1984 (9) TMI 48 - HC - Income Tax

Summary

Issues Involved:

1. Whether the issuance of notice u/s 148 prior to the commencement of proceedings u/s 263 invalidates the Commissioner's order.
2. Interpretation of the effect of reassessment proceedings on the original assessment order.

Summary of Judgment:

Issue 1: Validity of Commissioner's Order Under Section 263

The primary question was whether the service of notice u/s 148 before the commencement of proceedings u/s 263 rendered the Commissioner's order legally infirm. The court held that the issuance of notice u/s 148 does not invalidate the Commissioner's jurisdiction to revise the original assessment order u/s 263. The original assessment order does not stand set aside merely by the issuance of a notice u/s 148. Therefore, the Commissioner's revisional proceedings under section 263 were deemed legal and valid.

Issue 2: Effect of Reassessment Proceedings on Original Assessment

The court examined whether the initiation of proceedings u/s 147 by issuing a notice u/s 148 results in the setting aside of the original assessment order made u/s 143(1). The court clarified that the notice under section 148 is not equivalent to a notice under section 139(2) and does not automatically set aside the original assessment order. The reassessment proceedings under section 147 are confined to income that has escaped assessment and do not reopen or affect the entire original assessment. The court rejected the argument that the original assessment order stands quashed upon issuance of notice u/s 148.

The court also referenced several precedents and legislative provisions to support its conclusion that reassessment proceedings do not obliterate the original assessment order. It was emphasized that both the original assessment order and the reassessment order can coexist, and reassessment proceedings are independent and limited to the escaped income.

Conclusion:

The court confirmed the Tribunal's view and answered the question in the affirmative, holding that the Commissioner's order u/s 263 was valid despite the prior issuance of notice u/s 148. The reference was answered against the assessee with no order as to costs.