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Validity of notice under section 148 for assessment year 1965-66. Analysis: The High Court was asked to consider the validity of a notice under section 148 for the assessment year 1965-66. The assessee, an individual, filed the return of income on 28th March, 1969, which was within the period allowed by section 139(4) and (8) of the Income-tax Act, 1961. However, the Income-tax Officer treated this return as invalid and issued a notice under section 148 on 9th March, 1970. The assessment was completed based on the return filed on 9th March, 1970, assessing the total income at &8377; 32,431. The assessee raised multiple grounds in the appeal to the Appellate Assistant Commissioner, including challenging the notice under section 148. However, the Appellate Assistant Commissioner rejected grounds 2 to 5 as they were not specifically pressed before him. The assessee then appealed to the Income-tax Appellate Tribunal, which refused to consider grounds 2 to 5 as they were given up before the Appellate Assistant Commissioner. The assessee sought rectification of the Tribunal's order, which was rejected. Subsequently, the assessee requested the Tribunal to refer the question of law regarding the validity of the notice under section 148 to the High Court. The main contention was that the notice was invalid as there was a valid return filed within the prescribed time under section 139(4). The High Court analyzed the provisions of section 139(4) and section 147 of the Income-tax Act. It noted that the notice under section 148 can only be issued if there is a reason to believe that income has escaped assessment due to the assessee's failure to disclose material facts. In this case, the notice was issued based on the failure to file a return under section 139, not on the grounds specified in section 147. The Court emphasized that a valid return had been filed within the allowed time, rendering the notice under section 148 invalid. The Court referred to relevant case law, including Commissioner of Income-tax v. M. K. K. R. Muthukaruppan Cheitiar and Commissioner of Income-tax v. Kurban Hussain Ibrahimji Mithiborwala, to support its decision. It highlighted that if the notice issued under section 148 is invalid, the entire proceedings become void for want of jurisdiction. The Court concluded that the grounds challenging the notice under section 148 should have been considered, and the Tribunal erred in rejecting the appeal on the basis that these grounds were not raised before the Appellate Assistant Commissioner. In light of the Supreme Court's decision, the High Court ruled in favor of the assessee, holding that the notice under section 148 was invalid, and the Tribunal should have considered the grounds challenging it. The Court answered the question in the negative, favoring the assessee.
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