Reassessment cannot begin while a filed return remains pending, and a delayed assessment beyond limitation is void.

A reassessment notice under section 148 is invalid where the assessee has already filed a return and that return remains undisposed of, because income cannot be treated as having escaped assessment while the original return is still pending. On that basis, the reassessment proceedings were held unsustainable. The assessment order was also found to be time-barred under section 153 because, once the defective reassessment notice was excluded, the order was passed beyond the prescribed limitation period. The proceedings and assessment were therefore set aside, and the assessee succeeded.

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Issues: (i) Whether the notice issued for reassessment under section 148 was valid when the original return had been filed but not disposed of. (ii) Whether the assessment order was barred by limitation under section 153.

Issue (i): Whether the notice issued for reassessment under section 148 was valid when the original return had been filed but not disposed of.

Analysis: The return had been filed voluntarily and was still pending. In such circumstances, income could not be said to have escaped assessment so as to justify reassessment proceedings. The legal position was supported by the binding principle that reassessment cannot be initiated while the return remains undisposed of.

Conclusion: The notice issued under section 148 was illegal and invalid, in favour of the assessee.

Issue (ii): Whether the assessment order was barred by limitation under section 153.

Analysis: Once the reassessment notice was excluded, the assessment had to be completed within the statutory period from the filing of the return. On the dates recorded, the assessment order was passed after the limitation period had expired.

Conclusion: The assessment order was time-barred and liable to be quashed, in favour of the assessee.

Final Conclusion: The reassessment proceedings and the assessment order were set aside, and the assessee succeeded while the revenue's appeal did not survive.

Ratio Decidendi: Where a return has been filed and remains undisposed of, reassessment under section 148 cannot be validly initiated on the premise of escapement of income; any assessment completed beyond the prescribed limitation under section 153 is void.

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