 148 of the Income-tax Act, 1961 for the assessment year 1990-91 and the acceptance of the return filed under section 139(1) in compliance with the notice.

Analysis:
The petitioner, a company registered under the Indian Companies Act, challenged the notice dated March 18, 1994, under section 148 of the Income-tax Act, 1961, for the assessment year 1990-91. The petitioner also contested the order dated March 19, 1994, which did not accept the return filed under section 139(1) in response to the notice under section 148. The petitioner maintained accounts on a mercantile basis and had filed a return declaring a loss for the assessment year 1990-91. The assessment proceedings involved multiple notices and inquiries from different authorities, leading to the determination of assessable income at variance with the petitioner's claimed loss.

The petitioner appealed the assessment order to the Commissioner of Income-tax (Appeals), who set aside the assessment for a de novo consideration. Subsequently, the petitioner received a notice under section 148 dated March 18, 1994, alleging an escaped income chargeable to tax for the same assessment year. The petitioner contended that this notice was illegal as the assessment proceedings were already pending before the Assessing Officer post the Commissioner's order of remand. The petitioner sought acceptance of the return filed under section 139(1) as compliant with the notice under section 148.

The court referred to established precedents that prohibit the issuance of a notice under section 148 when assessment proceedings are pending. The court noted that once the Commissioner of Income-tax (Appeals) passed an order of remand, the assessment proceedings were pending before the Assessing Officer, rendering the notice under section 148 invalid. The petitioner's subsequent appeal to the Income-tax Appellate Tribunal, resulting in dismissal and confirmation of the Commissioner's order, further solidified the invalidity of the notice under section 148.

In conclusion, the court held the notice dated March 18, 1994, under section 148 to be invalid and quashed it. The petition was allowed, with no order as to costs, based on the established legal principles and the specific circumstances of the case.