1978 (8) TMI 76 - HC - Income Tax

Summary

Issues involved: Validity of assessment based on multiple notices under section 148 and the impact of subsequent returns filed by the assessee.

The judgment addressed the validity of the assessment process conducted by the Income Tax Officer (ITO) for a registered partnership firm engaged in the printing press business. The ITO initially completed the assessment based on his judgment for the year 1961-62. Subsequently, noticing potential income escaping assessment, the ITO issued notices under section 148 on multiple occasions. The High Court noted that the ITO lacked jurisdiction to repeatedly issue section 148 notices when reassessment proceedings were already underway, emphasizing that subsequent notices should align with section 143(2) requirements. The Court deemed the notice issued on August 30, 1968, as illegal due to ongoing proceedings from an earlier notice. However, it was established that the return filed in response to the August 30, 1968, notice could still be considered valid for reassessment purposes initiated by the initial notice from July 2, 1966. The Court upheld the validity of the assessment order dated December 2, 1968, as it was within the timeframe of the original notice. The Tribunal's decision to remand the case for appeal review on its merits was supported by the Court.

The Court further deliberated on the significance of the returns filed by the assessee in response to the notices. It was highlighted that the ITO heavily relied on the information provided in the return following the August 30, 1968, notice for the assessment order. Despite the illegality of the notice, the Court emphasized that a revised return could be submitted before the assessment's completion. The Tribunal's determination that the return filed under the August 30, 1968, notice lacked protest confirmation but remained valid evidence for assessment considerations was upheld. The Court affirmed that the assessment order's validity was not compromised by utilizing information from the return linked to the illegal notice. Consequently, the Court answered affirmatively to questions regarding the assessment's validity based on the initial notice and subsequent returns, supporting the department's position over the assessee's claims. The Court also awarded costs to the Commissioner.