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TMI Blog1982 (8) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... before the AAC it was urged that the notice was never served either on the assessee or on her power of attorney holder. The AAC, accordingly, restored the matter under section 146 of the Act before the ITO for fresh consideration of the application under section 146. By order dated14-8-1973the ITO reopened the assessment under section 146 holding that : "I am satisfied that the notice under section 148 was not served on the right person, i.e., assessee's general attorney Shri Ajit Singh or even on her sister." 5. After these assessments were reopened for all the four years on the ground that the notice was not served, the ITO did not take any steps to serve the notice on the assessee's power of attorney holder. On the other hand, on12-12-1973, the ITO submitted the proposal to the CBDT for permission to reopen the assessments for the assessment years 1957-58 to 1959-60 on the ground that the income exceeding Rs. 50,000 had escaped assessment in each of these years. The Board recorded its satisfaction and the assessments were reopened by issue of notice under section 148 for all the three years. For the assessment year 1960-61, the proposal was not submitted to the Board because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , upheld. 9. So far as the assessment years 1957-58 to 1959-60 are concerned, the position is more or less similar. The proceedings were pending before the ITO after he reopened the ex parte assessments under section 146 and it was incumbent on the ITO to have served the notice on the assessee to make the reassessment. The ITO failed to do so. While those proceedings were pending he submitted a proposal to the Board to reopen the assessments. Strangely enough, even in the Board the proposal does not seem to have been scrutinised and the approval to reopen the assessment was mechanically given because if the proposal had been scrutinised properly, it would have been noticed that the proceedings on the basis of an earlier notice under section 148 were still pending. When proceedings legally and validly started for reassessment were pending, fresh notice under section 148 cannot be issued because it cannot be said that income liable to tax had escaped assessment. Therefore, on this basis alone the reopening of the assessment under section 148 under the authority of the approval granted by the CBDT had to be annulled because proceedings on the basis of an earlier notice under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DT. He simply made the reassessment on the basis that the assessment under section 144 was reopened on14-8-1973. No fresh notice under section 148 also appears to have been issued in this case. 4. The assessee went in appeal before the AAC for all the above years. The AAC looked into the matter and after considering the full facts of the case held that the reassessments made in pursuance of fresh notices under section 148 were invalid as the earlier proceedings for the years had been reopened under section 146 vide order dated 14-8-1973. Since the assessment itself was pending before the ITO for each of the above assessment years, the question of income having escaped assessment would not arise. He, accordingly, annulled the assessments for the assessment years 1957-58 to 1960-61. 5. The revenue is aggrieved and came up in appeal before us. The ground of appeal taken before us is: "On the facts and in the circumstances of the case, the Appellate Assistant Commissioner of Income-tax has erred in annulling the assessments for the assessment years 1957-58, 1958-59, 1959-60 and 1960-61 by holding that the proceedings started under section 148 by notice served on 29-3-1974 were in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comply with the conditions precedent to such issue of valid notice vide sections 149 and 151. Otherwise the notice issued will be invalid. In this view of the matter, the ITO is quite justified in issuing the notice under section 148 after obtaining the approval of the CBDT for the assessment years 1957-58 to 1959-60. The reassessments made in pursuance of such notices under section 148 read with section 147 for the above assessment years are valid and deserved to be sustained. 8. With regard to the assessment year 1960-61 vide appeal in IT Appeal No. 5209 (Delhi) of 1976-77, I fully agree with the order of my learned brother in confirming the order of the AAC. In this case, the ITO had not validly reopened the original assessment made under section 23(4) of the 1922 Act. When the assessment made under section 144 was reopened under section 146 on14-8-1973, no valid proceedings under section 147 survives. It was, therefore, incumbent upon the ITO to issue the notice under section 148 to the assessee so as to assume proper jurisdiction for reassessment. The same was not done. As such, the assessment made without proper assumption of jurisdiction was rightly annulled. In view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to them in my own way. The assessee is a resident ofPanama. The proceedings for assessing her for the assessment years 1957-58 to 1960-61 were originally initiated under section 148 and section 147(a), with the prior approval of the Commissioner and the assessments had been completed under section 144 of the Act on 28-2-1970 computing her total income at Rs. 2,17,138, Rs. 1,11,867, Rs. 1,78,225 and Rs. 35,983 for the respective years. The applications filed by her under section 146 requesting the ITO for cancelling the assessment orders made under section 144 were rejected by the ITO vide his order dated21-12-1971. However, the appeals thereagainst were allowed by the AAC who directed the ITO to consider the assessee's contention that the notices under section 148 were not served on her or her general power of attorney, etc., and to decide the applications under section 146 afresh. 4. By his orders dated14-8-1973the ITO has, after going through the facts on record, accepted the assessee's contention that the notices under section 148 had not been served on the assessee or on her general attorney, Sri Ajit Singh, and has observed that the assessments made under section 144 have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that income cannot be said to have escaped assessment when the proceedings for assessment are pending. The controversy thus gets further narrowed down in the sense that I am only to examine and decide whether the assessment proceedings are or can be said to have been pending in view of the orders passed by the ITO under section 146 on14-8-1973, ostensibly to reopen the assessment proceedings. 7. It is well settled that service of notice under section 148 for the purpose of commencing proceedings for assessment or reassessment is not a mere procedural requirement. It is a condition precedent to the initiation of proceedings for assessment under that section. If no notice is issued or if the notice issued is invalid, or if the notice has not been served, the proceedings started would be illegal and void. In the present case, the ITO has given a categorical finding in his orders under section 146, that the notices issued under section 148 earlier had not been served on the assessee. For this very reason he has cancelled the assessments made in pursuance of those notices. No doubt, he has observed in his aforesaid orders that the assessments were being reopened. The pertinent q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring whether the proceedings for assessment are pending or not, to my mind, is to ascertain whether the ITO had assumed valid jurisdiction to make the assessment in pursuance of such proceedings. In view of the learned members' orders annulling the assessment for the assessment year 1960-61, I do not think that there is any room for doubt about the proposition that so far as the Bench was concerned, valid assessments could not have been made for the assessment years 1957-58 to 1959-60, in pursuance of the orders passed under section 146. In my above view, I am supported by the ratio of the Kerala High Court decision in the case of Ponkunnam Traders v. Addl. ITO [1972] 83 ITR 508 where it was held that a void decision will always remain void, and the affected party is at liberty to treat it as void. It may be stated that this is a decision by a Single Judge in writ proceedings, but the decision has been confirmed by a Division Bench of the Kerala High Court in Addl. ITO v. Ponkunnam Traders [1976] 102 ITR 366. Having regard to the above discussion, I am inclined to agree with the learned Accountant Member that valid proceedings for assessment were not pending on12-12-1973when the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to take a number of steps, such as : a. he has to form reason to believe that income has escaped assessment, etc., for reasons mentioned in section 147(a) or section 147(b), as the case may be; b. he has to record the reasons for reopening the assessments and in cases where the assessments were reopened beyond four years or eight years, he has to obtain the satisfaction of the Commissioner or the CBDT; c. he has to prepare a notice under section 148 after recording the reasons or obtaining the satisfaction of the Commissioner or the CBDT, as the case may be, and sign it ; and d. he has then to issue the notice. It is only after all these steps are taken that a notice under section 148 can be served on the assessee. Just because the notice has not been served, it cannot be stated that the proceedings for assessment have not commenced or that the proceedings for assessment are not pending. Notice under section 148 can be served according to him at any time as held by thePunjaband Haryana High Court in the case of Jai Hanuman Trading Co. (P.) Ltd. v. CIT [1977] 110 ITR 36 (FB). Here again, I do not find any merit in the arguments advanced on behalf of the assessee. No d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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