1973 (8) TMI 17 - HC - Income Tax

In this petition the petitioner has challenged the notice issued by the respondent on March 31, 1970, for purposes of reassessment under section 147 of the Income-tax Act, 1961 validity of notice for reassessment which was issued before the time-limit, but served after the expiry of the time-limits

Summary

Issues Involved:
1. Jurisdiction of reassessment under Section 147 of the Income-tax Act, 1961.
2. Interpretation of the terms "issued" and "served" in the context of Sections 148 and 149 of the Income-tax Act, 1961.
3. Validity of the notice served beyond the prescribed period.

Issue-wise Detailed Analysis:

1. Jurisdiction of Reassessment under Section 147 of the Income-tax Act, 1961:
The petitioner challenged the notice issued by the respondent on March 31, 1970, for reassessment under Section 147 of the Income-tax Act, 1961, for the assessment year 1965-66. The petitioner contended that the notice was served beyond the prescribed period, thus rendering it void. The respondent argued that the only obligation was to issue the notice within the prescribed period of four years, and it was not necessary for the notice to be served within that period.

2. Interpretation of the Terms "Issued" and "Served" in the Context of Sections 148 and 149 of the Income-tax Act, 1961:
The petitioner relied on the Supreme Court decision in Banarsi Debi v. Income-tax Officer, District IV, Calcutta, asserting that the terms "issued" and "served" should have the same meaning for assuming jurisdiction under Section 147. The respondent countered that the legislative intent distinguished between "notice served" and "notice issued" in Sections 148 and 149, implying that issuing the notice within the prescribed period suffices for jurisdiction.

Section 148 mandates that the Income-tax Officer must serve a notice on the assessee before reassessment. Section 149 stipulates the time limits for issuing such notices. The controversy centered on whether the term "issued" in Section 149 also implied "served."

3. Validity of the Notice Served Beyond the Prescribed Period:
The court examined the legislative intent and judicial interpretations of the terms "issued" and "served." It referred to the Supreme Court's observation in Banarsi Debi's case, which equated "issued" with "served" in the context of notices under the Income-tax Act. The court rejected the respondent's argument that the 1961 Act's provisions (Sections 147, 148, and 149) intended a departure from the 1922 Act's Section 34. The court held that the terms "issued" and "served" are interchangeable, and the issuance of a notice within the prescribed period must include its service on the assessee.

The court concluded that the notice served on the petitioner on April 3, 1970, was beyond the prescribed period under Section 149, rendering it without jurisdiction, void, and ineffective.

Judgment:
The petition was allowed, and the rule was made absolute. The court issued a writ quashing and setting aside the notice (annexure "A" to the petition). The revenue was ordered to pay the costs to the petitioner.