Invalid Notice under Income-tax Act, 1961 quashed, Appeal dismissed, Court rules against notice during pending assessments.

The court declared the notice dated March 18, 1994, under section 148 of the Income-tax Act, 1961, for the assessment year 1990-91 as invalid and quashed it. The petitioner's appeal to the Income-tax Appellate Tribunal resulted in the dismissal of the notice and confirmation of the Commissioner's order for a de novo consideration. The court emphasized that issuing a notice under section 148 while assessment proceedings were pending was impermissible, thereby ruling in favor of the petitioner and allowing the petition without costs.

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Issues:
Challenge to the validity of notice under section 148 of the Income-tax Act, 1961 for the assessment year 1990-91 and the acceptance of the return filed under section 139(1) in compliance with the notice.

Analysis:
The petitioner, a company registered under the Indian Companies Act, challenged the notice dated March 18, 1994, under section 148 of the Income-tax Act, 1961, for the assessment year 1990-91. The petitioner also contested the order dated March 19, 1994, which did not accept the return filed under section 139(1) in response to the notice under section 148. The petitioner maintained accounts on a mercantile basis and had filed a return declaring a loss for the assessment year 1990-91. The assessment proceedings involved multiple notices and inquiries from different authorities, leading to the determination of assessable income at variance with the petitioner's claimed loss.

The petitioner appealed the assessment order to the Commissioner of Income-tax (Appeals), who set aside the assessment for a de novo consideration. Subsequently, the petitioner received a notice under section 148 dated March 18, 1994, alleging an escaped income chargeable to tax for the same assessment year. The petitioner contended that this notice was illegal as the assessment proceedings were already pending before the Assessing Officer post the Commissioner's order of remand. The petitioner sought acceptance of the return filed under section 139(1) as compliant with the notice under section 148.

The court referred to established precedents that prohibit the issuance of a notice under section 148 when assessment proceedings are pending. The court noted that once the Commissioner of Income-tax (Appeals) passed an order of remand, the assessment proceedings were pending before the Assessing Officer, rendering the notice under section 148 invalid. The petitioner's subsequent appeal to the Income-tax Appellate Tribunal, resulting in dismissal and confirmation of the Commissioner's order, further solidified the invalidity of the notice under section 148.

In conclusion, the court held the notice dated March 18, 1994, under section 148 to be invalid and quashed it. The petition was allowed, with no order as to costs, based on the established legal principles and the specific circumstances of the case.

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