Section 148 Issue of Notice

In one case notice under section 148 issued on 28.03.2015 for AY 2008-09. The notice was returned unserved. On 31st March Inspector was sent to serve the notice but could not locate the address. Whether the proceedings should be dropped ?

Section148 states that notice should be issued within time prescribied u/s 151 or 150. Service of notice is not a condition under the section. So AO should try to locate the assessee and serve upon him. The reopening is not time barred if the notice was issued in time but . could not be served by 31.03.2015 in the above case due to change in address of the assessee or for some other reason.

Reference R.K. Upadhyaya 166 ITR 163(SC)section 149 of the Income-tax Act, 1961 - Reassessment - Notice for - Whether service of notice is not a condition precedent to conferment of jurisdiction in ITO but it is a condition precedent to making of order of assessment - Held, yesHeld:- 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 limitations, jurisdiction becomes vested in the ITO 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 the present case, admittedly, the notice was issued within the prescribed period of limitation as 31-3-1970 was the last day of that period. Service under the 1961 Act is not a condition precedent to conferment of jurisdiction in the ITO to deal with the matter but it is a condition precedent to making of the order of assessment. As the ITO in the instant case had issued notice within limitations, the appeal was to be allowed and the order of the High Court was vacated.

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