2001 (2) TMI 271 - AT - Income Tax

Issues Involved:
1. Validity of proceedings under section 147 initiated vide notice under section 148 dated 18-11-1997.
2. Validity of the first notice under section 148 dated 7-3-1991.
3. Validity of the assessment orders and appellate orders passed based on the first notice.
4. Limitation period for issuing a second notice under section 148.
5. Effect of the High Court's order on the validity of the return and subsequent proceedings.
6. Jurisdiction of the Assessing Officer to issue a second notice under section 148.
7. Legal precedents and their applicability to the facts of the case.

Detailed Analysis:

1. Validity of Proceedings under Section 147 Initiated Vide Notice under Section 148 Dated 18-11-1997:
The CIT(Appeals) held that the reassessment proceedings had been validly initiated in accordance with law. The reasons recorded for this conclusion were that since the initial return filed in response to the first notice under section 148 was invalid, the Assessing Officer was within his jurisdiction to issue a fresh notice under section 148. The CIT(Appeals) relied on the judgment in Kunwar Bishwanath Singh v. CIT, which held that reassessment was valid when the original assessment was void.

2. Validity of the First Notice under Section 148 Dated 7-3-1991:
The assessee argued that the notice under section 148 dated 7-3-1991 was valid and had not been declared invalid by the High Court. The High Court had only quashed the return filed in response to this notice and the subsequent assessment orders. The CIT(Appeals) and the Tribunal examined whether the first notice remained valid and pending, which would preclude the issuance of a second notice under section 148.

3. Validity of the Assessment Orders and Appellate Orders Passed Based on the First Notice:
The High Court quashed the assessment orders and appellate orders based on the first notice under section 148, declaring them invalid as they were based on an invalid return. This led to the conclusion that the entire proceedings commenced from an invalid return, thus affecting the validity of subsequent orders.

4. Limitation Period for Issuing a Second Notice under Section 148:
The assessee contended that the second notice issued on 18-11-1997 was invalid as the first notice issued on 7-3-1991 was still pending and had not culminated in an assessment order or been dropped. The Tribunal examined whether the second notice could revive the time limit for reassessment when the first notice was still pending.

5. Effect of the High Court's Order on the Validity of the Return and Subsequent Proceedings:
The High Court's order dated 5th May, 1997, declared the return filed on 30-3-1991 as invalid and quashed all subsequent proceedings. This raised the issue of whether the proceedings initiated under the first notice under section 148 remained pending and whether the Assessing Officer could issue a second notice under section 148.

6. Jurisdiction of the Assessing Officer to Issue a Second Notice under Section 148:
The Tribunal examined whether the Assessing Officer had the jurisdiction to issue a second notice under section 148 when the first notice was still pending. The Tribunal referred to various legal precedents, including the judgment in Mahendra's case, which held that the Assessing Officer could not issue a fresh notice under section 148 when proceedings under the earlier notice were still pending.

7. Legal Precedents and Their Applicability to the Facts of the Case:
The Tribunal referred to several legal precedents to determine the validity of the second notice under section 148. The judgments in Mahendra's case, Jai Dev Jain & Co.'s case, and the decision of the Hon'ble Kerala High Court in Smt. Nilofer Hameed's case were found to be relevant. These judgments supported the view that subsequent proceedings under section 148 could not be commenced unless the earlier proceedings were disposed of or given finality.

Conclusion:
The Tribunal concluded that the second notice under section 148 issued on 18-11-1997 was invalid as the first notice issued on 7-3-1991 remained pending and had not been disposed of. Consequently, the assessment order passed on 31st December, 1999, pursuant to the second notice, was quashed. The appeal was treated as allowed, and it was held that successive proceedings under section 148 could not be initiated without completing the earlier ones.

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