Law:

Section:

Section 147 of the Income-tax Act, 1961 - Reassessment - Validity of -Assessment year 1972-73 - Whether notice issued under section 148 read with section 147 during pendency of assessment proceeding in respect of voluntarily filed return would be an invalid notice, and assessment completed on basis of return filed by assessee in response to such notice would also be invalid and deserved to be quashed - Held, yes FACTS During the pendency of the assessment proceedings in respect of a voluntarily filed return for the assessment year 1972-73, the ITO initiated proceedings under section 147 against the assessee for the same assessment year. In response to the notice issued under section 148, read with section 147, the assessee filed a return and the ITO thereafter passed the order of assessment on the basis of that return. On appeal, the assessee contended that the ITO had no jurisdiction to issue notice under section 148 because he had not passed any order of assessment on the basis of the voluntary return filed by him. The AAC rejected the contention of the assessee and upheld the action of the ITO. On second appeal, the Tribunal held that the action of the ITO in issuing notice under section 148 was not justified and, therefore, it quashed the assessment order. On reference: HELD Income cannot be said to have escaped assessment if at that time proceedings for the assessment of the assessee's income have not yet terminated in a final assessment thereof. In the instant case, it was clear that the assessment proceedings for the assessment year 1972-73 were pending when the notice under section 148 was issued by the ITO. Therefore, the notice for reassessment issued during the pendency of the assessment proceedings could not be held to be valid. Moreover, the record did not disclose any reason whatsoever for issuing the notice under section 148. Therefore, the Tribunal was justified in quashing the assessment. S.K. Sharan for the Applicant. L.N. Rastogi for the Respondent. JUDGMENT 1. As directed by this Court under section 256(2) of the Income-tax Act, 1961, ('the Act'), the Tribunal, Patna Bench, Patna, has referred the following question of law to this Court for…

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