Law:

Section:

Section 153(2)(b) of the income-tax act, 1961-Reassessment-Time limit for completion-Assessments for assessment years 1970-71, 1971-72 and 1972-73 reopened by notices under section 148 served on 22-7-1974-11mb limit for their completion expired on 21-7-1975, 31-3-1976 and 31-3-1977, respectively-ITO issued notices under section 142(1) in October 1978 for production of documents-Whether reassessment proceedings valid and could be continued beyond expiry of limitation period-Held, on facts, no Facts The assessee started constructing a house property in April 1968 and completed the same in July 1971. The house was four storeyed with an area of 950 sq. ft. on each floor. The assessee claimed its cost of construction at Rs. 60,000 and attributed its source to the gifted amounts from his father and grandmother. The original assessments up to the assessment year 1972-73 were completed accepting the assessee's contentions qua cost and source. Subsequently, on the basis of valuation report for wealth-tax purposes filed by the assessee and considering the covered area and period of construction, etc., the ITO felt that the cost was much more than disclosed and estimated a total unexplained investment at Rs. 60,000. Since the major construction was made during the accounting years 1969-70 to 1971-72, the ITO proposed to assess the said amount equally in three assessment years 1970-71, 1971-72 and 1972-73 under section 147( a). He, accordingly, reopened these assessments by serving notices under section 148 dated 12-7-1974 on 22-7-1974. Thereafter, notices under section 142(1) were issued on 17-10-1978 requiring the assessee to produce books of account and documents. The assessee thereupon filed a writ application for quashing these notices pleading that, the proceedings had already become time-barred and that, in any case, the condition precedent for application of section 148 had not been satisfied. The revenue, on the other hand, contended that the High Court could not go into the question of limitation in a writ application as the point could be agitated before the income-tax authorities in the normal course. Held 1. The revenue did not challenge the assessee's…

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