Invalid Notices Quashed for Past Years, Valid Notices Upheld for Recent Years. Section 148 Restrictions Emphasized.

The Tribunal quashed reassessments for assessment years 1976-77 to 1979-80 as notices were deemed invalid. However, reassessments for assessment years 1980-81, 1981-82, and 1982-83 were upheld due to valid notices. The Tribunal clarified that fresh notices under section 148 could not be issued during pending proceedings and emphasized the importance of timely notice service. Appeals for the upheld years were dismissed, while appeals for the invalidated years were allowed.

---

---

Issues Involved:
1. Validity of notices issued under section 148 of the Income-tax Act, 1961 for assessment years 1976-77 to 1982-83.
2. Jurisdiction of the Assessing Officer to issue fresh notices under section 148 during the pendency of revenue's appeals.
3. Time limit for service of notices issued under section 148.
4. Issuance of fresh notices under section 148 without concluding pending proceedings.

Detailed Analysis:

1. Validity of Notices Issued under Section 148:
The primary issue was the validity of notices issued under section 148 of the Income-tax Act, 1961 for the assessment years 1976-77 to 1982-83. The appellant had been assessed regularly, but after a search in August 1984, proceedings under section 147 were initiated, and reassessments were completed. The CIT(A) annulled all assessments for want of service of notices under section 148. The ITAT dismissed the department's appeals, and the department's reference applications were pending before the Allahabad High Court. Fresh notices were issued during the pendency of appeals.

The counsel for the assessee argued that the Assessing Officer had no jurisdiction to issue fresh notices during the pendency of appeals and that the CIT(A)'s observations were not directions for issuing fresh notices under section 148. The counsel also contended that the notices issued without prior sanction of the Central Board of Direct Taxes (CBDT) were invalid.

The learned DR supported the orders of CIT(A) and argued that the assessment proceedings had concluded, and the CIT(A)'s observations were directions, which the Assessing Officer was bound to follow without needing approval from higher authorities.

The Tribunal concluded that the CIT(A)'s observations were not directions as envisaged under section 150(1) and the notices issued without CBDT approval were invalid. Therefore, the notices for assessment years 1976-77 to 1979-80 were held to be bad in law, while notices for assessment years 1980-81, 1981-82, and 1982-83 were valid.

2. Jurisdiction of the Assessing Officer to Issue Fresh Notices:
The Tribunal addressed whether the Assessing Officer had jurisdiction to issue fresh notices under section 148 during the pendency of revenue's appeals. The Tribunal held that the Assessing Officer could proceed to serve the notices during the pendency of revenue's reference before the High Court, provided the proceedings based on earlier notices had been dropped or closed.

3. Time Limit for Service of Notices Issued under Section 148:
The Tribunal examined the time limit for the service of notices issued under section 148. It was determined that notices must be served within the same period as their issuance. For example, a notice issued within four years must be served before the expiry of four years. Similarly, a notice issued after four years but before eight years must be served before the expiry of eight years, and a notice issued after eight years but before sixteen years must be served before the expiry of sixteen years. The Tribunal emphasized that the revenue department must ensure timely service of notices to avoid invalidation.

4. Issuance of Fresh Notices without Concluding Pending Proceedings:
The Tribunal clarified that during the pendency of proceedings under section 147, no second initiation for the same income could be resorted to. Fresh notices under section 148 could not be issued unless the proceedings based on the earlier notices were concluded by a valid order. Therefore, the issuance of fresh notices under section 148 without concluding pending proceedings was held to be illegal and bad in law.

Conclusion:
The Tribunal quashed the reassessments for assessment years 1976-77 to 1979-80 as the notices were held to be invalid and bad in law. However, the reassessments for assessment years 1980-81, 1981-82, and 1982-83 were sustained as the notices for these years were valid. The appeals for assessment years 1980-81, 1981-82, and 1982-83 were dismissed, while the appeals for assessment years 1976-77 to 1979-80 were allowed.

---