1978 (4) TMI 94 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Income-tax Officer to issue a second notice u/s 148 for reassessment.
2. Validity of the second notice u/s 148 after the first reassessment was annulled.
3. Requirement of proper sanction by the Commissioner of Income-tax for issuing notice u/s 148 after the expiry of four years.

Summary:

1. Jurisdiction of the Income-tax Officer to issue a second notice u/s 148 for reassessment:
The petitioner-firm challenged the second notice issued u/s 148 of the Income-tax Act, 1961, on the grounds that the Income-tax Officer (ITO) had no jurisdiction to issue a fresh notice for reassessment on the same items that were previously annulled by the Appellate Assistant Commissioner (AAC) and upheld by the Income-tax Appellate Tribunal (ITAT). The court held that once an order with reference to those items became final, it was not open to the ITO to start proceedings u/s 147 on the same items afresh.

2. Validity of the second notice u/s 148 after the first reassessment was annulled:
The court observed that the grounds for reopening the assessment in the second notice were identical to those in the first reassessment proceedings, which were annulled by the AAC and ITAT. The court cited the Supreme Court's decision in Commissioner of Income-tax v. Rao Thakur Narayan Singh [1965] 56 ITR 234 (SC), emphasizing that a judicial determination that has become final is binding and cannot be circumvented by issuing a fresh notice on the same grounds. Therefore, the second notice issued u/s 148 was invalid.

3. Requirement of proper sanction by the Commissioner of Income-tax for issuing notice u/s 148 after the expiry of four years:
The court highlighted that the requirement of section 148 is that before issuing a notice after the expiry of four years from the end of the relevant assessment year, the Commissioner must be satisfied on the reasons recorded by the ITO. The court found that the Commissioner did not apply his mind properly while giving sanction for the second notice, as the reasons included items that were already decided upon by a competent authority. The court concluded that the ITO acted without jurisdiction in seeking approval for the second reassessment proceedings based on the same items.

Conclusion:
The writ petition was allowed, and the notice u/s 147(a) dated 29th August 1973 was quashed. The respondents were restrained from taking further proceedings based on the said notice. The petitioner was entitled to the costs of the petition.