Notice u/s 148 issued within time , but served after limitation is valid !

In previous posting , readers attention was brought on the invalidity of assessment if it was based on a notice u/s 143(2) which was issued in time , but served after time limitation . Contrary to the said  position is the issue of notice  u/s 148 of the I T Act. The notice u/s 148 is issued by A.O when he records reasons for reopening an assessment u/s 147 of the I .T.Act. Section 149 of the I T Act prescribes time limit within which notice us/ 148 can be issued.

Notice u/s 148

The question on validity of issue of notice us/ 148 which was issued in time , but served after the time limitation  recently came up before ITAT , Agra bench in ITO vs Sikandar Lal Jain reported in  45 SOT 113 [2011] . The tribunal held the service of notice even after the limitation date as valid if it was issued within time.
The decision of Tribunal was based on the decision of Hon’ble Supreme Court in the case of R.K. Upadhyaya v. Shanabhai P. Patel, 166 ITR 163 (SC) in which it was held that -

“The scheme of the 1961 Act so far as notice for reassessment is concerned is quite different. What used to be contained in section 34 of the 1922 Act has been spread out into three sections, being sections 147, 148 and 149, in the 1961 Act. A clear distinction has been made out between “issue of notice” and “service of notice” under the 1961 Act. Section 149 prescribes the period of limitation. It categorically prescribes that no notice under section 148 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. The mandate of section 148(1) is that reassessment shall not be made until there has been service. The requirement of issue of notice is satisfied when a notice is actually issued. In this case, admittedly the notice was issued within the prescribed period of limitation as March 31, 1970, was the last day of that period. Service under the new Act is not a condition precedent to conferment of jurisdiction on the Income-tax Officer to deal with the matter but it is a condition precedent to the making of the order of assessment. The High Court, in our opinion, lost sight of the distinction and under a wrong basis felt bound by the judgment in Banarsi Debi v. ITO [1964] 53 ITR 100. As the Income-tax Officer had issued notice within limitation, the appeal is allowed and the order of the High Court is vacated. The Income-tax Officer shall now proceed to complete the assessment after complying with the requirements of law.”

Settled Position on issue of notice u/s 148

If the notice u/s 148 is issued within time , the notice is valid despite the fact that the said notice is served after the end of time for issue of notice.


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CA. Mukesh Saran