Law:

Section:

section 149 of the Income-tax Act, 1961 - Reassessment - Notice for - Whether service of notice is not a condition precedent to conferment of jurisdiction in ITO but it is a condition precedent to making of order of assessment - Held, yes Facts The period of limitation for reopening the assessment under section 147( b) was going to end on 31-3-1970. On that day, i.e., 31-3-1970, the ITO issued a notice to the assessee under section 147(6) by registered post which was received by the assessee on 4-3-1970. On writ, the High Court relied upon the decision of the Supreme Court in Banarsi Devi v. ITO. [1964] 53 ITR 100 wherein it was held that section 34 of the 1922 Act, conferred jurisdiction on the ITO to reopen an assessment subject to service of notice within the prescribed period. Therefore, service of notice within limitation was the foundations of jurisdiction. The High Court, accordingly, quashed the notice for reassessment issued under section 147(6). On appeal : Held 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 1961 Act. A clear distinction has been made out between 'issue of notice' and 'service of notice' under the 1961 Act. Section 149 prescribes the period of limitation. It categorically prescribes that no notice under section 148 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 limitations, jurisdiction becomes vested in the ITO to proceed to reassess. The mandate of section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In the present case, admittedly, the notice was issued within the prescribed period of limitation as 31-3-1970 was the last day of that period. Service under the 1961 Act is not a condition precedent to conferment of jurisdiction in the ITO to deal with the matter but it is a…

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