2003 (6) TMI 469 - AT - Income Tax

Summary

Issues:
Validity of notices under section 148 of the Income Tax Act, 1961 issued in March 2001.

Detailed Analysis:

Issue 1: Validity of Notices under Section 148
The appeals were against orders of the CIT(A) pertaining to assessment years 1991-92 and 1992-93 for two assessees and assessment years 1992-93 and 1993-94 for a third assessee. The revenue contended that the CIT(A) erroneously cancelled assessments passed by the Assessing Officer under various sections of the Act. The assessments were reopened under section 147 by issuing notices under section 148, alleging under-assessment due to allowances received by the assessees from their employer, Indian Airlines. The Assessing Officer completed assessments by adding the allowances as income, which the assessees challenged before the CIT(A) on the grounds of improper issuance of notices. The CIT(A) cancelled the reassessments, stating that subsequent proceedings under section 148 could not have commenced during the pendency of earlier proceedings. The revenue appealed to the Tribunal.

Issue 2: Arguments and Decision
The Departmental Representative argued that the notices issued in March 2001 were valid as they were not issued during the pendency of earlier notices, which had expired. The assessees' counsel relied on the CIT(A)'s order and contended that the revenue's appeals were not maintainable due to the disputed tax amount being less than a specified limit. The Tribunal considered the submissions and relevant legal precedents. It noted that reassessment proceedings initiated by earlier notices had not concluded, yet fresh notices were issued in 2001. Citing legal precedents, the Tribunal held that subsequent proceedings under section 148 cannot commence without disposal of earlier proceedings. It found no merit in the revenue's argument that the 2001 notices were valid, as the reassessment machinery was already in motion. Therefore, the Tribunal upheld the CIT(A)'s decision to cancel the assessments based on the 2001 notices.

Conclusion:
The Tribunal dismissed the appeals, concluding that the notices under section 148 issued in March 2001 were not validly issued. It affirmed the CIT(A)'s decision to cancel the assessments completed based on those notices, emphasizing the procedural requirements and the need for proper conclusion of earlier proceedings before initiating fresh reassessment proceedings.