Invalid Income-tax Notice Quashed for 1989-90 Assessment Year. Lack of Valid Reasons. Discrepancies in Section 115J.

The court quashed the notice issued under section 148 of the Income-tax Act, 1961 for the assessment year 1989-90. It was held that the Assessing Officer did not have valid reasons to believe that income had escaped assessment, as required by law. The court found discrepancies in the reasons provided for initiating the proceedings, particularly regarding the computation of book profit under section 115J. Consequently, the notice dated March 18, 1994, was deemed unsustainable and was quashed without costs imposed.

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Issues involved: Quashing of notice u/s 148 of the Income-tax Act, 1961 for the assessment year 1989-90.

Summary:
The petitioner's assessment for the year 1989-90 was initially computed by the Assessing Officer, and after certain reliefs were granted by the appellate authority, the respondent recalculated the total income. Subsequently, the Assessing Officer issued a notice u/s 148 in 1994, prompting the petitioner to submit a return. The reasons recorded for this action included discrepancies in the computation of book profit under section 115J, such as incorrect set off of investment allowance. The court emphasized that for initiating proceedings u/s 148, the Assessing Officer must have valid reasons to believe that income has escaped assessment, and these reasons must be clearly documented. The court found that the reasons provided in this case did not meet the necessary conditions for issuing the notice u/s 148. It was concluded that the notice dated March 18, 1994, was not sustainable and was therefore quashed, with no costs imposed.

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