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TMI Blog2015 (2) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 1998-99. Based on this reasons to believe so recorded, a notice dated 28.03.2005 was issued under Section 148 of the Act after taking appropriate approval from the Additional Commissioner. This notice dated 28.03.2005 was sent by a process server and also by speed post, which came back undelivered with the remark that the appellant was not available and had gone out for medical treatment. Thereafter, another notice purporting to be a fresh notice dated 17.06. 2005 was again issued under Section 148 of the Act, which was received by the appellant on 29.06.2005. The appellant appeared before the assessing authority and submitted that the original return filed on 3.10.1998 be treated as the return filed in compliance of the notice under Section 148 of the Act. The appellant also objected to the initiation of the proceedings contending that the notice dated 17.06.2005 was barred by time and that no fresh assessment could be framed under Section 147/148 of the Act. The assessing authority rejected the objection raised by the appellant and made an assessment order adding a sum of Rs. 7,78,675/- on the total income and directed the appellant to pay the demand of tax and intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence no assessment could be framed on the basis of un-served Notice u/s 148 dated 28.03.2005?" In this background, we have heard Sri Rahul Agarwal, the learned counsel for the appellant and Sri Dhananjay Awasthi, the learned counsel for the department. Before proceeding further it would be essential to consider a few provisions relating to the procedure for making a re-assessment. For facility, the provisions of Section 147,148,149 and 151 as it existed at the relevant moment of time are extracted hereunder: "147. Income escaping assessment.- If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. Time limit for notice. 149. (1) No notice under section shall be issued for the relevant assessment year,-- (a) in a case where an assessment under sub-section (3) of Section 143 or Section 147 has been made for such assessment year, - (i) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause(ii) or clause (iii); (ii) if four years, but not more than seven years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to fifty thousand rupees or more for that year; (iii) if seven years, but not more than ten years, have elapsed from the end of the relevant assessment year, unless the income chargeable to tax which has escaped assessment amounts to or is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice. Under Section 148(2) of the Act the Assessing Officer has to record the reasons for arriving at a opinion that the income has escaped assessment. The Assessing Officer is thereafter required to obtain a sanction under Section 151 of the Act for issuance of a notice under Section 148 of the Act. Thereafter a notice issued under Section 148 is required to be served on the assessee. Section 149(1)(b) prescribes that no notice under Section 148 shall be issued if four years have elapsed from the end of the relevant assessment year or six years have elapsed from the end of the relevant assessment year where income chargeable to tax, which has escaped assessment amount or is likely to amount to Rs. 1.0 lakh or more for that year. As per Section 148(1) of the Act, before m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed period. Therefore, service of notice within limitation was the foundation of jurisdiction. The same view has been taken by this Court in Janni v. Indu Prasad Bhat, 72 ITR 595 as also in C.I.T. v. Robert, 48 ITR 177. The High Court in our opinion went wrong in relying upon the ratio of 53 ITR 100 in disposing of the case in hand. The scheme of the 1961 Act so far as notice for reassessment is concerned is quite different. What used to be contained in section 34 of the 1922 Act has been spread out into three sections, being sections 147, 148 and 149 in the 45 1961 Act. A clear distinction has been made out between 'issue of notice' and 'service of notice' under the 1961 Act. Section 149 prescribe the period of limitation. It categorically prescribes that no notice under section 149 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. The mandate of section 148(1) is that reassessment shall not be made until there has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce dated 24.03.2005. This assumption of jurisdiction by the Assessing Officer was illegal and invalid for the simple reason that the Assessing Officer was required to record the reasons to believe and obtain a sanction from the competent authority before issuing notice under Section 148 of the Act, which in the instant case had not been done till that date. Therefore, the Assessing Officer could not assume the jurisdiction under Section 148 of the Act on 24.03.2005. A fresh notice under Section 148 of the Act was issued on 28.03.2005 after recording reasons and after obtaining sanction from the competent authority. The last date for issuance of notice under Section 148 of the Act was admittedly 31.03.2005. Consequently, a valid notice was issued by the Assessing Officer under Section 148 of the Act on 28.03.2005. The Assessing Officer assumes jurisdiction, under Section 148 of the Act, the moment a notice dated 28.03.2005 was issued as per the decision of the Supreme Court in R.K.Upadhyaya (Supra). The scheme of the 1961 Act indicates that the notice, which has been issued under Section 148 of the Act was required to be served upon the assessee under Section 148 of the Act, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessing Officer in its report submitted that originally a notice under Section 148 of the Act was issued on 24.03.2005, which was returned unserved, thereafter another notice under Section 148 of the Act was issued on 28.03.2005 by speed post as well as by a process server, which also came back unserved. The Assessing Officer further, recorded "later on the then Assessing Officer for the reasons best known to him issued another notice dated 17.06.2005, which was received by the assessee on 29.06.2005". The remand report of the Assessing Officer makes it apparently clear that three different notices under Section 148 of the Act were issued on 24.03.2005, 28.03.2005 and 17.06.2005. The first notice dated 24.03.2005 was an invalid notice because no reasons to believe were recorded nor sanction order was obtained by the Assessing Officer. The second notice dated 28.03.2005 was a valid notice but came back unserved and this notice was dropped and no further action was taken on this notice. The third notice, which was issued on 17.06.2005 was issued after the period of limitation and, consequently, was an invalid notice. The Assessing Officer assumes jurisdiction under Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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