Law: Income Tax Act, 1961

Section: 147,148

Income-tax-----Reassessment---Notice under S.148 to assessee---Reasons not recorded and proceedings dropped---Fresh notice under S.148 as partners introduced capital and there were also credits during relevant period---Matter required to be examined---Notice not without jurisdiction---Indian Income Tax Act, 1961, Ss. 147 & 148. The petitioner, a registered firm, took certain excise contracts in auction held in February, 1984, and the working started from April 1, 1984. The Income-tax Officer issued a notice under section 148 of the Income Tax Act, 1961, on October 11, 1988, for the assessment year 1984-85, proposing to assess/reassess income which had escaped assessment. The notice was served on October 27, 1988, but no assessment was made within a period of one year as required under the Act. On September 10, 1993, another notice under section 148 for the same assessment year was issued. This notice was challenged by the petitioner on the ground that the earlier notice had not been concluded, therefore, the second notice could not have been issued: Held, that when the earlier notice was issued without any basis and the Department had no option but to drop the proceeding., on January 15, 1991, the chapter was closed. The fresh notice which had been issued had nexus and the reasons were given in this notice. The partners of the firm had introduced capital and there were also credits during the period relevant to the assessment year 1984-85. It was a matter to be examined and the notice was not without jurisdiction. It was open to the petitioner to raise any legal objection before the Assessing Officer. JUDGMENT The petitioner by this petition has prayed that the notice dated September 10, 1993 (Annexure P.4), issued under section 148 read with section 147 of the Income Tax Act, 1961, may be quashed. The brief facts giving rise to this petition arc that the petitioner is a registered firm and followed the financial year as the accounting year. The petitioner-firm took certain excise contracts in the auction held in February. 1984 and working of such contracts started from April 1, 1984. The petitioner filed the return of income for the financial year 1984-85…

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