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Issues Involved:
Challenging validity of proceedings u/s 154 of the Income-tax Act, 1961 during pending assessment proceedings u/s 143(3) of the Act. Special Civil Application No. 1047 of 1996: The petitioner, a public limited company, challenged the notice u/s 154 issued during assessment proceedings for the year 1993-94. The Assessing Officer had already passed an order u/s 143(1)(a) accepting the loss claimed by the petitioner. Subsequently, a notice u/s 143(2) was issued, followed by proceedings u/s 143(3) leading to the final assessment order. However, a notice u/s 154 was issued regarding disallowance of royalty amount, which the petitioner challenged. The court held that once notice u/s 143(2) is issued, the assessment must be completed u/s 143(3), and there is no need for a notice u/s 154(1)(b) after the assessment is already completed. The impugned notice u/s 154 was quashed and set aside. Special Civil Application No. 2178 of 1996: In this case, another public limited company challenged the notice u/s 154 issued after the assessment proceedings for the year 1993-94. The Assessing Officer had already passed an order u/s 143(1)(a) accepting the depreciation claimed by the petitioner. Subsequently, a notice u/s 143(2) was issued, followed by a notice u/s 154 which the petitioner objected to. The court held that once the assessment is completed u/s 143(3), there is no requirement for a notice u/s 154(1)(b) and the Assessing Officer must follow the procedure under section 143(3) after issuing notice u/s 143(2). The impugned notice u/s 154, order passed u/s 154, and demand under section 156 were quashed and set aside in this case as well. In both matters, the court found in favor of the petitioners, quashing the impugned notices u/s 154 and setting aside the subsequent orders. The court emphasized the procedural requirements under the Income-tax Act, specifically the necessity to complete assessments u/s 143(3) after issuing notices u/s 143(2), without the need for additional notices u/s 154(1)(b) once the assessment process is initiated.
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