1976 (1) TMI 41 - AT - Income Tax

Summary

Issues:
1. Validity of notice under section 148 served after the period of limitation.
2. Jurisdiction of the assessment made under section 144.
3. Imposition of interest by the ITO.
4. Grounds raised by the assessee regarding illegal business and addition of income from other sources.

Analysis:

Issue 1: Validity of notice under section 148:
The case involved the initiation of proceedings under section 147(a) against the assessee, with a notice under section 148 issued on 28th March, 1969, and served on 1st April, 1969. The assessee contended that the notice was served after the period of limitation, which expired on 31st March, 1969. The Punjab and Haryana High Court judgment in 101 ITR 106 was cited, emphasizing that a notice served after the limitation period is void. The High Court held that the notice issued under section 148 was without jurisdiction and void, leading to the cancellation of the assessment by the AAC.

Issue 2: Jurisdiction of the assessment under section 144:
The AAC, based on the void notice under section 148, held that the assessment made by the ITO under section 144 was without jurisdiction. The Revenue appealed this decision, arguing that the AAC erred in canceling the assessment. However, the Tribunal upheld the AAC's decision, stating that since the notice itself was void, the assessment was rightfully deemed without jurisdiction.

Issue 3: Imposition of interest by the ITO:
The assessee raised a ground challenging the imposition of interest by the ITO, claiming it was not exigible based on the facts and circumstances of the case. However, since the AAC had already canceled the assessment due to jurisdictional issues, this ground was not addressed separately.

Issue 4: Grounds raised by the assessee:
The assessee raised various grounds, including disputing the allegation of engaging in an illegal business of opium and contesting the addition of income from undisclosed sources. These grounds were not addressed individually by the AAC due to the primary issue of jurisdiction. The Tribunal dismissed the Revenue's appeal, affirming the AAC's decision to cancel the assessment based on the void notice under section 148.

Overall, the Tribunal upheld the AAC's decision, emphasizing that the notice served after the limitation period rendered the assessment without jurisdiction, leading to the cancellation of the assessment. The appeal was dismissed, and no other points were argued during the hearing.