Reassessment jurisdiction depends on valid notice service, but fresh proceedings may stand once earlier proceedings have ended.
Proper service of notice under section 148 is a jurisdictional for valid reassessment, and the absence of service on the assessee or authorised agent renders the reassessment invalid. However, where earlier reassessment proceedings had been effectively terminated and were no longer pending, fresh reassessment proceedings could be initiated with the requisite statutory sanction, and approval was not vitiated merely because prior proceedings had existed. The discussion therefore distinguishes between a fatal notice defect, which goes to jurisdiction, and a situation where fresh action is permissible because the earlier proceedings had ended.
Issues: (i) Whether the reassessment proceedings for the assessment years 1957-58 to 1959-60 were invalid on the ground that earlier proceedings were pending and the approval of the CBDT was granted mechanically; (ii) Whether the reassessment for the assessment year 1960-61 was invalid for want of service of notice under section 148.
Issue (i): Whether the reassessment proceedings for the assessment years 1957-58 to 1959-60 were invalid on the ground that earlier proceedings were pending and the approval of the CBDT was granted mechanically.
Analysis: The reassessment controversy turned on whether the earlier proceedings, reopened after the order under section 146, could still be treated as pending so as to bar fresh action under section 148. The majority view accepted that service of notice under section 148 is a condition precedent to valid reassessment, but held that the earlier proceedings had been effectively terminated and could not be regarded as pending. On that basis, the subsequent initiation of reassessment with CBDT approval was treated as valid and the approval was not invalid merely because fresh proceedings were taken after the section 146 order.
Conclusion: The reassessments for the assessment years 1957-58 to 1959-60 were valid and the objection based on pendency of earlier proceedings failed, in favour of Revenue.
Issue (ii): Whether the reassessment for the assessment year 1960-61 was invalid for want of service of notice under section 148.
Analysis: For the assessment year 1960-61, all Members accepted that no valid notice under section 148 had been served on the assessee or her authorised agent. In the absence of such service, no jurisdiction could be assumed for making the reassessment, and the defect was not curable by the earlier procedural steps or by the order under section 146.
Conclusion: The reassessment for the assessment year 1960-61 was invalid and the annulment was upheld, in favour of the assessee.
Final Conclusion: The departmental appeals succeeded for the assessment years 1957-58 to 1959-60, but failed for the assessment year 1960-61, resulting in a partly favourable outcome for Revenue.
Ratio Decidendi: Valid reassessment under section 148 requires proper service of notice as a jurisdictional condition, but where earlier proceedings are no longer pending, fresh reassessment proceedings may be validly initiated with the requisite statutory sanction.