In Nilesh Kalidas Shah v. ACIT, the Ahmedabad bench of the ITAT held that the Department cannot initiate fresh re-assessment proceedings when the re-assessment proceeding are pending on the basis of a valid notice passed under section 148 of the Income Tax Act.
In the instant case, the Department initiated re-assessment proceedings under section 148 of the Income Tax Act in consequent to a search in response to which the assessee filed return of income by declaring total income of Rs.5,65,660/-. Subsequently, notices under sections were issued to the assessee. A separate notice u/s 148 was served on the assessee for the very same assessment year just a couple of days prior to the limitation period for passing the assessment order pursuant to first notice under section 148 of the Income Tax Act.
The assessee challenged validity of the proceedings on appeal on ground the assessment proceedings pursuant to the first valid notice u/s.148 of the Act dated 27.07.1995 were already pending.However, the assessee failed to secure relief from the first appellate authority and approached the Tribunal on second appeal.
Allowing the appeal, Single Member noted that the assessment proceedings pursuant to the first notice u/s.148 of the Act did not culminate into a valid order prior to issuance of the second notice under the same section i.e. u/s.148 of the Act.
“In the entirety of facts and circumstances, it is quite clear that the position of law is settled proposition that when the reassessment proceedings are pending based on a valid 148 notice, the subsequent proceedings under section 148 cannot be initiated unless earlier proceedings are brought to a logical end. In the present appeal, it is an undisputed fact that the first notice dated 27.07.1995 issued under the same section remains un-disposed of. It is also an undisputed fact that the second notice under section 148 was issued on the ground that income had escaped assessment because of the invalid/non-est return filed by the assessee. The Assessing Officer in the remand report has confirmed all the dates as mentioned in para no.13 on page 19 to 22 of the order of CIT(A) and also confirmed that no assessment was made pursuance to first notice u/s.148 dated 27.07.1995.” accordingly, the proceedings were quashed.
Read the full text of the order below.
