2007 (12) TMI 178 - HC - Income Tax

Validity of Income-tax Notice Upheld; Second Appeal Doesn't Keep Assessment Pending

The court upheld the validity of a notice issued under section 148 of the Income-tax Act, 1961, by an Income-tax Officer below the rank of Joint ... Assessee challenge that notice u/s 148, could not have been issued by the Income-tax Officer. It could have been issued by an AO not below the rank of the Joint Commissioner – held that Income-tax Officer who was below the rank of the Jt. Commissioner & who is an AO, was empowered to issue the notice – Merely because revenue’s appeal against annulment of assessment is pending, it would not mean that assessment is pending – reassessment notice even during pendency of revenue’s appeal, is valid Issues:Challenge to notice issued under section 148 of the Income-tax Act, 1961.Analysis:The petitioner contested a notice issued under section 148 of the Income-tax Act, challenging the jurisdiction of the Income-tax Officer to issue the notice after the expiry of four years from the relevant assessment year. The petitioner argued that the notice should have been issued by an Assessing Officer not below the rank of the Joint Commissioner. The petitioner relied on a Division Bench decision that outlined the conditions for issuing notices under section 148 based on the rank of the Assessing Officer and the satisfaction required from higher authorities. The court referred to the provisions of section 151 of the Income-tax Act, emphasizing the requirement for satisfaction by the Joint Commissioner or higher authorities for issuing notices after the expiry of four years from the relevant assessment year.The court clarified that under section 151(2) of the Act, if an assessment has not been made under section 143(2) or 147, a notice under section 148 can be issued by an Assessing Officer of the rank of Joint Commissioner or above, or by an officer below that rank if the Joint Commissioner is satisfied it is a fit case for the notice. The court noted that the confusion in interpreting section 151(2) did not warrant a reference to a larger bench. In the present case, the Income-tax Officer, below the rank of the Joint Commissioner, was authorized to issue the notice under section 148 based on the sanction provided by the Commissioner of Income-tax.The petitioner further contended that the assessment order under section 144 was annulled in appeal, and as the Department appealed further, the assessment should be considered pending, precluding the issuance of a notice under section 148. The court rejected this argument, stating that merely filing a second appeal does not keep the assessment pending. The court clarified that if the second appeal is dismissed, the assessment under section 144 is annulled, and if allowed, the assessment stands. As neither scenario leads to an assessment under section 143(3) or 147, the conditions of section 151(2) are not met. Consequently, the court found no merit in the writ petition and dismissed it.