Reassessment invalid for non-service of Section 148 notice despite timely issuance; assessment and demand notice set aside with remand.

Reassessment under the Income-tax Act was held unsustainable where the Section 148 notice was issued within limitation under Section 149, but service of that notice on the assessee before completion of assessment was not established. The court treated the defect as a violation of the statutory requirement of prior service and natural justice, while noting that the Assessing Officer did not lack subject-matter jurisdiction because the notice itself was timely issued. The assessment order and consequential demand notice were set aside, and the matter was remanded for fresh assessment after service of notice and an opportunity of hearing.

---

---

Issues: Whether reassessment completed under Section 147 read with Section 144 of the Income-tax Act, 1961 was vitiated for non-service of the notice under Section 148 and whether the assessment order and consequential demand notice were liable to be set aside with remand for fresh assessment.

Analysis: The notice under Section 148 was found to have been issued within the period prescribed under Section 149, so the reassessment was not time-barred and the Assessing Officer did not lack subject-matter jurisdiction. However, the record did not establish service of the Section 148 notice on the assessee before completion of assessment, while the statutory scheme required service before making assessment under Section 147. The Court held that mere issuance of notice was not enough to sustain the completed reassessment when service was not demonstrated, and the defect attracted violation of natural justice. The assessment proceedings were therefore treated as suffering from an irregular assumption of jurisdiction rather than a void jurisdictional nullity.

Conclusion: The assessment order and consequential demand notice were set aside, and the matter was remanded to the Assessing Officer for fresh assessment after serving notice under Section 148 and affording an opportunity of hearing.

---