Reassessment power where no prior processing exists under the income-tax return scheme remains valid despite absence of section 143(1)(a) action.

Reassessment under the Income-tax Act is not barred merely because a return was not processed under section 143(1)(a) or served on the assessee. The statutory scheme after the 1989 amendment, including clause (b) of Explanation 2 to section 147, permits reopening where a return has been filed but no assessment has been made and the Assessing Officer notices understatement of income or an excessive claim of loss, deduction, allowance or relief. The absence of prior processing under section 143(1)(a) does not remove the power to initiate reassessment proceedings. The reassessment was therefore upheld and the objection based on non-processing failed.

---

---

Issues: Whether reassessment under section 147 of the Income-tax Act, 1961 was barred because no processing under section 143(1)(a) had been completed or served on the assessee.

Analysis: Clause (b) of Explanation 2 to section 147 permits reopening where a return has been filed but no assessment has been made and the Assessing Officer notices understatement of income or an excessive claim of loss, deduction, allowance or relief. The statutory scheme after the 1989 amendment enables income escaping assessment even where the original return is pending and no assessment under section 143(1)(a) or section 143(3) has been completed. The absence of processing under section 143(1)(a) does not, by itself, take away the power to initiate reassessment proceedings.

Conclusion: Reassessment under section 147 was held to be valid and the objection based on non-processing under section 143(1)(a) failed.

---