Reassessment notice without jurisdiction where original assessment remained pending; consequential demand and penalty proceedings failed.

A notice for reassessment under section 148 of the Income-tax Act, 1961 could not be issued while the original assessment proceedings on the return filed under the Income-tax Act, 1922 were still pending, because no escaped income could be said to exist. The reassessment notice was therefore without jurisdiction, and the assessment made under section 144, the consequential demand, and the proposed penalty proceedings founded on non-compliance with that invalid notice were all unsustainable against the assessee.

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Issues: Whether the Income-tax Officer had jurisdiction to issue a notice for reassessment under section 148 of the Income-tax Act, 1961, when the original assessment proceedings on the return filed under the Income-tax Act, 1922 were still pending, and whether the consequential assessment, demand, and penalty proceedings were valid.

Analysis: The original return had been filed in response to notice under section 22(2) of the Income-tax Act, 1922, and a notice under section 23(2) had already been issued in those proceedings. Those assessment proceedings had not concluded when the notice under section 148 of the Income-tax Act, 1961 was issued. In that situation, it could not be said that income had escaped assessment, and there was no jurisdictional basis for invoking reassessment powers. Once the notice under section 148 was without jurisdiction, the assessment made under section 144 and the notice of demand based on it could not stand. The proposed penalty proceedings founded on non-compliance with the invalid notice also failed.

Conclusion: The notice under section 148 was invalid and without jurisdiction, and the consequential assessment, demand, and penalty proceedings were unsustainable against the assessee.

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