Service of reassessment notice is mandatory before assessment, while appellate directions effectively remanding verification remain unsustainable.

Reassessment requires proven service of a notice under section 148 before an assessment can be completed, although issuance within limitation initiates reassessment jurisdiction. Where service was not evidenced, the assessee filed no return in response, and section 292BB could not conclusively cure that defect, the reassessment orders were set aside for fresh assessment after service, opportunity to respond, and compliance with consequential procedure. A Commissioner (Appeals) cannot direct the Assessing Officer to verify a possible double addition where that direction effectively remands or sets aside the issue; such a direction was unsustainable after 01.06.2001.

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Issues: (i) Whether reassessment could be sustained where notice under section 148 was issued but its service upon the assessee was not evidenced, and the assessee had not filed a return in response to that notice; (ii) Whether the Commissioner (Appeals) could direct verification by the Assessing Officer concerning a possible double addition.

Issue (i): Whether reassessment could be sustained where notice under section 148 was issued but its service upon the assessee was not evidenced, and the assessee had not filed a return in response to that notice.

Analysis: Issue of a notice under section 148 within limitation confers jurisdiction to initiate reassessment, whereas service of that notice is a condition precedent to making the assessment. The assessment record referred to issuance of the notice but did not establish its service. The assessee had responded only to the final show-cause notice and had not responded to the earlier notices. In these circumstances, section 292BB could not conclusively cure the absence of evidence of service. Since no return was filed in response to the notice under section 148, the assessment could not properly have been framed under section 143(3). Procedural fairness required verification of service, service of the notice if necessary, an opportunity to file the return and submissions, and a fresh assessment in accordance with law.

Conclusion: In favour of the assessee; the reassessment orders were set aside for a fresh assessment after compliance with the requirement of service of notice under section 148 and consequential statutory procedure.

Issue (ii): Whether the Commissioner (Appeals) could direct verification by the Assessing Officer concerning a possible double addition.

Analysis: The direction for verification of the alleged double addition effectively set aside the matter for action by the Assessing Officer. Such power was not available to the Commissioner (Appeals) after 01.06.2001.

Conclusion: In favour of the assessee; the direction to the Assessing Officer for verification was unsustainable.

Final Conclusion: The validity of issuance of the notice under section 148 remained intact, but completion of reassessment requires proven service and adherence to the applicable assessment procedure.

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