Reassessment proceedings and invalid notice: a return on record can still support assessment where original proceedings remain valid.

A valid reassessment initiated under the original Section 148 notice could support the assessment because the earlier proceedings were still pending and the order was made within time computed from that notice. The invalidity of a later Section 148 notice did not, by itself, vitiate the reassessment, and the return filed in response to that notice remained usable as material because it was not shown to have been filed under protest. The return furnished pursuant to the original notice also continued to form part of the reassessment record. The assessment was therefore sustained on the basis of the lawful proceedings and material already on record.

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Issues: (i) Whether the assessment made on 2 December 1968 was valid with reference to the reassessment proceedings initiated by the notice under Section 148 of the Income-tax Act, 1961 dated 2 July 1966; (ii) whether the return filed pursuant to the invalid second notice under Section 148 dated 30 August 1968 could be used as the basis of the assessment; (iii) whether the assessment could be upheld on the basis of the return filed pursuant to the notice dated 2 July 1966.

Issue (i): Whether the assessment made on 2 December 1968 was valid with reference to the reassessment proceedings initiated by the notice under Section 148 of the Income-tax Act, 1961 dated 2 July 1966.

Analysis: Reassessment proceedings had already commenced pursuant to the earlier notice and were pending when the later steps were taken. A fresh notice under Section 148 could not validly be issued while the earlier reassessment proceedings remained alive. The assessment order was nevertheless made within time computed from the original notice dated 2 July 1966.

Conclusion: The assessment was valid with reference to the original notice, and this issue was answered in favour of the Revenue.

Issue (ii): Whether the return filed pursuant to the invalid second notice under Section 148 dated 30 August 1968 could be used as the basis of the assessment.

Analysis: The invalidity of the second notice did not erase the return filed in response to it. There was no finding that the return had been filed under protest, and a return voluntarily placed on record could be looked into as material in the reassessment proceedings. The use of information contained in that return did not by itself deprive the assessment order of jurisdiction.

Conclusion: The return filed in response to the invalid second notice could be looked into and used in support of the assessment, and this issue was answered in favour of the Revenue.

Issue (iii): Whether the assessment could be upheld on the basis of the return filed pursuant to the notice dated 2 July 1966.

Analysis: The reassessment proceedings initiated by the original notice were validly pending, and the return filed in consequence of that notice remained part of the record for completion of the reassessment. The assessment order made on 2 December 1968 was within time and could be supported by the material furnished in those proceedings.

Conclusion: The assessment could be upheld on the basis of the return filed pursuant to the original notice, and this issue was answered in favour of the Revenue.

Final Conclusion: The assessment was sustained, the challenge to its validity failed, and the questions referred were answered in favour of the Revenue on the substantive issues decided.

Ratio Decidendi: A return filed during validly pending reassessment proceedings remains usable as material for completing the assessment, and the illegality of a subsequent notice under Section 148 of the Income-tax Act, 1961 does not by itself vitiate the assessment if the order is supportable on the basis of the original valid proceedings and the material lawfully on record.

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