Law:

Section:

Section 148, read with section 139, of the Income-tax Act, 1961 – Income escaping assessment – Issue of notice for – Assessment years 1967-68 to 1969-70 – Whether when a return has been filed by an assessee, it cannot be ignored by ITO and he will have no jurisdiction to issue notice under section 148 without completing assessment on return filed – Held, yes – Whether even though a return is invalid in sense that it is not correct and complete within meaning of section 139, ITO cannot ignore or disregard same for purpose of issuing a notice under section 148, unless return can be regarded as not a return in eye of law – Held, yes – Whether where ITO acted on returns filed by assessee, issued notices under section 143(2) and heard him 143(3) but without completing assessments he took recourse to reopen assessments by issuing notices under section 148, ITO acted without jurisdiction in issuing said notices under section 148 and such notices, therefore, had to be quashed – Held, yes FACTS While processing returns for the relevant assessment years, the ITO issued notice under section 143(2) in response to which the assessee produced relevant documents. The ITO, however, did not pass any assessment order or issued any notice of demand. Subsequently, on the assessee's application for a tax clearance certificate, the ITO while issuing the same noted that the returns filed by the assessee were invalid. The assessee objected to the remarks, but the ITO instead of sending a reply to the said objection, issued reassessment notices under section 148 on ground that the particulars of profits and gains from business were not submitted by the assessee along with the returns, although in the note appended to the annexure to each return it was clearly mentioned that such particulars must accompany the return and, therefore, the ITO had reason to believe that the income chargeable to tax had escaped assessment. In response, the assessee contended that since the returns were already submitted by him and the assessment proceedings were pending, the ITO had no jurisdiction to issue the impugned notices under section 148. On writ, the Single Judge held that the returns filed by the…

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