Limitation for reassessment expired under the Income-tax Act, so the scrutiny notice was quashed as unauthorised.

Where a restored assessment was not completed within the statutory time limit under proviso 2(a) to section 153B of the Income-tax Act, the reassessment period had already expired and no further scrutiny could validly be initiated. The High Court held that the notice under section 143(2), issued after expiry of that mandatory limitation period, was without authority and liable to be quashed. The proceedings were therefore barred by limitation in favour of the assessee.

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Issues: Whether the notice issued under section 143(2) was liable to be quashed as the assessment proceedings had become barred by limitation in view of the Tribunal's earlier order and the limitation prescribed under the Income-tax Act.

Analysis: The assessment had already been restored by the Tribunal for fresh adjudication, but no fresh assessment order was passed within the period permitted by law. The Court noted that, on the facts of the case and having regard to proviso 2(a) to section 153B of the Income-tax Act, the period for completing the reassessment had expired long back. Once the statutory period had run out, there remained no occasion to initiate scrutiny or reassessment proceedings for the relevant assessment year. The notice issued after such expiry was therefore without authority.

Conclusion: The notice under section 143(2) was quashed and the proceedings were held to be barred by limitation, in favour of the assessee.

Ratio Decidendi: Where the statute prescribes a mandatory period for completion of reassessment pursuant to a restored assessment, initiation or continuation of proceedings after expiry of that period is invalid and liable to be set aside.

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