1973 (11) TMI 5 - HC - Income Tax

Notice issued by the respondent herein under the provisions of sections 147 and 148 of the Income-tax Act 1961 - Originally notice under section 22(2) of 1922 Act was issued but assessee did not file any return of income neither an assessment order was passed. The time limit for completing assessment expired. Whether subsequently notice for reassessment under section 147(1)(b) can be issued held that reassessment notice was valid

Summary

Issues Involved:
1. Validity of reassessment proceedings initiated under sections 147 and 148 of the Income-tax Act, 1961.
2. Impact of pending assessment proceedings initiated under section 22(2) of the Indian Income-tax Act, 1922.
3. Validity of the second notice under section 148 issued during the pendency of the Appellate Assistant Commissioner's order.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Proceedings Initiated Under Sections 147 and 148 of the Income-tax Act, 1961:

The petitioner challenged the notice dated March 18, 1970, issued under sections 147 and 148 of the Income-tax Act, 1961, for the assessment year 1961-62. Initially, a notice under section 22(2) of the Indian Income-tax Act, 1922, was served on March 22, 1962, but no return was filed by the petitioner. Subsequently, on March 5, 1966, a notice under section 148 of the Act of 1961 was issued, which led to an assessment order under section 144 on December 6, 1968. This was later set aside by the Appellate Assistant Commissioner, who held that the Income-tax Officer had no jurisdiction to reopen the assessment under section 147(a) as the original proceedings were still pending. The Appellate Tribunal upheld this decision, declaring the reassessment proceedings invalid.

2. Impact of Pending Assessment Proceedings Initiated Under Section 22(2) of the Indian Income-tax Act, 1922:

The court examined whether the reassessment proceedings could be initiated while the original assessment proceedings under section 22(2) of the Act of 1922 were still pending. Citing the Supreme Court's decision in Commissioner of Income-tax v. Ranchhoddas Karsondas, the court noted that once assessment proceedings are initiated by either a voluntary return or a notice under section 22(2), reassessment cannot be done until the original proceedings are disposed of by an assessment order. The court emphasized that the Income-tax Officer could not ignore the initial proceedings and any reassessment notice issued under such circumstances would be invalid.

3. Validity of the Second Notice Under Section 148 Issued During the Pendency of the Appellate Assistant Commissioner's Order:

The petitioner argued that the second notice under section 148 issued on March 18, 1970, was invalid as the Appellate Assistant Commissioner's order setting aside the assessment had not been set aside. The court, however, held that since the income for the assessment year 1961-62 had escaped assessment due to the expiry of the limitation period, the provisions of section 147(1)(b) were applicable. The court concluded that the notice dated March 18, 1970, was valid and that there was no estoppel or res judicata preventing the Income-tax Officer from issuing the notice.

Conclusion:

The court dismissed the special civil application, holding that the notice under section 147 read with section 148 issued on March 18, 1970, was valid. The court did not address the second contention regarding the Appellate Assistant Commissioner's order, as the primary issue had already been resolved. The application was dismissed with costs.