TMI Blog1972 (9) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings in pursuance of the notice dated July 6, 1967, issued under section 148 of the Income-tax Act, 1961 (hereinafter called " the Act "), in respect of the assessment year 1963-64. The-petitioner, a firm of partnership, originally consisted of five partners. On April 24, 1963, one K. Ramaswami, a partner of the firm, retired and on December 26, 1963, M/s. Krishnaswami and Thiagarajan, two other partners of the firm, also retired. The partnership firm was continued by Perumalsami and Uthamraj, the two remaining partners, up to January 3, 1965, on which date the firm was dissolved. For the assessment year 1963-64, the petitioner filed a return of income and this return was accompanied by a statement of the auditor, containin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer on the basis of authentic market reports that the premiums on the sale of import licences during the relevant time were 205 per cent. on art silk import licences and anything between 150 to 170 per cent. on licences for dyes. On this information the Income-tax Officer was said to have entertained the belief that the assessee's income had been under-assessed in the original assessment. The petitioner filed an objection on April 20, 1968, to the notice issued under section 148 of the Act. It may be stated that one of the objections taken by the petitioner was that the notice served on Krishnaswami was not legal and valid and there was no proper notice served on the petitioner. Thereafter the petitioner has filed this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution. The dissolution of the firm was on January 3, 1965, and immediately before that the firm consisted of only two partners and Krishnaswami was not then a partner, he having already retired on December 26, 1963. Therefore, on a plain reading of the section, it is clear that there was no valid notice in this case. But, what the learned counsel for the revenue would contend is that the phrase " immediately before " occurring in section 283(2) should not be given its ordinary and plain meaning but should be understood and given a meaning with reference to the year of assessment and that the notice issued is in respect of under-assessment of the income of the firm for the assessment year 1963-64 and that, therefore, the notice could be issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er-firm. In Narayanan Chetti v. Income-tax Officer, the Supreme Court held that the service of requisite notice on the assessee is a condition precedent to the validity of any reassessment made under section 34 of the Income-tax Act, 1922 (which corresponds to section 147 of the Income-tax Act, 1961), and if a valid notice was not issued as required, the proceeding taken by the Income-tax Officer in pursuance of an invalid notice and consequent orders of reassessment passed by him would be void and inoperative. The learned counsel for the revenue submitted that this decision of the Supreme Court rested on the language of section 34 and that the provisions of sections 147 and 148 had not made service of notice the foundation for the initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old Act and sections 147 and 148 of the new Act, on a construction of sections 147 and 148, the learned judges came to the conclusion that a notice prescribed under section 148 of the Act for initiating reassessment proceedings is not a mere procedural requirement and that the service of the prescribed notice on the assessee is a condition precedent to the validity of any reassessment under section 147. It is next contended by the learned counsel for the revenue that the notice issued and served on Krishnaswami, a retired partner, found its way to the petitioner and in fact the petitioner filed an objection to the notice and that, therefore, there was a valid initiation of the reassessment proceedings. We are unable to accept this conten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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