My reassessment notice was posted on the last day of the limitation period but reached me three days later. Is it time barred?
No. The Supreme Court allowed the Revenue's appeal and vacated the Gujarat High Court's order. Under the 1961 Act a clear distinction is made between issue of a notice and service of it. Section 149 says no notice under section 148 shall be issued after the limitation has lapsed, so once a notice is issued in time jurisdiction vests in the officer. Section 148(1) requires service before the order of assessment is made: the mandate is that reassessment shall not be made until there has been service. Service is therefore a condition precedent to the order, not to jurisdiction. Here the notice went by registered post on 31 March 1970, the last day, and that sufficed.
Decided by the Supreme Court (Supreme Court of India, Civil Appellate Jurisdiction; Ranganath Misra and G.L. Oza, JJ (judgment by Ranganath Misra, J)) on 1987-04-28, reported as (1987) 166 ITR 163; 1987 AIR 1378; 1987 (3) SCC 96; 1987 SCR (3) 42; JT 1987 (2) 287; (1987) 33 Taxman 226; 1987 SCC (Tax) 230. It bears on section 148, section 149, section 147 of the Income Tax Act 1961, in Reassessment & Reopening matters.
This is the case that separated issue from service in reassessment, and the distinction still organises every limitation argument under the reopening provisions. Under section 34 of the 1922 Act the officer could serve a notice within the prescribed period and then proceed, so service within limitation was the foundation of jurisdiction; that is what Banarsi Debi, Jai Krishna Srivastava and Robert decided, and High Courts had carried the reasoning into the 1961 Act. The Supreme Court held that this was to misread a different scheme: what section 34 did in one provision the 1961 Act spreads across sections 147, 148 and 149, and the limitation in section 149 attaches to issue alone. The practical consequence is twofold and both halves matter. A notice put out of the officer's hands on the last day is in time even though it arrives later. But service does not become irrelevant - it remains a condition precedent to making the order of reassessment, so an unserved or badly served notice is still fatal to the assessment even where jurisdiction was validly assumed.
Binding on every court and authority in India.
Read aloud by your device. Press again to stop.
For assessment year 1965-66 the Income-tax Officer issued a notice for reassessment under section 147(b). It was sent by registered post on 31 March 1970, which was the last day of the four year period allowed by section 149(1)(b) for cases falling under clause (b) of section 147, and was received by the assessee on 3 April 1970. The assessee challenged the notice by writ petition, Special Civil Application No. 631 of 1970, contending that the officer's action was barred by limitation. By its judgment of 20 August 1973 the Gujarat High Court accepted that contention and quashed the notice, relying on this Court's decision in Banarsi Debi & Anr. v. Income Tax Officer, District IV, Calcutta, 53 ITR 100, which had been decided on section 34(1) of the Income-tax Act, 1922 and on section 4 of the Income-tax (Amendment) Act, 1959. The Revenue appealed by special leave. Despite service of notice of the appeal, the assessee did not appear before the Supreme Court.
The appeal was allowed and the High Court's order vacated, with no order as to costs since the respondent did not appear. The Income-tax Officer was directed to proceed to complete the assessment after complying with the requirements of law. The Court held that the scheme of the 1961 Act on notice for reassessment is quite different from that of section 34 of the 1922 Act, what was contained in that single section having been spread across sections 147, 148 and 149. The 1961 Act draws a clear distinction between issue of notice and service of notice. Section 149 prescribes the period of limitation and does so categorically in terms of issue: no notice under section 148 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service 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 officer to proceed to reassess, and the requirement of issue is satisfied when a notice is actually issued. The mandate of section 148(1) is that reassessment shall not be made until there has been service. Service under the new Act is thus not a condition precedent to the conferment of jurisdiction but to the making of the order of assessment. Banarsi Debi, Jai Krishna Srivastava (Janni) v. Indu Prasad Bhat, 72 ITR 595 and CIT v. Robert, 48 ITR 177 were distinguished as decisions on the 1922 Act, and the High Court was held to have lost sight of the distinction and to have felt bound by Banarsi Debi on a wrong basis.
The reasoning is a comparison of two statutory schemes. Section 34(1) of the 1922 Act empowered the officer, in cases under clause (a) at any time within eight years and under clause (b) within four years of the end of the year, to serve on the assessee a notice and then to proceed to assess or reassess. Because the section made service the act to be done within the period, service within limitation was the foundation of jurisdiction, and on that footing this Court had said in Banarsi Debi that there was really no distinction between issue and service of notice; Janni and Robert are to the same effect. The 1961 Act is drafted differently. The single provision has been divided: section 147 supplies the conditions for reopening, section 148(1) requires the officer to serve a notice before making the assessment, reassessment or recomputation, and section 149 imposes the time limit expressly on issue, providing that no notice under section 148 shall be issued after the stated period. Given that separation, the word used in each provision must be given its own effect. Limitation therefore bites on issue; jurisdiction vests once a notice is issued in time; and service, though still mandatory, operates at the later stage as a condition of making the order. Applying that reading, the notice having gone out on 31 March 1970, the last day of the period, the officer had jurisdiction and the High Court's contrary conclusion, drawn from an authority on the earlier Act, could not stand.
Service under the new Act is not a condition precedent to conferment of jurisdiction in the Income-tax Officer to deal with the matter but it is a condition precedent to making of the order of assessment.
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppNo. The Supreme Court allowed the Revenue's appeal and vacated the Gujarat High Court's order. Under the 1961 Act a clear distinction is made between issue of a notice and service of it. Section 149 says no notice under section 148 shall be issued after the limitation has lapsed, so once a notice is issued in time jurisdiction vests in the officer. Section 148(1) requires service before the order of assessment is made: the mandate is that reassessment shall not be made until there has been service. Service is therefore a condition precedent to the order, not to jurisdiction. Here the notice went by registered post on 31 March 1970, the last day, and that sufficed. This was decided by the Supreme Court (Supreme Court of India, Civil Appellate Jurisdiction; Ranganath Misra and G.L. Oza, JJ (judgment by Ranganath Misra, J)) and bears on section 148, section 149, section 147 of the Income Tax Act 1961. It is reported as (1987) 166 ITR 163; 1987 AIR 1378; 1987 (3) SCC 96; 1987 SCR (3) 42; JT 1987 (2) 287; (1987) 33 Taxman 226; 1987 SCC (Tax) 230. This is the case that separated issue from service in reassessment, and the distinction still organises every limitation argument under the reopening provisions. Under section 34 of the 1922 Act the officer could serve a notice within the prescribed period and then proceed, so service within limitation was the foundation of jurisdiction; that is what Banarsi Debi, Jai Krishna Srivastava and Robert decided, and High Courts had carried the reasoning into the 1961 Act. The Supreme Court held that this was to misread a different scheme: what section 34 did in one provision the 1961 Act spreads across sections 147, 148 and 149, and the limitation in section 149 attaches to issue alone. The practical consequence is twofold and both halves matter. A notice put out of the officer's hands on the last day is in time even though it arrives later. But service does not become irrelevant - it remains a condition precedent to making the order of reassessment, so an unserved or badly served notice is still fatal to the assessment even where jurisdiction was validly assumed. If it applies to you, the first step is this: Separate the two questions in your objection: was the notice issued within the period in section 149, and was it served before the reassessment order was made?
For assessment year 1965-66 the Income-tax Officer issued a notice for reassessment under section 147(b). It was sent by registered post on 31 March 1970, which was the last day of the four year period allowed by section 149(1)(b) for cases falling under clause (b) of section 147, and was received by the assessee on 3 April 1970. The assessee challenged the notice by writ petition, Special Civil Application No. 631 of 1970, contending that the officer's action was barred by limitation. By its judgment of 20 August 1973 the Gujarat High Court accepted that contention and quashed the notice, relying on this Court's decision in Banarsi Debi & Anr. v. Income Tax Officer, District IV, Calcutta, 53 ITR 100, which had been decided on section 34(1) of the Income-tax Act, 1922 and on section 4 of the Income-tax (Amendment) Act, 1959. The Revenue appealed by special leave. Despite service of notice of the appeal, the assessee did not appear before the Supreme Court. The matter was decided on 1987-04-28 by the Supreme Court (Supreme Court of India, Civil Appellate Jurisdiction; Ranganath Misra and G.L. Oza, JJ (judgment by Ranganath Misra, J)). On those facts the Supreme Court held as follows. The appeal was allowed and the High Court's order vacated, with no order as to costs since the respondent did not appear. The Income-tax Officer was directed to proceed to complete the assessment after complying with the requirements of law. The Court held that the scheme of the 1961 Act on notice for reassessment is quite different from that of section 34 of the 1922 Act, what was contained in that single section having been spread across sections 147, 148 and 149. The 1961 Act draws a clear distinction between issue of notice and service of notice. Section 149 prescribes the period of limitation and does so categorically in terms of issue: no notice under section 148 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service 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 officer to proceed to reassess, and the requirement of issue is satisfied when a notice is actually issued. The mandate of section 148(1) is that reassessment shall not be made until there has been service. Service under the new Act is thus not a condition precedent to the conferment of jurisdiction but to the making of the order of assessment. Banarsi Debi, Jai Krishna Srivastava (Janni) v. Indu Prasad Bhat, 72 ITR 595 and CIT v. Robert, 48 ITR 177 were distinguished as decisions on the 1922 Act, and the High Court was held to have lost sight of the distinction and to have felt bound by Banarsi Debi on a wrong basis.
The reasoning is a comparison of two statutory schemes. Section 34(1) of the 1922 Act empowered the officer, in cases under clause (a) at any time within eight years and under clause (b) within four years of the end of the year, to serve on the assessee a notice and then to proceed to assess or reassess. Because the section made service the act to be done within the period, service within limitation was the foundation of jurisdiction, and on that footing this Court had said in Banarsi Debi that there was really no distinction between issue and service of notice; Janni and Robert are to the same effect. The 1961 Act is drafted differently. The single provision has been divided: section 147 supplies the conditions for reopening, section 148(1) requires the officer to serve a notice before making the assessment, reassessment or recomputation, and section 149 imposes the time limit expressly on issue, providing that no notice under section 148 shall be issued after the stated period. Given that separation, the word used in each provision must be given its own effect. Limitation therefore bites on issue; jurisdiction vests once a notice is issued in time; and service, though still mandatory, operates at the later stage as a condition of making the order. Applying that reading, the notice having gone out on 31 March 1970, the last day of the period, the officer had jurisdiction and the High Court's contrary conclusion, drawn from an authority on the earlier Act, could not stand. In the words reproduced by the source cited on this page: "Service under the new Act is not a condition precedent to conferment of jurisdiction in the Income-tax Officer to deal with the matter but it is a condition precedent to making of the order of assessment."
It was decided by the Supreme Court on 1987-04-28 and is reported as (1987) 166 ITR 163; 1987 AIR 1378; 1987 (3) SCC 96; 1987 SCR (3) 42; JT 1987 (2) 287; (1987) 33 Taxman 226; 1987 SCC (Tax) 230. Binding on every court and authority in India. A Supreme Court decision binds every assessing officer, every Commissioner (Appeals), every bench of the Income Tax Appellate Tribunal and every High Court in India. An officer who declines to follow it is acting contrary to law, and that refusal is itself a ground of appeal. On section 148, section 149, section 147, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. The appeal was allowed and the High Court's order vacated, with no order as to costs since the respondent did not appear. The Income-tax Officer was directed to proceed to complete the assessment after complying with the requirements of law. The Court held that the scheme of the 1961 Act on notice for reassessment is quite different from that of section 34 of the 1922 Act, what was contained in that single section having been spread across sections 147, 148 and 149. The 1961 Act draws a clear distinction between issue of notice and service of notice. Section 149 prescribes the period of limitation and does so categorically in terms of issue: no notice under section 148 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service 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 officer to proceed to reassess, and the requirement of issue is satisfied when a notice is actually issued. The mandate of section 148(1) is that reassessment shall not be made until there has been service. Service under the new Act is thus not a condition precedent to the conferment of jurisdiction but to the making of the order of assessment. Banarsi Debi, Jai Krishna Srivastava (Janni) v. Indu Prasad Bhat, 72 ITR 595 and CIT v. Robert, 48 ITR 177 were distinguished as decisions on the 1922 Act, and the High Court was held to have lost sight of the distinction and to have felt bound by Banarsi Debi on a wrong basis. It arises in Reassessment & Reopening matters, on section 148, section 149, section 147 of the Income Tax Act 1961, and was decided by Supreme Court of India, Civil Appellate Jurisdiction; Ranganath Misra and G.L. Oza, JJ (judgment by Ranganath Misra, J). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Do not treat late delivery as fatal by itself; ask instead for the date the notice was actually issued and press for proof of it, since that is the date that fixes jurisdiction. Where service is defective or absent, take the point against the reassessment order rather than against jurisdiction - that is the ground this judgment leaves open. Check the limitation and notice provisions applicable to your own year; this judgment construes sections 148 and 149 as they stood for assessment year 1965-66.
Validity check could not be completed. No later history was checked. The judgment construes sections 147, 148 and 149 as they stood for assessment year 1965-66, long before the substitution of section 147 from 1 April 1989 and the wholly new scheme substituted from 1 April 2021 with sections 148A and the present section 149. The distinction between issue and service turns on the words of those provisions, so a reader must satisfy himself that the current sections are worded the same way before applying it to a recent year. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The harvested page carries a reporter's headnote above the judgment; it has been disregarded and this record follows the judgment. The judgment text contains an obvious slip, saying that section 149 categorically prescribes that no notice under section 149 shall be issued after limitation has lapsed, where section 148 is meant, as the extract of section 149(1) set out immediately above makes clear. The respondent did not appear, so no argument was advanced against the Revenue's construction and the Court did not consider what would follow if a notice were issued in time but never served, beyond saying that reassessment shall not be made until there has been service. The judgment does not say what date the notice bore or when it was signed, only that it was sent by registered post on 31 March 1970, so it gives no guidance on what constitutes issue where those dates differ. It also decides nothing on the merits of the reopening under section 147(b). This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed and the High Court's order vacated, with no order as to costs since the respondent did not appear. The Income-tax Officer was directed to proceed to complete the assessment after complying with the requirements of law. The Court held that the scheme of the 1961 Act on notice for reassessment is quite different from that of section 34 of the 1922 Act, what was contained in that single section having been spread across sections 147, 148 and 149. The 1961 Act draws a clear distinction between issue of notice and service of notice. Section 149 prescribes the period of limitation and does so categorically in terms of issue: no notice under section 148 shall be issued after the prescribed limitation has lapsed. Section 148(1) provides for service 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 officer to proceed to reassess, and the requirement of issue is satisfied when a notice is actually issued. The mandate of section 148(1) is that reassessment shall not be made until there has been service. Service under the new Act is thus not a condition precedent to the conferment of jurisdiction but to the making of the order of assessment. Banarsi Debi, Jai Krishna Srivastava (Janni) v. Indu Prasad Bhat, 72 ITR 595 and CIT v. Robert, 48 ITR 177 were distinguished as decisions on the 1922 Act, and the High Court was held to have lost sight of the distinction and to have felt bound by Banarsi Debi on a wrong basis.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
My return was only processed under 143(1). Does that stop the department reopening it later?
How much am I actually required to disclose — and can they reopen because the officer drew the wrong conclusion?
The sanctioning authority just wrote 'yes' and signed. Is that a sanction?
A reassessment was done in between. Does the two-year clock for s.263 restart from it?