Law: Income Tax Act, 1961

Section: 148,149

Income-tax----Reassessment---Notice---Issued within period of limitation but served after that period---High Court---Writ petition---Appeal from assessment order pending before appellate authority---High Court deciding the interpretation of the word "issue"---Direction that appeal be decided according to law---Appeal to Supreme Court by department---Meaning of "issue" settled by Supreme Court decision--¬Departments appeal dismissed--Indian Income Tax Act, 1961, Ss. 148 & 149. A notice of reassessment was issued within the period of limitation but the notice was served on the respondent after that period and the Income Tax Officer passed an assessment order. The respondent filed a writ petition challenging both the assessment order and a notice to show cause why penalty should not be imposed; and the High Court admitted the petition on the point of interpretation of the word "issue" in section 148 of the Income Tax Act, 1961. In its decision the High Court held that the notice of reassessment though "issued" within the period of limitation was bad as it was served after that period but, since an appeal was pending against the order of assessment, directed that the appeal be decided by, the appellate authority in accordance with law: See Tikka Khushwant Singh v. C.I.T. (1975) 101 ITR 106 (P&H). The Department preferred an appeal to the Supreme Court: Held, that the point of law involved in the appeal was already settled by the Supreme Court in R.K. Upadhyaya v. Shanabhai P. Patel (1987) 166 ITR 163 in which it was held that the issuance of a notice of reassessment within the period of limitation gave jurisdiction to the…

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