Service of reassessment notice is mandatory before a valid order; mere issuance without proof of service invalidates reassessment.

Issue of notice under section 148 may commence reassessment proceedings, but valid reassessment also requires service of that notice on the assessee before the order is made. The ITAT held that departmental records showing only dispatch by registered post did not prove service, as no acknowledgment or other material established receipt by the assessee. It treated service as a mandatory factual requirement, not a mere procedural irregularity, and rejected the argument that participation in other notices or conduct could amount to waiver. The reassessment orders were therefore invalid and unsustainable.

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Issues: Whether the reassessment orders were valid when notice under section 148 was issued but not shown to have been served on the assessee before completion of reassessment.

Analysis: The reassessment scheme under the Income-tax Act, 1961 distinguishes between issue of notice and service of notice. Issue of notice under section 148 may confer jurisdiction to initiate reassessment proceedings, but service of that notice is required before an order of reassessment can be validly made. On the facts, the departmental records only established issuance of notice by registered post, while no acknowledgement or other material showed service on the assessee. The Tribunal treated service as a factual and mandatory requirement, held that the defect was not a mere procedural irregularity, and rejected the contention that compliance with other notices or the assessee's conduct amounted to waiver.

Conclusion: The reassessment orders were invalid and could not be sustained; the assessee's appeals succeeded.

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