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Issues involved:
The legal issue of validity of re-assessment notice issued u/s 148 of the Act before the expiry of time limit for issuing notice u/s 143(2) for completing assessment u/s 143(3). Assessment on merits of various additions. Validity of re-assessment notice u/s 148: The assessee filed returns under sections 139(1) and 139(5) of the Act for the assessment year 2002-03. The Assessing Officer issued a re-assessment notice u/s 148 of the Act for reopening the assessment, while the time limit for issuing notice u/s 143(2) for completing the original assessment was still available. The assessee contended that the re-assessment notice u/s 148 issued before the expiry of the time limit prescribed u/s 143(2) is not valid. The Hon'ble jurisdictional High Court of Kerala held that income escaping assessment u/s 147 cannot be completed within the time available for issuing notice u/s 143(2) and for completing assessment u/s 143(3). The Tribunal concurred with this view, stating that the re-assessment notice issued within the time limit for issuing notice u/s 143(2) is not valid, leading to the quashing of the assessment order. Observations on legal issue: The Tribunal highlighted that the Supreme Court's decision did not address a scenario where re-assessment was initiated within the time available for issuing notice u/s 143(2) and for making a regular assessment u/s 143(3) of the Act. The Tribunal emphasized that for making a re-assessment u/s 147, a regular assessment under section 143(3) is not required. It was noted that the Assessing Officer can initiate and complete an assessment u/s 147 for any year if there is a reason to believe that income chargeable to tax has escaped assessment, irrespective of whether a return was filed or a regular assessment u/s 143(3) was made. The Tribunal's view conflicted with the Delhi High Court's stance, but it upheld the consistent view of the Madras and Delhi High Courts that an income escaping assessment under section 147 cannot be completed within the time available for issuing notice u/s 143(2) and for completing assessment u/s 143(3). Conclusion: Based on the binding decision of the Hon'ble High Court of Kerala, the Tribunal held that the re-assessment notice u/s 148 issued within the time limit for issuing notice u/s 143(2) was not valid. Consequently, the assessment order based on the invalid notice was quashed, and the appeal filed by the assessee was allowed.
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