1978 (9) TMI 81 - AT - Income Tax

Summary

Issues:
Validity of assessment under section 144 of the Income Tax Act, 1961 due to lack of proper service of notice under section 148.

Analysis:

1. The case involved a reference application seeking clarification on the validity of the assessment conducted under section 144 of the Income Tax Act, 1961, due to the alleged lack of proper service of notice under section 148. The question raised was whether the Tribunal was correct in holding that the assessment under section 144 was void ab initio due to the absence of legal sanctity behind it.

2. The facts of the case revealed that a notice under section 148 was issued on 24th Feb, 1970, for the assessment year 1961-62, but the assessee did not file a return in response. Subsequently, the Income Tax Officer (ITO) issued a notice under section 142(1) on 10th Oct, 1973, followed by another notice on 18th March, 1974, which the assessee refused to acknowledge. The ITO then passed an order under section 144 on 21st March, 1974, which led to a series of appeals and confusion regarding the validity of the assessment.

3. The assessee had also moved the ITO under section 146 to set aside the assessment, but the appeal was rejected by the Appellate Authority Commissioner (AAC). The AAC's involvement in multiple appeals led to confusion, and the assessee challenged the observations made by the AAC regarding the assessment under section 144 becoming infructuous.

4. The Tribunal examined the evidence presented, including the affidavit filed by the assessee regarding non-service of the notice under section 148. The Tribunal emphasized the importance of proving that the notice was served before 31st March, 1970, as per the General Clauses Act. The Tribunal concluded that there was no evidence to show that the notice was served before the specified date, leading to the acceptance of the assessee's appeal and the declaration that the assessment under section 144 was void ab initio.

5. Upon reviewing the Tribunal's order, it was established that there was no evidence of proper service of notices under section 148 before the specified date, rendering the question of law suggested by the CIT irrelevant. Consequently, the reference application was dismissed as misconceived.

In conclusion, the judgment focused on the lack of proper service of notice under section 148, leading to the invalidity of the assessment under section 144 of the Income Tax Act, 1961. The Tribunal's decision to accept the assessee's appeal was based on the absence of evidence proving timely service of the notice, ultimately resulting in the assessment being declared void ab initio.