Orissa High Court
Sunil Kumar Sahoo vs Deputy Commissioner Of Income Tax on 31 March, 2026
ORISSA HIGH COURT : CUTTACK
W.P.(C) No.23165 of 2025
In the matter of an Application under Articles 226 and 227
of the Constitution of India, 1950
***
Sunil Kumar Sahoo
Aged about 50 Years
Son of Narayan Sahoo
Proprietor of
M/s. Bhagabati Cashew
At/P.O.: Dhirapatna
Via: Bhapur, District: Dhenkanal. … Petitioner
-VERSUS-
1. Deputy Commissioner of Income Tax
Circle-1(2), Bhubaneswar
At: 5th Floor, Aayakar Bhawan
Rajaswa Vihar, Bhubaneswar
District: Khordha.
2. Joint Commissioner of Income Tax
Aayakar Bhawan
Rajaswa Vihar, Bhubaneswar
District: Khordha.
3. Tax Recovery Officer
Income Tax Department
4th Floor, Aayakar Bhawan
Rajaswa Vihar
Bhubaneswar – 751007.
WP(C) No.23165 of 2025 Page 1 of 85
4. Deputy Director of Income Tax
(Investigation)
Unit – 2(2), Bhubaneswar
District: Khordha. … Opposite parties
Counsel appeared for the parties:
For the Petitioner : Mr. Sidhartha Ray,
Senior Advocate
Assisted by
M/s. Kshirod Kumar Sahoo,
and
Dillip Kumar Samal, AdvocatesFor the Opposite parties : Mr. Avinash Kedia,
Junior Standing Counsel,
Income Tax DepartmentP R E S E N T:
HONOURABLE CHIEF JUSTICE
MR. HARISH TANDON
ANDHONOURABLE JUSTICE
MR. MURAHARI SRI RAMANDate of Hearing : 19.03.2026 :: Date of Judgment : 31.03.2026
J UDGMENT
MURAHARI SRI RAMAN, J.–
Challenge is laid in the instant writ petition against
Assessment framed under Section 147 read with Section
144 of the Income Tax Act, 1961, vide Order dated
14.11.2017 of the Deputy Commissioner of Income Tax,
Circle 1(2), Bhubaneswar with respect to assessmentWP(C) No.23165 of 2025 Page 2 of 85
year 2012-13 (Financial Year 2011-12) purported to have
been passed in pursuance of Notice under Section 148
and subsequent Notices dated 14.06.2017 and
23.10.2017 under Section 142, and the petitioner craves
indulgence of this Court exercising power under Articles
226 and 227 of the Constitution of India for grant of
following relief(s):
“In the context aforesaid it is most humbly prayed that
Your Lordships may after hearing the counsel for the
petitioner be pleased to:
(i) Call for the records;
(ii) And further Your Lordships may be pleased to issue
rule nisi calling upon the opposite party to show
cause as to why the order of reassessment passed
under Section 147/144 of Income Tax Act for the
assessment year 2012-13 passed by opposite party
No.1 under Annexure-5 & the Demand Notice Under
Annexure-5/A to the Writ Petition shall not be
quashed;
(iii) And further Your Lordships may be pleased to issue
rule nisi calling upon the opposite parties to show
cause as to why the order of attachment dated
21.05.2025 issued by the opposite party No.3 under
Annexure-4 shall not be quashed,
(iv) And if the opposite parties fail to show cause or
show insufficient cause then the rule may be made
absolute;
WP(C) No.23165 of 2025 Page 3 of 85
(v) And further Your Lordships may be pleased to pass
such other order or orders as your Lordships may
deem fit and proper;
And for this act of kindness, the petitioners as in duty
bound shall ever pray.”
Case of the petitioner:
2. The petitioner filed return of income for the assessment
year 2012-13 on 05.04.2013 under the Income Tax Act,
1961 (for brevity, ―IT Act‖) declaring total income at
Rs.22,26,000/-. After filing of return for the said
assessment year, no communication was made in
respect of assessment under Section 143(1).
2.1. The Deputy Commissioner of Income Tax, Circle 1(2),
Bhubaneswar without causing any independent inquiry
with respect to information received vide Letter dated
29.03.2017 from the Deputy Director of Income Tax
(Investigation), Unit-2(2), Bhubaneswar reopened the
Assessment for the assessment year 2012-13.
Subsequent thereto, a penalty proceeding was initiated
by issue of show cause notice in obedience to which the
petitioner having appeared in the said proceeding, the
Assessing Authority imposed penalty under Section
271C of the IT Act on 13.04.2018.
2.2. Neither the Notice under Section 147 nor was the
Assessment Order served on the petitioner. The
WP(C) No.23165 of 2025 Page 4 of 85
petitioner came to know about the Assessment Order
and the Demand Notice passed under Section 147/144
of the IT Act, on 21.05.2025 when a Tax Recovery
Proceeding was initiated. The Tax Recovery Officer, has
issued the order of attachment of the immovable
property. On getting the information about such
attachment order, the petitioner having applied for the
certified copy of the relevant Orders which was supplied
to him on 24.07.2025.
2.3. Hence this application has been filed questioning
jurisdiction of the Assessing Officer to pass Assessment
Order dated 14.11.2017 under Section 147 read with
Section 144 (Annexure-5) and as a consequence thereof
raise demand under Section 156 of the IT Act vide
Annexure-5A without ensuring service of Notice under
Section 148.
Hearing:
3. Though copy of the writ petition was served on the
Senior Standing Counsel for the Income Tax Department
on 18.08.2025, no counter affidavit has been filed by the
Department.
3.1. On 12.03.2026 when the matter was taken up for the
first time by this Court, at the request of Sri Subash
Chandra Mohanty, learned Senior Standing Counsel for
WP(C) No.23165 of 2025 Page 5 of 85
the Income Tax Department the matter stood adjourned
to 19.03.2026 for furnishing instructions.
3.2. Accordingly matter being listed today, on receipt of
written instruction from the Department, Sri Avinash
Kedia, learned Junior Standing Counsel for the Income
Tax Department appeared and was ready with the
matter to advance arguments.
3.3. Heard Sri Sidhartha Ray, learned Senior Advocate
assisted by Sri Kshirod Kumar Sahoo, learned Advocate
for the petitioner and Sri Avinash Kedia, learned Junior
Standing Counsel representing the opposite parties.
3.4. Hearing being concluded, the matter stood reserved for
preparation and pronouncement of Judgment/Order.
Arguments and submissions:
4. Sri Sidhartha Ray, learned Senior Advocate being
assisted by Sri Kshirod Kumar Sahoo, learned Advocate
urged that the mandatory requirement of Section 148
implying service of notice on the petitioner
contemplating initiation of proceeding for assessment
under Section 147 read with Section 144 being not
complied with, the Assessment Order dated 14.11.2017
suffers from patent infirmity rendering the entire
proceeding vitiated.
WP(C) No.23165 of 2025 Page 6 of 85
4.1. It is vociferously argued that without completing the
assessment process under Section 143 (as there was no
communication in this respect), no assessment could
have been validly initiated under Section 147 by taking
recourse to provisions of Section 148. The impugned
assessment being made without demonstrating that the
notice under Section 148 was served on the petitioner,
the assessment order cannot be sustained.
4.2. Amplifying his argument further, Sri Sidhartha Ray,
learned Senior Advocate would emphasise that the
modes specified in Section 282 of the IT Act with respect
to service of notice, as it existed prior to bringing into
force Notification dated 30.01.2019 issued by the
Central Board of Direct Taxes, being not adhered to, the
Assessment Order dated 14.11.2017 (Annexure-5) and
consequential Demand Notice dated 14.11.2017 raising
demand to the tune of Rs.47,45,150/- cannot be
sustained.
5. Vehemently opposing entertainment of the writ petition
it is stated that inordinate delay in approaching this
Court being not appropriately explained, the petitioner
cannot be allowed to circumvent alternative remedial
forum. Sri Avinash Kedia, learned Junior Standing
Counsel refuted the submissions made by the learned
Senior Advocate and supported the Assessment Order on
the premise that non-appearance of the assessee despite
WP(C) No.23165 of 2025 Page 7 of 85
issue of statutory notice under Section 148 coupled with
notices under Section 142 left the Assessing Authority
without any option but to conclude the assessment
based on unexplained cash deposits made under Section
69A of the IT Act.
Consideration of arguments and submissions:
6. The Assessment Order dated 14.11.2017 (Annexure-5)
reflects the following fact:
“The case was reopened under Section 147 of the IT Act,
1961. Notice under Section 148 of the Act was issued to
the assessee requiring to deliver before the expiry of 30
days from the date of service of notice, a return in the
prescribed form of their income in respect of which they
are assessable for the said assessment year.”
6.1. Certified copy of order dated 29.03.2017 (Annexure-1)
shows that the Assessing Officer after reducing the fact
enumerated in the information received from the Deputy
Director of Income Tax (Investigation) to writing on
29.03.2017, directed to issue Notice under Section 148.
It is observed in the said order dated 29.03.2017 as
follows:
“Information has been received from the Deputy
Director of Income-tax (Investigation), Unit-2(2),
Bhubaneswar vide his letter dated 23.03.2017 that
M/s. Bhagabati Cashew is a Proprietorship concern
of Shri Sunil Kumar Sahoo, having account
No.028405004208 with Bhubaneswar, Nayapalli
WP(C) No.23165 of 2025 Page 8 of 85
Branch. The account was opened on 30.06.2011.
Date of incorporation was 14 March 1984. There are
11 linked accounts under PAN-ATOPS6509F held by
the customer. Alert had been generated due to large
value cash transactions in currents accounts. As per
the due diligence conducted by the bank official
customer is into cashew business and exporter of
this product. Transaction pattern shows that account
get credits by the cash, clearing and get debits by
the RTGS, transfer, self paid cheque. Total deposits
between 02.07.2011 to 08.10.2011 is amounted to
Rs.104 lakhs out of which Rs.78 lakh is by cash and
total debit is amounted to Rs.104 lakh. Cash
deposited from different branches and on
26.07.2011, Rs.17 lakh remitted through RTGS in
own name. Customers another account also showing
the same transaction pattern that is cash
transaction in a new account is a short period leads
to suspicion hence reported.
2. The additional linked bank accounts as detailed
under have been found in the CTR database of FIU-
IND in which substantial cash transactions have
been made. 1) IDBI Bank, College Road, Cuttack-
21710200000 2) ICICI Bank, Bajraakabati Road,
Cuttack-6342050085003 3) IDCI Bank, Khurda,
Bhubaneswar-042102000030463.
2. Enquiry had been initiated by the Directorate by
issuing summons to Shri Sunil Kumar sahoo (Prop:
Bhagabati Cashew) and the other individual linked
to the STR Sri Ashok Kumar Sahoo. In his
submission Sri Ashok Kumar Sahoo explained that
he is doing business of cashew collection which is
seasonal in nature. He takes cash advances from SriWP(C) No.23165 of 2025 Page 9 of 85
Sunil Kumar Sahoo for supply of cashew and when
the desired collection is not materialized the advance
is returned in cash or deposited in the bank account
of the Sri Sunil Kumar Sahoo. The bank account
shows number of high cash deposits which are
explained as cash collection against sales.
3. Summons had been issued by the Directorate to both
parties. However, only Sri Ashok Kumar Sahoo has
complied to summon but had not furnished any
documentary evidence like ledger copies, stock book,
bank book, cash book. The other party Sri Sunil
Kumar Sahoo has not yet complied with the
summons. They were also issued the reminder but
they have not complied.
4. It is seen from the record that the assessee has filed
the return of income for the assessment year under
consideration i.e. 2012-13 on 05.04.2013 declaring
total income of Rs.22,26,000/-. It is observed from
the balance sheet filed that the balance available
with the banks is Rs.13,233/- only and hence
obviously the balance sheet of the concern of the
assessee do not manifest or reflective of the
transactions brought on record/transaction reported
in the letter of the ADIT (Inv.), Bhubaneswar.
5. Thus I have reason to believe that income upto such
extent has escaped assessment within the meaning
of Section 147 of the I.T. Act. Issue notice under
Section 148 of the I.T. Act.”.
6.2. The zimni orders of the proceeding under Section 148 as
enclosed with the writ petition at Annexure-1
demonstrates as follows:
WP(C) No.23165 of 2025 Page 10 of 85
“28.03.2017 Approval under Section 147 received vide
No.11487 dated 28.03.2017 placed in the
folder.
29.03.2017 Notice under Section 148 issued to assessee.
No compliance.
14.06.2017 Notice under Section 142(1) issued fixing
compliance on 28.06.2017 at 1.15 p.m.
***”
6.3. The written instruction received from the Department
and furnished by the learned Junior Standing Counsel
during the course of hearing reveals the following facts:
Notice under Despatch on --- ---
Section 148 29.03.2017
dated vide despatch
29.03.2017 No.11536
Notice under Despatch on --- Annexure-
Section 142(1) 16.06.2017 A
dated vide despatch
14.06.2017 No.2065
Notice under Despatch on Speed post No. Annexure-
Section 142(1) 26.10.2017 EO941011095IN B
dated vide despatch (postal delivery
23.10.2017 No.8319 report placed on
record)
Assessment Despatch on Speed post No. Annexure-
Order along 14.11.2017 EO941014159IN C
with Demand vide despatch
Notice under No.9637
Section 156
dated
14.11.2017
WP(C) No.23165 of 2025 Page 11 of 85
6.4. Aforesaid instruction as provided by the Income Tax
Department would make it abundantly clear that though
despatch number is assigned with respect to despatch of
Notice dated 29.03.2017 under Section 148, it could not
be demonstrated the mode of despatch and date of
service on the petitioner. However, the zimni order
indicates ―issue‖ of notice under Section 148 on
29.03.2017.
6.5. Indubitably from the arguments of counsel for both sides
it is discernible that since the Notice under Section 148
was stated to have been issued on 29.03.2017 pursuant
to which impugned Assessment Order was passed on
14.11.2017, the provisions of the IT Act as it existed on
the date of issue of notice would be the guiding the
factor. With the above factual scenario regarding
statutory Notice dated 29.03.2017 under Section 148, in
order to examine whether service of such notice is sine
qua non for validity of initiation of proceeding under
Section 147 of the IT Act, it is felt expedient to have
regard to the relevant provisions of the IT Act.
6.6. The provisions of Section 147, Section 148 and Section
149 of the IT Act at the relevant period stood thus:
“147.Income escaping assessment.–
If the Assessing Officer has reason to believe that
any income chargeable to tax has escapedWP(C) No.23165 of 2025 Page 12 of 85
assessment for any assessment year, he may,
subject to the provisions of Section 148 to 153,
assess or reassess such income and also any other
income chargeable to tax which has escaped
assessment and which comes to his notice
subsequently in the course of the proceedings under
this section, or recomputed the loss or the
depreciation allowance or any other allowance, as
the case may be, for the assessment year concerned
(hereafter in this section and in Section 148 to 153
referred to as the relevant assessment year:
Provided that where an assessment under sub-
section (3) of Section 143 or this section has been
made for the relevant assessment year, no action
shall be taken under this section after the expiry of
four years from the end of the relevant assessment
year, unless any income chargeable to tax has
escaped assessment for such assessment year by
reason of failure on the part of the assessee to make
a return under Section 139 or in response to a notice
issued under sub-section (1) of Section 142 or
Section 148 or to disclose fully and truly all material
facts necessary for his assessment, for that
assessment year:
Provided further that nothing contained in the first
proviso shall apply in a case where any income in
relation to any asset (including financial interest in
any entity) located outside India, chargeable to tax,
has escaped assessment for any assessment year:
Provided also that the Assessing Officer may assess
or reassess such income, other than the income
involving matters which are the subject matters ofWP(C) No.23165 of 2025 Page 13 of 85
any appeal, reference or revision, which is
chargeable to tax and has escaped assessment.
Explanation 1.–
Production before the Assessing Officer of account
books or other evidence from which material
evidence could with due diligence have been
discovered by the Assessing Officer will not
necessarily amount to disclosure within the meaning
of the foregoing proviso.
Explanation 2.–
For the purposes of this section, the following shall
also be deemed to be cases where income
chargeable to tax has escaped assessment, namely:
(a) where no return of income has been furnished
by the assessee although his total income or
the total income of any other person in respect
of which he is assessable under this Act during
the previous year exceeded the maximum
amount which is not chargeable to income-tax;
(b) where a return of income has been furnished
by the assessee but no assessment has been
made and it is noticed by the Assessing Officer
that the assessee has understated the income
or has claimed excessive loss, deduction,
allowance or relief in the return;
(ba) where the assessee has failed to furnish a
report in respect of any international
transaction which he was so required under
Section 92E;
WP(C) No.23165 of 2025 Page 14 of 85
(c) where an assessment has been made, but–
(i) income chargeable to tax has been
underassessed ; or
(ii) such income has been assessed at too
low a rate; or
(iii) such income has been made the subject of
excessive relief under this Act; or
(iv) excessive loss or depreciation allowance
or any other allowance under this Act has
been computed;]
(d) where a person is found to have any asset
(including financial interest in any entity)
located outside India.
Explanation 3.–
For the purpose of assessment or reassessment
under this section, the Assessing Officer may assess
or reassess the income in respect of any issue,
which has escaped assessment, and such issue
comes to his notice subsequently in the course of the
proceedings under this section, notwithstanding that
the reasons for such issue have not been included in
the reasons recorded under sub-section (2) of Section
148.
Explanation 4.–
For the removal of doubts, it is hereby clarified that
the provisions of this section, as amended by the
Finance Act, 2012, shall also be applicable for any
assessment year beginning on or before the 1st day
of April, 2012.
WP(C) No.23165 of 2025 Page 15 of 85
148. Issue of notice where income escaped assessment.–
(1) Before making the assessment, reassessment or
recomputation under Section 147, the Assessing
Officer shall serve on the assessee a notice
requiring him to furnish within such period, as may
be specified in such notice, a return of his income or
the income of any other person in respect of which
he is assessable under this Act during the previous
year corresponding to the relevant assessment year,
in the prescribed form and verified in the prescribed
manner and setting forth such other particulars as
may be prescribed; and the provisions of this Act
shall, so far as may be, apply accordingly as if such
return were a return required to be furnished under
Section 139:
Provided that in a case–
(a) where a return has been furnished during the
period commencing on the 1st day of October,
1991 and ending on the 30th day of
September, 2005 in response to a notice served
under this section, and
(b) subsequently a notice has been served under
sub-section (2) of Section 143 after the expiry of
twelve months specified in the proviso to sub-
section (2) of Section 143, as it stood
immediately before the amendment of said
sub-section by the Finance Act, 2002 (20 of
2002) but before the expiry of the time limit for
making the assessment, reassessment or
recomputation as specified in sub-section (2) of
Section 153, every such notice referred to in
WP(C) No.23165 of 2025 Page 16 of 85
this clause shall be deemed to be a valid
notice:
Provided further that in a case–
(a) where a return has been furnished during
the period commencing on the 1st day of
October, 1991 and ending on the 30th
day of September, 2005, in response to a
notice served under this section, and
(b) subsequently a notice has been served
under clause (ii) of sub-section (2) of
section 143 after the expiry of twelve
months specified in the proviso to clause
(ii) of sub-section (2) of Section 143, but
before the expiry of the time limit for
making the assessment, reassessment or
recomputation as specified in sub-section
(2) of Section 153, every such notice
referred to in this clause shall be deemed
to be a valid notice.
Explanation.–
For the removal of doubts, it is hereby declared
that nothing contained in the first proviso or the
second proviso shall apply to any return which
has been furnished on or after the 1st day of
October, 2005 in response to a notice served
under this section.
(2) The Assessing Officer shall before issuing any notice
under this section record his reasons for doing so.
149. Time limit for notice.–
WP(C) No.23165 of 2025 Page 17 of 85
(1) No notice under Section 148 shall be issued for the
relevant assessment year,–
(a) if four years have elapsed from the end of the
relevant assessment year, unless the case falls
under clause (b) or clause (c);
(b) if four years, but not more than six years, have
elapsed from the end of the relevant
assessment year unless the income chargeable
to tax which has escaped assessment amounts
to or is likely to amount to one lakh rupees or
more for that year;
(c) if four years, but not more than sixteen years,
have elapsed from the end of the relevant
assessment year unless the income in relation
to any asset (including financial interest in any
entity) located outside India, chargeable to tax,
has escaped assessment.
Explanation.–
In determining income chargeable to tax which has
escaped assessment for the purposes of this sub-
section, the provisions of Explanation 2 of Section
147 shall apply as they apply for the purposes of
that section.
(2) The provisions of sub-section (1) as to the issue of
notice shall be subject to the provisions of Section
151.
(3) If the person on whom a notice under Section 148 is
to be served is a person treated as the agent of a
non-resident under Section 163 and the assessment,
reassessment or recomputation to be made in
WP(C) No.23165 of 2025 Page 18 of 85
pursuance of the notice is to be made on him as the
agent of such non-resident, the notice shall not be
issued after the expiry of a period of six years from
the end of the relevant assessment year.
Explanation.–
For the removal of doubts, it is hereby clarified that
the provisions of sub-sections (1) and (3), as
amended by the Finance Act, 2012, shall also be
applicable for any assessment year beginning on or
before the 1st day of April, 2012.”
6.7. It does surface from the language employed in Section
148(1) that it is required to ―serve on the assessee a
notice‖ before making the assessment, reassessment or
recomputation under Section 147. In Section 149 it is
made clear that ―no notice under Section 148 shall be
issued‖ beyond the periods specified therein.
6.8. The use of the word ―shall‖ in the aforesaid provisions
would denote that it is mandatory in nature.
6.9. In Bank of India Vrs. Sri Nangli Rice Mills (P) Ltd., (2025)
9 SCC 225 it is observed as follows:
“115.This Court in Delhi Airtech Services (P) Ltd. Vrs.
State of U.P. (2011) 9 SCC 354 held that the general
rule of interpretation requires that the word “shall”
be read as “must”. It observed that the term “shall”
only be read as “may” where doing so would
achieve the ends of legislative intent behind the
substantive provision and the scheme of the entire
WP(C) No.23165 of 2025 Page 19 of 85
statute in question. The relevant observations read
as under:
„122. The distinction between mandatory and
directory provisions is a well-accepted norm of
interpretation. The general rule of
interpretation would require the word to
be given its own meaning and the word
“shall” would be read as “must” unless it
was essential to read it as “may” to
achieve the ends of legislative intent and
understand the language of the
provisions. It is difficult to lay down any
universal rule, but wherever the word “shall” is
used in a substantive statute, it normally
would indicate mandatory intent of the
legislature.
123. Crawford on Statutory Construction has
specifically stated that language of the
provision is not the sole criterion; but the courts
should consider its nature, design and the
consequences which could flow from construing
it one way or the other.
124. Thus, the word “shall” would normally be
mandatory while the word “may” would be
directory. Consequences of non-compliance
would also be a relevant consideration. The
word “shall” raises a presumption that the
particular provision is imperative but this prima
facie inference may be rebutted by other
considerations such as object and scope of the
enactment and the consequences flowing from
such construction.‟WP(C) No.23165 of 2025 Page 20 of 85
116. Similarly in State of Haryana Vrs. Raghubir Dayal,
(1995) 1 SCC 133, this Court held that the use of the
word “shall” ordinarily be construed as mandatory
except where such an interpretation would be
anathema to either the scope of the enactment, or
where the consequences that would flow from such
construction would not demand such interpretation.
The relevant observations read as under:
„5. The use of the word “shall” is ordinarily
mandatory but it is sometimes not so
interpreted if the scope of the enactment, on
consequences to flow from such construction
would not so demand. Normally, the word
“shall” prima facie ought to be considered
mandatory but it is the function of the
court to ascertain the real intention of the
legislature by a careful examination of the
whole scope of the statute, the purpose it
seeks to serve and the consequences that
would flow from the construction to be
placed thereon. The word “shall”, therefore,
ought to be construed not according to the
language with which it is clothed but in the
context in which it is used and the purpose it
seeks to serve. The meaning has to be ascribed
to the word “shall” as mandatory or as
directory, accordingly. Equally, it is settled
law that when a statute is passed for the
purpose of enabling the doing of
something and prescribes the formalities
which are to be attended for the purpose,
those prescribed formalities which are
essential to the validity of such thing,
would be mandatory. However, if by holdingWP(C) No.23165 of 2025 Page 21 of 85
them to be mandatory, serious general
inconvenience is caused to innocent persons or
general public, without very much furthering
the object of the Act, the same would be
construed as directory.‟ ***”
6.10. The following observation with respect to ‗shall’ and
‗may’ appearing in C. Bright Vrs. The District Collector,
(2020) 7 SCR 997 deserves to be quoted:
“7. A well settled rule of interpretation of the statutes is
that the use of the word „shall‟ in a statute, does not
necessarily mean that in every case it is mandatory
that unless the words of the statute are literally
followed, the proceeding or the outcome of the
proceeding, would be invalid. It is not always correct
to say that if the word „may‟ has been used, the
statute is only permissive or directory in the sense
that non-compliance with those provisions will not
render the proceeding invalid [State of U.P. Vrs.
Manbodhan Lal Srivastava, AIR 1957 SC 912] and
that when a statute uses the word „shall‟, prima
facie, it is mandatory, but the Court may ascertain
the real intention of the legislature by carefully
attending to the whole scope of the statute [State of
U.P. Vrs. Babu Ram Upadhya, AIR 1961 SC 751].
The principle of literal construction of the statute
alone in all circumstances without examining the
context and scheme of the statute may not serve the
purpose of the statute [Reserve Bank of India Vrs.
Peerless General Finance and Investment Co. Ltd.,
(1987) 1 SCC 424].”
WP(C) No.23165 of 2025 Page 22 of 85
6.11. In CCE, Cus. & ST Vrs. Ballarpur Industries Ltd., 2016 (I)
ILR-Cut 931 this Court while considering the use of the
word ―shall‖ as mandatory enunciated the circumstance
as follows:
“16. It is reported in the decision of Privy Council in
Montreal Street Railway Company Vrs. Normandin
(1917) AC 170 where their Lordships have observed:
„*** The question whether provisions in a
statute are directory or imperative has very
frequently arisen in this country, but it has
been said that no general rule can be laid
down, and that in every case the object of the
statute must be looked at. The cases on the
subject will be found collected in Maxwell on
Statutes, 5th Edn., page 596 and the following
pages. When the provisions of a statute relate to the
performance of a public duty and the case is such
that to hold null and void acts done in neglect of this
duty would work serious general inconvenience, or
injustice to persons who have no control over those
entrusted with the duty, and at the same time would
not promote the main object of the Legislature, it has
been the practice to hold such provisions to be
directory only, the neglect of them, though
punishable, not affecting the validity of the acts
done.‟
17. The aforesaid observation has also been followed by
the Hon‟ble Supreme Court in L. Hazari Mal Kuthiala
Vrs. ITO reported in (1961) 41 ITR 12 (SC) = AIR
1961 SC 200. In Bhavnagar University Vrs. PalitanaWP(C) No.23165 of 2025 Page 23 of 85
Sugar Mill P. Ltd., AIR 2003 SC 511 their lordships
have observed:
„23. It is the basic principle of construction of
statute that the same should be read as a
whole, then chapter by chapter, section by
section and words by words. Recourse to
construction or interpretation of statute is
necessary when there is ambiguity, obscurity,
or inconsistency therein and not otherwise. An
effort must be made to give effect to all parts of
the statute and unless absolutely necessary,
no part thereof shall be rendered surplusage or
redundant.‟
18. With due respect to the above decisions, it is made
clear that when the statute has entrusted the
performances of public duty upon the public officer
having great importance and the dereliction of such
purpose will cause serious inconvenience to the
general public and State exchequer. Such statutory
provision cannot be said to be mere directory but it is
mandatory. Moreover, for interpretation or the
construction of statute, it should be read as a whole
to find out the purposive interpretation as observed
by the Hon‟ble Supreme Court.”
6.12. Presence of the word ―shall‖ in the provisions of the IT
Act referred to above would indicate that the ―service on
the assessee‖ in Section 148 and ―shall be issued‖ in
Section 149 are necessary concomitant facets and both
the sections are required to be read in harmony.
WP(C) No.23165 of 2025 Page 24 of 85
6.13. In Franklin Templeton Trustee Services Private Limited
Vrs. Amruta Garg, (2021) 6 SCC 736, it has been held as
under:
“17. The concept of “absurdity” in the context of
interpretation of statutes is construed to include any
result which is unworkable, impracticable, illogical,
futile or pointless, artificial, or productive of a
disproportionate counter-mischief [See Bennion on
Statutory Interpretation, 5th Edn., p. 969.]. Logic
referred to herein is not formal or syllogistic logic,
but acceptance that enacted law would not set a
standard which is palpably unjust, unfair,
unreasonable or does not make any sense. [Bennion
on Statutory Interpretation, 5th Edn., p. 986.] When
an interpretation is beset with practical difficulties,
the courts have not shied from turning sides to
accept an interpretation that offers a pragmatic
solution that will serve the needs of society [Id, p.
971, quoting Griffiths, L.J.]. Therefore, when there is
choice between two interpretations, we would avoid
a “construction” which would reduce the legislation
to futility, and should rather accept the
“construction” based on the view that draftsmen
would legislate only for the purpose of bringing
about an effective result. We must strive as far as
possible to give meaningful life to enactment or rule
and avoid cadaveric consequences [See Principles of
Statutory Interpretation by Justice G.P. Singh, 14th
Edn., p. 50.].”
6.14. In the case of Vivek Narayan Sharma Vrs. Union of India,
(2023) 3 SCC 1, it has been held as under:
WP(C) No.23165 of 2025 Page 25 of 85
“134.Legislation has an aim, it seeks to obviate some
mischief, to supply an inadequacy, to effect a
change of policy, to formulate a plan of Government.
That aim, that policy is not drawn, like nitrogen, out
of the air; it is evidenced in the language of the
statute, as read in the light of other external
manifestations of purpose [“Some Reflections on the
Reading of Statutes” [(1947) 47 Columbia LR 527],
Columbia LR at p. 538]. This is how Justice
Frankfurter succinctly propounds the principle of
purposive interpretation. ***
137. A statute must be construed having regard to the
legislative intent. It has to be meaningful. A
construction which leads to manifest absurdity must
not be preferred to a construction which would fulfil
the object and purport of the legislative intent. ***
148. It is thus clear that it is a settled principle that the
modern approach of interpretation is a pragmatic
one, and not pedantic. An interpretation which
advances the purpose of the Act and which ensures
its smooth and harmonious working must be chosen
and the other which leads to absurdity, or confusion,
or friction, or contradiction and conflict between its
various provisions, or undermines, or tends to defeat
or destroy the basic scheme and purpose of the
enactment must be eschewed. The primary and
foremost task of the Court in interpreting a statute is
to gather the intention of the legislature, actual or
imputed. Having ascertained the intention, it is the
duty of the Court to strive to so interpret the statute
as to promote or advance the object and purpose of
the enactment. For this purpose, where necessary,
the Court may even depart from the rule that plainWP(C) No.23165 of 2025 Page 26 of 85
words should be interpreted according to their plain
meaning. There need be no meek and mute
submission to the plainness of the language. To
avoid patent injustice, anomaly or absurdity or to
avoid invalidation of a law, the court would be
justified in departing from the so-called golden rule
of construction so as to give effect to the object and
purpose of the enactment. Ascertainment of
legislative intent is the basic rule of statutory
construction.”
6.15. In Sultana Begum Vrs. Prem Chand Jain, (1997) 1 SCC
373, the following principles relating to harmonious
construction has been propounded:
“15. On a conspectus of the case-law indicated above,
the following principles are clearly discernible:
(1) It is the duty of the courts to avoid a head-on
clash between two sections of the Act and to
construe the provisions which appear to be in
conflict with each other in such a manner as to
harmonise them.
(2) The provisions of one section of a statute
cannot be used to defeat the other provisions
unless the court, in spite of its efforts, finds it
impossible to effect reconciliation between
them.
(3) It has to be borne in mind by all the courts all
the time that when there are two conflicting
provisions in an Act, which cannot be
reconciled with each other, they should be so
interpreted that, if possible, effect should beWP(C) No.23165 of 2025 Page 27 of 85
given to both. This is the essence of the rule of
“harmonious construction”.
(4) The courts have also to keep in mind that an
interpretation which reduces one of the
provisions as a “dead letter” or “useless
lumber” is not harmonious construction.
(5) To harmonise is not to destroy any statutory
provision or to render it otiose.”
6.16. The case of Commissioner of Income Tax Vrs. Hindustan
Bulk Carriers, (2003) 3 SCC 57, proceeded to observe
that:
“16. The courts will have to reject that construction which
will defeat the plain intention of the legislature even
though there may be some inexactitude in the
language used. (See Salmon Vrs. Duncombe, (1886)
11 AC 627 = 55 LJPC 69 = 55 LT 446 (PC), AC at p.
634, Curtis Vrs. Stovin, (1889) 22 QBD 513 = 58
LJQB 174 = 60 LT 772 (CA) referred to in S. Teja
Singh case, AIR 1959 SC 352 = (1959) 35 ITR 408.)
17. If the choice is between two interpretations, the
narrower of which would fail to achieve the manifest
purpose of the legislation, we should avoid a
construction which would reduce the legislation to
futility, and should rather accept the bolder
construction, based on the view that Parliament
would legislate only for the purpose of bringing
about an effective result. (See Nokes Vrs. Doncaster
Amalgamated Collieries, (1940) 3 All ER 549 = 1940
AC 1014 = 109 LJKB 865 = 163 LT 343 (HL) referred
to in Pye Vrs. Minister for Lands for NSW, (1954) 3WP(C) No.23165 of 2025 Page 28 of 85
All ER 514 = (1954) 1 WLR 1410 (PC).) The principles
indicated in the said cases were reiterated by this
Court in Mohan Kumar Singhania Vrs. Union of
India, 1992 Supp (1) SCC 594 = AIR 1992 SC 1.
18. The statute must be read as a whole and one
provision of the Act should be construed with
reference to other provisions in the same Act so as to
make a consistent enactment of the whole statute.
19. The court must ascertain the intention of the
legislature by directing its attention not merely to the
clauses to be construed but to the entire statute; it
must compare the clause with other parts of the law
and the setting in which the clause to be interpreted
occurs. (See R.S. Raghunath Vrs. State of
Karnataka, (1992) 1 SCC 335 = AIR 1992 SC 81.)
Such a construction has the merit of avoiding any
inconsistency or repugnancy either within a section
or between two different sections or provisions of the
same statute. It is the duty of the court to avoid a
head-on clash between two sections of the same Act.
(See Sultana Begum Vrs. Prem Chand Jain, (1997) 1
SCC 373 = AIR 1997 SC 1006.)
20. Whenever it is possible to do so, it must be done to
construe the provisions which appear to conflict so
that they harmonise. It should not be lightly
assumed that Parliament had given with one hand
what it took away with the other.
21. The provisions of one section of the statute cannot be
used to defeat those of another unless it is
impossible to effect reconciliation between them.
Thus a construction that reduces one of the
provisions to a “useless lumber” or “dead letter” isWP(C) No.23165 of 2025 Page 29 of 85
not a harmonised construction. To harmonise is not
to destroy.”
6.17. Upon harmonious construction of the provisions of the
IT Act so far as is necessary, it can be affirmatively
stated that if adequate opportunity is not granted to an
assessee and there has been irregular assumption of
jurisdiction by the Assessing Officer, it is quite obvious
that there has been violation of the principles of natural
justice.
6.18. The circular referred to by Sri Sidhartha Ray, learned
Senior Advocate would point out that adherence to the
principles of natural justice before assessment is
expedient to avoid prejudice. Noteworthy here to have
reference to said Instruction No.20/2015, dated
29.12.2015 which reads thus:
“Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct TaxesNorth Block, New Delhi, the 29th of December, 2015
Subject: Scrutiny Assessments– some important issues
and scope of scrutiny cases selected through
Computer Aided Scrutiny Selection (CASS)–
reg.
The Central Board of Direct Taxes (“CBDT”), vide
Instruction No.7/2014 dated 26.09,2014 had
clarified the extent of enquiry in certain category of
WP(C) No.23165 of 2025 Page 30 of 85
cases specified therein, which are selected for
scrutiny through CASS Further clarifications have
been sought regarding the scope and applicability of
the aforesaid Instruction to cases being scrutinized
2. In order to facilitate the conduct of scrutiny
assessments and to bring further clarity on some of
the issues emerging from the aforesaid Instruction,
following clarifications are being made:
i. Year of applicability: As stated in the
Instruction No. 7/2014, the said Instruction is
applicable only in respect of the cases selected
for scrutiny through CASS-2014.
ii. Whether the said Instruction is applicable to all
cases selected under CASS: The said
Instruction is applicable where the case is
selected for scrutiny under CASS only on the
parameter(s) of AIR/CIB/26AS data. If a case
has been selected under CASS for any other
reason(s)/parameter(s) besides the AIR/CIB/
26AS data, then the said Instruction would not
apply.
iii. Scope of Enquiry: Specific issue based enquiry
is to be conducted only in those scrutiny cases
which have been selected on the parameter(s)
of AIR/CIB/26AS data. In such cases, the
Assessing Officer, shall also confine the
Questionnaire only to the specific issues
pertaining to AIR/CIB/26AS data Wider
scrutiny in these cases can only be conducted
as per the guidelines and procedures stated in
Instruction No.7/2014.
WP(C) No.23165 of 2025 Page 31 of 85
iv. Reason for selection: In cases under scrutiny
for verification of AIR/CIB/26AS data, the
Assessing Officer has to intimate the reason for
selection of case for scrutiny to the assessee
concerned.
3. As far as the returns selected for scrutiny through
CASS-2015 are concerned, two type of cases have
been selected for scrutiny in the current Financial
Year– one is „Limited Scrutiny‟ and other is
„Complete Scrutiny‟. The assessees concerned have
duly been intimated about their cases falling either
in Limited Scrutiny or „Complete Scrutiny‟ through
notices issued under Section 143(2) of the Income-
tax Act 1961 („Act‟). The procedure for handling
„Limited Scrutiny‟ cases shall be as under:
a. In Limited Scrutiny cases, the reasons/issues
shall be forthwith communicated to the
assessee concerned.
b. The Questionnaire under Section 142(1) of the
Act in „Limited Scrutiny‟ cases shall remain
confined only to the specific reasons/issues for
which case has been picked up for scrutiny.
Further, the scope of enquiry shall be restricted
to the Limited Scrutiny issues.
c. These cases shall be completed expeditiously
in a limited number of hearings.
d. During the course of assessment proceedings
in „Limited Scrutiny‟ cases, If it comes to the
notice of the Assessing Officer that there is
potential escapement of income exceeding Rs.
five lakhs (for metro charges, the monetaryWP(C) No.23165 of 2025 Page 32 of 85
limit sha’l be Rs ten lakhs) requiring
substantial verification on any other issue(s),
then, the case may be taken up for „Complete
Scrutiny‟ with the approval of the Pr. CIT/CIT
concerned However, such an approval shall be
accorded by the by the Principal CIT/CIT in
writing after being satisfied about merits of the
issue(s) necessitating „Complete Scrutiny‟ in
that particular case Such cases shall be
monitored by the Range Head concerned The
procedure Indicated at points (a), (b) and (c)
above shall no longer remain binding such
cases (For the present purpose, Metro charges
would mean Delhi Mumbai, Chennai, Kolkata,
Bengaluru, Hyderabad and Ahmedabad).
4. The Board further desires that in all cases under
scrutiny, where the Assessing Officer proposes to
make additions or disallowances, the assessee
would be given a fair opportunity to explain his
position on the proposed additions/disallowances in
accordance with the principle of natural justice. In
this regard, the Assessing Officer shall issue
an appropriate show cause notice duly
indicating the reasons for the proposed
additions/disallowances along with necessary
evidences/reasons forming the basis of the
same. Before passing the final order against the
proposed additions/disallowances, due
consideration shall be given to the submissions
made by the assessee in response to the show
cause notice.
WP(C) No.23165 of 2025 Page 33 of 85
5. The contents of this Instruction should be
immediately brought to the notice of ail concerned for
strict compliance.
6. Hindi version to follow.
Sd/-
(Ankita Pandey)
Under Secretary to
the Government of India”
6.19. It is argued that the notice to show cause is also
required to be communicated by following the manner
provided under Section 282 of the IT Act, which reads
thus:
“282.Service of notice generally.–
(1) The service of a notice or summon or requisition or
order or any other communication under this Act
(hereafter in this section referred to as
„communication‟) may be made by delivering or
transmitting a copy thereof, to the person therein
named:
(a) by post or by such courier services as may be
approved by the Board; or
(b) in such manner as provided under the Code of
Civil Procedure, 1908 (5 of 1908) for the
purposes of service of summons; or
(c) in the form of any electronic record as provided
in Chapter IV of the Information Technology
Act, 2000 (21 of 2000); orWP(C) No.23165 of 2025 Page 34 of 85
(d) by any other means of transmission of
documents as provided by rules made by the
Board in this behalf.
(2) The Board may make Rules providing for the
addresses (including the address for electronic mail
or electronic mail message) to which the
communication referred to in sub-section (1) may be
delivered or transmitted to the person therein
named.”
6.20. It is submitted by Sri Sidhartha Ray, learned Senior
Advocate that by virtue of the Central Verification
Scheme, 2019 vide Ministry of Finance (Department of
Revenue), Central Board of Direct Taxes in Notification
bearing No.5/2019/F. No.370142/22/2017-TPL (SO
550(E), dated 30.01.2019 promulgated mechanism for
―issue and service of notice‖ in exercise of power
conferred under Section 133C of the IT Act. Thus, he
submitted that the manner prescribed under Section
282 as it existed prior to 2019 having not been adhered
to, mere making statement in the Assessment Order that
Notice under Section 148 was ―issued‖,
contradistinguished with the word ―served‖, would not
clothe the Assessing Officer to exercise the power and
proceed with the assessment under Section 147 read
with Section 144. It is canvassed before this Court by
the learned Senior Advocate that service of notice by way
of electronic mode could only be permissible in the year
2019 and thereafter, but prior thereto as the
WP(C) No.23165 of 2025 Page 35 of 85
Department has to serve the notice by way of Registered
Post to the address of the assessee. Such stance is
fallacious, inasmuch as the documents enclosed with
the written instruction placed by the Junior Standing
Counsel does not reveal the fact of communication of
notices by using electronic mode. Even otherwise much
indication is available in Section 282 of the IT Act for the
purpose of service of notice taking shelter of the
provisions of the Information Technology Act, 2000. This
Court, therefore, does not accede to the contentions
advanced in this regard by the learned Senior Advocate.
6.21. Nonetheless, cumulative reading of zimni orders of the
proceeding and the statutory provisions as referred to
above would unequivocally lead to suggest that the
Assessing Officer was required to serve on the petitioner
statutory Notice under Section 148. Perusal of written
instruction of the Department as furnished by the
Junior Standing Counsel does ex facie indicate that
though Notice under Section 142 was sent by Speed Post
on 23.10.2017 and 14.11.2017, the mode of despatch of
the statutory Notice under Section 148 has not been
mentioned and the same could not be clarified by the
learned Junior Standing Counsel. It would not suffice by
merely stating in the Assessment Order dated
14.11.2017 (Annexure-5) that the Notice under Section
148 ―was issued to the assessee‖ without demonstrating
WP(C) No.23165 of 2025 Page 36 of 85
whether factually it was ―served‖ on the petitioner. In
order to comprehend that the petitioner has been served
with the Notice as required under Section 148, it is
necessary to understand the meaning of ―issue of notice‖
vis-a-vis ―service of notice‖.
6.22. In R.K. Upadhyaya Vrs. Shanabhai P. Patel, (1987) 3 SCC
96 the Hon’ble Supreme Court of India brought out clear
distinction between the two expressions, viz., ―issue of
notice‖ and ―service of notice‖ with the following
observations:
“2. The High Court has quashed the notice by accepting
the assessee‟s contention that the action of the
Income Tax Officer was barred by limitation
prescribed by the Act. There is no dispute that the
notice in this case under Section 147(b) of the Act
was issued by registered post on March 31, 1970,
and was received by the assessee on April 3, 1970.
To the facts of the case, Section 147(b) of the Act
applies. The two relevant provisions are in Sections
148 and 149 of the Act which provide:
„148.
(1) Before making the assessment, reassessment
or recomputation under Section 147, the
Income Tax Officer shall serve on the assessee
a notice containing all or any of the
requirements which may be included in a
notice under sub-section (2) of Section 139; and
the provisions of this Act shall, so far as mayWP(C) No.23165 of 2025 Page 37 of 85
be, apply accordingly as if the notice were a
notice issued under that sub-section.
(2) ***
149.
(1) No notice under Section 148 shall be issued,
(a) ***
(b) in cases falling under clause (b) of Section 147,
at any time after the expiry of four years from
the end of the relevant assessment year.
(2) The provisions of sub-section (1) as to the issue
of notice shall be subject to the provisions of
Section 151.‟
The High Court relied upon the decision of this Court
in the case of Banarsi Debi Vrs. ITO, AIR 1964 SC
1742 = (1964) 7 SCR 539 where the validity of a
notice under Section 34(1) of the Income Tax Act,
1922 and the scope of Section 4 of the Income Tax
(Amendment) Act of 1959 by which sub-section (4)
was introduced into Section 34 were considered. The
Court indicated, keeping the provisions of Section 34
in view, that there was really no distinction between
“issue” and “service of notice”. Section 34, sub-
section (1) as far as relevant provided thus:
“34.
(1) If--
(a) ***
(b) *** he may in cases falling under clause (a) at
any time within 8 years and in cases falling
WP(C) No.23165 of 2025 Page 38 of 85
under clause (&) at any time within four years
of the end of that year, serve on the assessee,
… and may proceed to assess or reassess such
income. …
Section 34 conferred jurisdiction on the Income Tax
Officer to reopen an assessment subject to service of
notice within the prescribed period. Therefore,
service of notice within limitation was the
foundations of jurisdiction. The same view has been
taken by this Court in J.P. Janni, ITO Vrs.
Induprasad D. Bhatt, AIR 1964 SC 1742 = (1964) 7
SCR 539 as also in CIT Vrs. Robert J. Sas, AIR 1964
SC 1742 = (1964) 7 SCR 539. The High Court in our
opinion went wrong in relying upon the ratio of
Banarsi Debi Vrs. ITO, AIR 1964 SC 1742 = (1964) 7
SCR 539 in disposing of the case in hand. 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.
WP(C) No.23165 of 2025 Page 39 of 85
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 in the Income Tax
Officer to deal with the matter but it is a
condition precedent to 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 Vrs. ITO, AIR
1964 SC 1742 = (1964) 7 SCR 539. As the Income
Tax Officer had issued notice within
limitations, 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. Since there has been no
appearance on behalf of the respondents, we make
no orders for costs.”
6.23. In CIT Vrs. Major Tikka Khushwant Singh, (1995) 212 ITR
650 (SC) it has been observed as follows:
“1. The point of law involved for decision in this appeal
is already settled by the decision of this Court in
R.K. Upadhyaya Vrs. Shanabhai P. Patel, (1987) 3
SCC 96 = (1987) 166 ITR 163 (SC), in which it has
been held that the issuance of a notice within the
period of limitation gives jurisdiction to the Income
Tax Officer to proceed to make the reassessment.
2. A copy of the impugned order [Tikka Khushwant
Singh Vrs. CIT, (1975) 101 ITR 106 (P&H)] made byWP(C) No.23165 of 2025 Page 40 of 85
the High Court in the writ petition filed by the
respondent has not been produced by the appellant.
However, from the statement contained in the
special leave petition, it appears that the High
Court directed the Appellate Assistant
Commissioner to decide the assessee’s appeal
in accordance with law and in doing so to also
ascertain when the notice under Section 148 of
the Income Tax Act, 1961, had been dispatched
by registered post. There is thus no occasion to
interfere with the order made by the High
Court.”
6.24. In Commissioner of Income Tax Vrs. Vision Inc., 2012 SCC
OnLine Del 3081 it has been observed as follows:
“19. The above observations were approvingly cited by
the Supreme Court in CIT Vrs. Jai Prakash Singh,
(1996) 219 ITR 737. In addition, the Supreme Court
also noticed its observations made earlier in Estate
of Late Rangalal Jajodia Vrs. CIT, (1971) 79 ITR 505
which are as under:
„The lack of a notice does not amount to the revenue
authority having had no jurisdiction to assess, but
that the assessment was defective by reason of
notice not having been given to her. An assessment
proceeding does not cease to be a proceeding under
the Act merely by reason of want of notice. It will be
a proceeding liable to be challenged and corrected.‟
20. Noticing the aforesaid two judgments, the Supreme
Court in Jai Prakash Singh‟s case (supra) held as
under:
WP(C) No.23165 of 2025 Page 41 of 85
„The principle that emerges from the above decision
is that an omission to serve or any defect in the
service of notices provided by procedural provisions
does not efface or erase the liability to pay tax
where such liability is created by distinct
substantive provisions [charging sections]. Any such
omission of defect may render the order made
irregular-depending upon the nature of the provision
not complied with-but certainly not void or illegal.‟
21. The observations made in the judgments of the
Federal Court (supra) [Chatturam Vrs. CIT, (1947) 15
ITR 302] and the Supreme Court in the two
judgments cited above are to be understood as
reminders that whenever a case is set up by the
assessee that there has been no valid or proper
service of the notice issued under Section 143(2) of
the Act, be it for the purpose of regular assessment
under Section 143(3) of the Act or for the purpose of
a block assessment under Chapter XIV-B or for the
purpose of an assessment under Section 153A, such
a plea has to be examined thoroughly and in-depth
by taking a practical and reasonable view of the
matter, not inconsistent with the statutory
provisions, keeping in mind the basic principle that
the liability to pay tax, which is founded on the
charging provisions of the statute, is not to be
nullified on specious or unjustified pleas taken by
the assessee.”
6.25. In Chatturam Vrs. CIT, (1947) 15 ITR 302 = 1947 SCC
OnLine FC 9 = AIR 1947 FC 32 it was laid down as
follows:
WP(C) No.23165 of 2025 Page 42 of 85
“It was next contended that in the present case notices
under Section 22(1) and (2) of the Income-tax Act (1922)
were already issued before the Notification of 26th May,
1940. The notices were the foundation of the jurisdiction
of the Income-tax Officer. At that time the Finance Act of
1940 was not operative in the area in question and the
Governor, by his Notification, cannot give jurisdiction to
the Income-tax Officer in respect of his ultra vires notices.
This contention is founded on a misunderstanding of the
jurisdiction of the Income-tax Officer and the operation of
the Income-tax Act. The income-tax assessment
proceedings commence with the issue of a notice. The
issue or receipt of a notice is not, however, the foundation
of the jurisdiction of the Income-tax Officer to make the
assessment or of the liability of the assessees to pay the
tax. It may be urged that the issue and service of a notice
under Section 22(1) or (2) may affect the liability under the
penal clauses which provide for failure to act as required
by the notice. The jurisdiction to assess and the liability to
pay the tax, however, are not conditional on the validity of
the notice. Suppose a person, even before a notice is
published in the papers under Section 22(1), or before he
receives a notice under Section 22(2) of the Income-tax
Act, gets a form of return from the Income-tax Office and
submits his return, it will be futile to contend that the
Income-tax Officer is not entitled to assess the party or
that the party is not liable to pay any tax because a notice
had not been issued to him. The liability to pay the tax is
founded on Sections 3 and 4 of the Income-tax Act, which
are the charging sections. Section 22 etc., are the
machinery sections to determine the amount of tax.
Lord Dunedin in Whitney Vrs. Commissioners of Inland
Revenue, (1926) A.C. 37 = 10 Tax Cas. 88 stated as
follows:
WP(C) No.23165 of 2025 Page 43 of 85
„Now, there are three stages in the imposition of a tax.
There is the declaration of liability, that is the part of the
statute which determines what persons in respect of what
property are liable. Next, there is the assessment. Liability
does not depend on assessment, that ex hypothesi has
already been fixed. But assessment particularizes the
exact sum which a person liable has to pay. Lastly, come
the methods of recovery if the person taxed does not
voluntarily pay.‟In W.H. Cockerline & Co. Vrs. Commissioners of Inland
Revenue, (1930) 16 Tax Cas. 1, at p. 19 [Not reported],
Lord Hanworth, M.R., after accepting the passage from
Lord Dunedin‟s judgment quoted above, observed as
follows:
„Lord Dunedin, speaking, of course, with accuracy as to
these taxes, was not unmindful of the fact that it is the
duty of the subject to whom a notice is given to render a
return in order to enable the Crown to make an
assessment upon him; but the charge is made in
consequence of the Act, upon the subject; the assessment
is only for the purpose of quantifying it.‟He quoted with approval the following passage from the
judgment of Sargant, L.J., in the case of Williams:
„I cannot see that the non-assessment prevents the
incidence of the liability, though the amount of the
deduction is not ascertained until assessment. The
liability is imposed by the charging section, namely,
Section 38 (of the English Act) the words of which are
clear. The subsequent provisions as to assessment and so
on are machinery only. They enable the liability to be
quantified, and when quantified to be enforced against
the subject, but the liability is definitely and finallyWP(C) No.23165 of 2025 Page 44 of 85
created by the charging section and all the materials for
ascertaining it are available immediately.‟In Attorney-General Vrs. Aramayo and Others, (1925) 9
Tax Cas. 445, it was held by the whole Court that there
may be a waiver as to the machinery of taxation which
inures against the subject.
In India these well-considered pronouncements are
accepted without reservation as laying down the true
principles of taxation under the Income-tax Act. This
contention of the appellants therefore fails.”
6.26. It may be pertinent to have regard to CST Vrs. Subhash
& Co., (2003) 3 SCC 454, wherein it has been observed
as follows:
“12. Whether service of notice is valid or not is
essentially a question of fact. In the instant case,
learned Single Judge found that certain procedures
were not followed while effecting service by
affixture. There was no finding recorded that such
service was non est in the eye of the law. In a given
case, if the assessee knows about the
proceedings and there is some irregularity in
the service of notice, the direction for
continuing proceedings cannot be faulted. It
would depend upon the nature of irregularity and its
effect and the question of prejudice which are to be
adjudicated in each case on the basis of surrounding
facts. If, however, the service of notice is treated as
non est in the eye of the law, it would not be
permissible to direct de novo assessment without
considering the question of limitation. There also the
question of prejudice has to be considered.
WP(C) No.23165 of 2025 Page 45 of 85
***
15. The term “notice” originated from the Latin word
“notifia” which means “a being known” or a knowing
and is wide enough in legal circle to include a plaint
filed in a suit. “Notice” has been defined in various
judicial dictionaries and dictionaries as follows:
The Judicial Dictionary, Words and Phrases
Judicially Interpreted, 2nd Edn., by F. Stroud (p.
1299)„Notice is a direct and definite statement of a thing,
as distinguished from supplying materials from
which the existence of such thing may be inferred.‟Webster‟s Universal College Dictionary, 1997 Edn.,
(p. 543)„Information, warning or announcement of something
impending; notification; to give notice of one’s
intentions; a written or printed statement conveying
such information or warning; as for renting or
employment, that the agreement will terminate on a
specified date — „She gave her employer two weeks‟
notice.‟ ‟Oxford Concise Dictionary
„an intimation; intelligence, warning” and has the
meaning in the expression like “give notice”, “have
notice” or “formal intimation of something or
instruction to do something” and has the expression
like “notice to quit”, “till further notice”.‟Chamber‟s 20th Century Dictionary, 1993 (p. 1154)
WP(C) No.23165 of 2025 Page 46 of 85
„intimation; announcement; information; warning; a
writing, placard etc. conveying an intimation or
warning; time allowed for preparation, etc.‟Chamber‟s Dictionary vide Allied Chambers (India)
Ltd., Reprint 1994, 1995 (p. 1154)„intimation; announcement; a formal announcement
made by one of the parties to a contract of his or her
intention to terminate that contract; information,
especially about a future event; warning; a writing;
placard, board etc. conveying an intimation or
warning; time allowed for preparation; cognizance;
observation; heed; mention; a dramatic or artistic
review; civility or respectful treatment; a notion etc.‟
Law Lexicon Dictionary– A Legal Dictionary of Legal
Terms and Phrases Judicially Defined, 4th Edn., Vol.
II, 1989 (p. 226)
„A person is said to have notice of a fact, when he
actually knows that fact, or when, but for wilful
abstention from an enquiry or search which he ought
to have made, or gross negligence, he would have
known it.‟
The Law Lexicon Dictionary, 2nd Edn., 1997 (p.
1322)
(1) Intimation; a writing; placard, board etc.
conveying an intimation or warning [Section
154 IPC and Article 61(2)(a), Constitution of
India];
(2) Knowledge or cognizance (Section 56, Indian
Evidence Act).‟
WP(C) No.23165 of 2025 Page 47 of 85
16. “Notice”, in its legal sense, may be defined as
information concerning a fact actually communicated
to a party by an authorised person, or actually
derived by him from a proper source, or else
presumed by law to have been acquired by him,
which information is regarded as equivalent to
knowledge in its legal consequences. Dictionary
further states : Co Lit 309 Tomlin’s Law Dictionary.
17. Notice is making something known, of what a man
was or might be ignorant of before. And it produces
diverse effects, for, by it, the party who gives the
same shall have the same benefit, which otherwise
he should not have had; the party to whom the
notice is given is made subject to some action or
charge, that otherwise he had not been liable to; and
his estate in danger of prejudice.
18. “Notice is a direct and definite statement of a thing
as distinguished from supplying materials from
which the existence of such thing may be inferred.”
(Per Parke, B. Burgh Vrs. Legge, (1839) 5 M&W 418 :
8 LJ Ex 258 : 151 ER 177)
19. The dictionary gives some other definitions of
“notice” as:
— The legal instrumentality by which knowledge
is conveyed, or by which one is charged with
knowledge.
— The term “notice” in its full legal sense
embraces a knowledge of circumstances that
ought to induce suspicion or belief, as well as
direct information of that fact.
WP(C) No.23165 of 2025 Page 48 of 85
— In its popular sense “notice” is equivalent to
information intelligence, or knowledge.
20. In Anandji Haridas and Co. (P) Ltd. Vrs. S.P.
Kasture, AIR 1968 SC 565 it was observed as
follows:
„23. We are unable to accept the contention of Mr
Gokhale that a notice under Section 11(4)(a) or
11-A(1) is a condition precedent for initiating
proceedings under those provisions or that it is
the very foundation for the proceedings to be
taken under those provisions. The notice
contemplated under Rule 32 is not similar to a
notice to be issued under Section 34(1)(b) of the
Income Tax Act, 1922. All that Sections 11(4)
and 11-A(1) prescribe is that before taking
proceedings against an assessee under those
provisions, he should be given a reasonable
opportunity of being heard. In fact, those
sections do not speak of any notice. But Rule
32 prescribes the manner in which the
reasonable opportunity contemplated by those
provisions should be afforded to the assessee.
The period of 30 days prescribed in Rule 32 is
not mandatory. The rule itself says that
„ordinarily‟ not less than 30 days‟ notice
should be given. Therefore, the only question to
be decided is whether the defects noticed in
those notices had prejudiced the appellants. It
may be noted that when the assessees
received the notices in question, they appeared
before the assessing authority, but they did not
object to the validity of those notices. They
asked for time for submitting their explanation.
WP(C) No.23165 of 2025 Page 49 of 85
The time asked for was given. Therefore, the
fact that only nine days were given to them for
submitting explanation could not have in any
manner prejudiced them. So far as the mistake
in the notice as regards the assessment year is
concerned, the assessees kept silent about that
circumstance till 1958. It was only when they
were sure that the period of limitation
prescribed by Section 11-A had expired, they
brought that fact to the notice of the assessing
authority. It is clear that the appellants were
merely trying to take advantage of the
mistakes that had crept into the notices. They
cannot be permitted to do so. We fail to see
why those notices are not valid in respect of
the periods commencing from 01.02.1953 till
31.10.1955. We are unable to agree with Mr
Gokhale’s contention that each one of those
notices should be read separately and that we
should not consider them together. If those
notices are read together as we think they
should be, then it is clear that those notices
give the appellants the reasonable opportunity
contemplated by Sections 11(4)(a) and 11-A(1).
In Chatturam Vrs. CIT, (1947) 15 ITR 302 =
AIR 1947 FC 32 the Federal Court held
that any irregularity in issuing a notice
under Section 22 of the Income Tax Act,
1922 does not vitiate the proceeding; that
the income tax assessment proceedings
commence with the issue of the notice but
the issue or receipt of the notice is,
however, not the foundation of the
jurisdiction of the Income Tax Officer to
make the assessment or of the liability of
WP(C) No.23165 of 2025 Page 50 of 85
the assessee to pay the tax. The liability
to pay the tax is founded on Sections 3
and 4 of the Income Tax Act which are the
charging sections. Section 22 and others are
the machinery sections to determine the
amount of tax. The ratio of that decision applies
to the facts of the present case. In our opinion,
the notices issued in the year 1955 are valid
notices so far as they relate to the period
commencing from 01.02.1953 to 31.10.1955.”
21. Whenever an order is struck down as invalid
being violative of principles of natural justice,
there is no final decision of the case and,
therefore, proceedings are left open. All that is
done is that the order assailed by virtue of its
inherent defect is vacated but the proceedings are
not terminated. [See Guduthur Bros. Vrs. ITO, (1960)
40 ITR 298 = AIR 1960 SC 1326 and Supdt. (Tech. I),
Central Excise Vrs. Pratap Rai, (1978) 3 SCC 113.]
In CST Vrs. R.P. Dixit Saghidar, (2001) 9 SCC 324 it
was held as follows:
„5. We are unable to subscribe to the view of the
High Court. The aforementioned passage
quoted from the Tribunal‟s order shows that
the Tribunal was of the view that once the
order is quashed by the Assistant
Commissioner, he could not in law remand the
case for a decision afresh. As has been noted,
before the Assistant Commissioner the counsel
for the respondent had contended that the ex
parte order should have been set aside
because no notice had been received. When
principles of natural justice are stated to
WP(C) No.23165 of 2025 Page 51 of 85
have been violated it is open to the
Appellate Authority, in appropriate cases,
to set aside the order and require the
assessing officer to decide the cases de
novo. This is precisely what was directed by
the Assistant Commissioner and the Tribunal,
in our opinion, was clearly in error in taking a
contrary view.‟This view is clearly applicable to the facts of the
present case.
22. The emerging principles are:
(i) Non-issue of notice or mistake in the issue of
notice or defective service of notice does not
affect the jurisdiction of the assessing officer, if
otherwise reasonable opportunity of being
heard has been given.
(ii) Issue of notice as prescribed in the Rules
constitutes a part of reasonable opportunity of
being heard.
(iii) If prejudice has been caused by non-issue or
invalid service of notice the proceeding would
be vitiated. But irregular service of notice
would not render the proceedings invalid; more
so, if the assessee by his conduct has rendered
service impracticable or impossible.
(iv) In a given case when the principles of natural
justice are stated to have been violated it is
open to the Appellate Authority in appropriate
cases to set aside the order and require the
assessing officer to decide the case de novo.”
WP(C) No.23165 of 2025 Page 52 of 85
6.27. In Commercial Tax Officer Vrs. Neeraja Pipes Pvt. Ltd.,
2023 SCC OnLine SC 267 it has been said as follows:
“18. In Sri Budhia Swain Vrs. Gopinath Deb, (1999) 2
SCR 1189 similarly, the court observed as follows:
„As already noted the appellants sought for review
or recall of the order from the O.E.A. Collector solely
by alleging that the notice which was required to be
published in the locality before settling the land in
favour of the respondent No. 1 was not served in
accordance with the manner prescribed by law. The
appellants did not plead „non-service of the notice‟
but raised objection only with regard to „the manner
of service of the notice‟. The High court had called for
and perused the record of the O.E.A. Collector and
noted that the notice was issued on 15.12.1963
inviting public objection. The notice was available on
record but some of its pages were missing. The
O.E.A. Collector had noted in his order dated
23.2.1966 as under:
„It is only due to missing of some pages of the
proclamation- including the last page over which the
report of the process server was there, a scope was
available to the objectors to file this petition. Under
the above circumstances, it is not necessary to issue
another proclamation and entertain further objection
since the case is being heard and going to be
finalised on 14.03.1966.‟The O.E.A. Collector was satisfied of the notice
having been published. Assuming that the notice
was not published in the manner contemplated
by law, it will at best be a case of irregularityWP(C) No.23165 of 2025 Page 53 of 85
in the proceedings but certainly not a fact
striking at the very jurisdiction of the
authority passing the order. The Appellate
Authority, i.e., the ADM has in his order noted two
other contentions raised by the appellants, viz., (i)
the application for settlement by the respondent No.
1 was not filed within the prescribed time, and (2)
the application should have been treated as an
application for lease and should not have been
treated as a claim case. None of the two pleas was
raised by the appellants in their pleadings. None of
the two was urged before O.E.A. Collector. Therefore,
there was no occasion to consider those pleas. Still
we may make it clear that none of the two pleas
could have been a ground for recalling the order
which was otherwise within the jurisdiction
conferred on the O.E.A. Collector…‟
19. In the present case, arguendo if the assessee was
unaware, in the first instance regarding the issuance
of assessment orders against it, at least when the
revenue filed a writ petition (W.P. No. 25943/2011)
complaining about Canara Bank’s proposal to
auction the assessee‟s properties, it had impleaded
the assessee too. In the pleadings, there was a
specific mention about the assessment orders, them
having become final, and why those demands had
to be given primacy as revenue dues, over and
above the bank‟s dues. The assessee was served in
those writ proceedings; however, it did not dispute
the revenue‟s contention. This, in the opinion of the
court is a telling aspect, as it highlights the
assessee‟s conduct in deliberately choosing to keep
quiet, even when it could have raised a grievance.”
WP(C) No.23165 of 2025 Page 54 of 85
6.28. Sri Sidhartha Ray, learned Senior Advocate in order to
buttress his submission that non-service of notice would
vitiate the assessment proceeding as the exercise of
power would be without jurisdiction relied on Muralidhar
Gopikishan (P) Ltd. Vrs. State of Odisha, (1999) 116 STC
308 (Ori) = 1990 SCC OnLine Ori 399. Said decision was
rendered in the setting of provisions contained in Rule
12(2) of the Central Sales Tax (Odisha) Rules, 1957 read
with Rule 84 of the Odisha Sales Tax Rules, 1947. Since
factual scenario in the instant case and the provisions of
statute are distinguishable, ratio of said judgment has
no application; this is particularly so, in view
subsequent decisions of Hon’ble Supreme Court of India
referred to above.
6.29. In the present case, as it reveals from the written
instructions provided to the Junior Standing Counsel by
the Department that Notice under Section 148 of the IT
Act was issued on 29.03.2017 and despatched on
29.03.2012 vide Serial No.11536 maintained in the
Despatch Register. Such fact remained uncontroverted
by the learned Senior Advocate who was served with a
copy such written instruction during the course of
hearing. It is further noticed from the said written
instructions that Notice dated 14.06.2017 under Section
142(1) was despatched vide Serial No.2065 of Despatch
Register and further Notice dated 23.10.2017 underWP(C) No.23165 of 2025 Page 55 of 85
Section 142(1) was also despatched by Speed Post vide
Serial No.8319 of Despatch Register. The impugned
Assessment Order (Annexure-5) and the Demand Notice
(Annexure-5A) were sent by Speed Post vide Serial
No.9337 of Despatch Register. No rebuttal is placed by
the petitioner to show that such notices and assessment
order were not sent by Speed Post. A presumption under
Section 27 of the General Clauses Act, 18971 is available
in favour of the opposite parties with regard to
sufficiency of the service of notice inasmuch as it has
been proved that the opposite party had sent the notice
by Registered Post in the address of the petitioner and
the same did not return. See, Suman Chatterjee Vrs. Lina
Roy Tappadar, 2016 (I) OLR 254.
6.30. Burden is cast on the assessee to demonstrate that
Notice dated 23.10.2017 under Section 142(1)
despatched by Speed Post vide Serial No.8319 of
Despatch Register was not served. As said notice is
presumed to have been served, the proceeding for
reassessment under Section 148 can also be said to be
within his knowledge. At this juncture reference to Order1 Section 27 of the General Clauses Act, 1897 stands as follows:
“27. Meaning of service by post.–
Where any Central Act or Regulation made after the commencement of this
Act authorizes or requires any document to be served by post, whether the
expression “serve” or either of the expressions “give” or “send” or any
other expression is used, then, unless a different intention appears, the
service shall be deemed to be effected by properly addressing, pre-paying
and posting by registered post, a letter containing the document, and,
unless the contrary is proved, to have been effected at the time at which
the letter would be delivered in the ordinary course of post.”
WP(C) No.23165 of 2025 Page 56 of 85
V, Rule 9 of the Code of Civil Procedure, 1908 may not
be inept:
“9. Delivery of summons by Court.–
(1) Where the defendant resides within the jurisdiction
of the Court in which the suit is instituted, or has an
agent resident within that jurisdiction who is
empowered to accept the service of the summons,
the summons shall, unless the Court otherwise
directs, be delivered or sent either to the proper
officer to be served by him or one of his subordinates
or to such courier services as are approved by the
Court.
(2) The proper officer may be an officer of a Court other
than that in which the suit is instituted, and, where
he is such an officer, the summons may be sent to
him in such manner as the Court may direct.
(3) The services of summons may be made by
delivering or transmitting a copy thereof by
registered post acknowledgment due, addressed to
the defendant or his agent empowered to accept the
service or by speed post or by such courier services
as are approved by the High Court or by the Court
referred to in sub-rule (1) or by any other means of
transmission of documents (including fax message
or electronic mail service) provided by the rules
made by the High Court:
Provided that the service of summons under this
sub-rule shall be made at the expenses of the
plaintiff.
WP(C) No.23165 of 2025 Page 57 of 85
(4) Notwithstanding anything contained in sub-rule (1),
where a defendant resides outside the jurisdiction of
the Court in which the suit is instituted, and the
Court directs that the service of summons on that
defendant may be made by such mode of service of
summons as is referred to in sub-rule (3) (except by
registered post acknowledgment due), the provisions
of Rule 21 shall not apply.
(5) When an acknowledgment or any other receipt
purporting to be signed by the defendant or his
agent is received by the Court or postal article
containing the summons is received back by the
Court with an endorsement purporting to have been
made by a postal employee or by any person
authorised by the courier service to the effect that
the defendant or his agent had refused to take
delivery of the postal article containing the summons
or had refused to accept the summons by any other
means specified in sub-rule (3) when tendered or
transmitted to him, the Court issuing the summons
shall declare that the summons had been duly
served on the defendant:
Provided that where the summons was properly
addressed, pre-paid and duly sent by registered
post acknowledgment due, the declaration
referred to in this sub-rule shall be made
notwithstanding the fact that the
acknowledgment having been lost or mislaid,
or for any other reason, has not been received
by the Court within thirty days from the date
of issue of summons.
WP(C) No.23165 of 2025 Page 58 of 85
(6) The High Court or the District Judge, as the case
may be, shall prepare a panel of courier agencies for
the purposes of sub-rule (1).”
6.31. On 29.03.2017 the Assessing Authority has recorded
satisfaction as to ―reason to believe‖ to initiate
proceeding for assessment under Section 147 by issue of
notice under Section 148.
6.32. Zimni orders maintained in the proceedings would show
that steps are being taken at the end of the Assessing
Officer for ensuring presence of the assessee. It is not
denied by the learned Senior Advocate that the
Assessing Officer had issued Notice under Section 148 of
the IT Act within period stipulated in the statute and
passed the Assessment Order within the period of
limitation. Only contention of the petitioner as reflected
in the writ petition was neither notice under Section 148
nor the Assessment Order under Section 147 was ever
served.
6.33. In order to perceive the veracity of such contention,
minute reading of pleading of writ petition would reveal
that it had the knowledge of Assessment Order prior to
initiation of proceeding for attachment. In paragraph 3.4
of the writ petition it has been candidly stated thus:
“That the Assessing Officer subsequently initiated the
penalty proceeding by issuing a show cause on the
petitioner and the petitioner appeared in the penaltyWP(C) No.23165 of 2025 Page 59 of 85
proceeding and the Assessing Officer passed an
order levying penalty under Section 271-C of the IT
Act on 13.04.2018. However the petitioner was never
served any notice in the reassessment proceeding
initiated under Section 147 of the IT Act for the
assessment year 2012-13.”
6.34. In 2018 itself as it appears from the above narration of
fact, the petitioner had the knowledge about Assessment
Order being passed. It can safely be said that it is not a
case of time-barred assessment; nevertheless, it is a case
of non-service of statutory notice on the petitioner. The
documents furnished by the learned Junior Standing
Counsel reveals that the statutory notice was issued as
per the entry reflected in the Despatch Register. To
support such observation reference to Section 149 of the
IT Act would be relevant. A glance at sub-section (1) of
Section 149 would indicate that the limitation would
commence and/or be computed by taking into account
―issue‖ (but not, ―service‖) of notice under Section 148.
The period under assessment is assessment year 2012-
13. End of the relevant assessment year is 31.03.2013.
The income chargeable to tax which has escaped
assessment in the present case is more than one lakh
rupees for that year. The notice under Section 148 of the
IT Act was issued on 29.03.2017. Thus, the initiation of
proceeding for assessment under Section 147 is within
six years as stipulated under clause (b) of sub-section (1)
of Section 149.
WP(C) No.23165 of 2025 Page 60 of 85
6.35. In view of the proposition of law as exposited by different
Courts including the Hon’ble Supreme Court of India as
referred to supra it cannot be gainsaid that being not
able to place evidence as to the service of notice under
Section 148 of the IT Act, the impugned assessment
proceeding is not vitiated. It is significant to note that
the words ―shall be issued‖ have been employed in
Section 149(1) of the IT Act. In this context for the
purpose of proceeding with assessment as it is
requirement under Section 148 of the IT Act that the
assessee ―shall be served‖ with a notice before making
assessment, it is prudent to set aside the Assessment
Order along with the Demand Notice vide Annexure-5
and Annexure-5A in order to give chance to the
petitioner to have his say with respect to reason for the
assessment.
7. It may be of relevance to have clear idea about the
―jurisdiction‖ so that a decision can be taken on the
question whether by issue of notice under Section 148 of
the IT Act on 29.03.2017 the Assessing Officer did not
lose jurisdiction to assess, notwithstanding the claim of
the petitioner that the assessee was not served with
such notice in view of explicit provisions contained in
Section 149 of the IT Act specifically providing for ―issue‖
of notice under Section 148.
WP(C) No.23165 of 2025 Page 61 of 85
7.1. This Court derives the connotation of ―jurisdiction‖ as
lucidly explained in the case of Foreshore Co-operative
Housing Society Limited Vrs. Praveen D. Desai, (2015) 5
SCR 1075 in the following terms:
“41. The term „jurisdiction‟ is a term of art; it is an
expression used in a variety of senses and draws
colour from its context. Therefore, to confine the term
„jurisdiction‟ to its conventional and narrow meaning
would be contrary to the well settled interpretation
of the term. The expression „jurisdiction‟, as stated in
Halsbury‟s Laws of England, Volume 10, paragraph
314, is as follows:
„314. Meaning of ‘jurisdiction’: By ‘jurisdiction’ is
meant the authority which a court has to
decide matters that are litigated before it or to
take cognisance of matters presented in a
formal way for its decision. The limits of this
authority are imposed by the statute, charter or
commission under which the court is
constituted, and may be extended or restricted
by similar means. If no restriction or limit is
imposed the jurisdiction is said to be unlimited.
A limitation may be either as to the kind and
nature of the claims and matters of which the
particular court has cognisance, or as to the
area over which the jurisdiction extends, or it
may partake of both these characteristics.‟
42. In American Jurisprudence, Volume 32A, paragraph
581, it is said that,„Jurisdiction is the authority to decide a given case
one way or the other. Without jurisdiction, a court
WP(C) No.23165 of 2025 Page 62 of 85
cannot proceed at all in any case; jurisdiction is the
power to declare law, and when it ceases to exist,
the only function remaining to a court is that of
announcing the fact and dismissing the cause.”
Further, in paragraph 588, it is said that lack of
jurisdiction cannot be waived, consented to, or
overcome by agreement of the parties.
43. It is well settled that essentially the jurisdiction is an
authority to decide a given case one way or the
other. Further, even though no party has raised
objection with regard to jurisdiction of the court, the
court has power to determine its own jurisdiction. In
other words, in a case where the Court has no
jurisdiction; it cannot confer upon it by consent or
waiver of the parties.
44. Section 3 of the Limitation Act, 1963 clearly provides
that every suit instituted, appeal preferred and
application made after the prescribed period of
limitation, subject to the provisions contained in
Sections 4 to 24, shall be dismissed although the
limitation has not been set up as a defence.
45. A Constitution Bench of five Judges of this Court in
the case of Pandurang Dhondi Chougule Vrs. Maruti
Hari Jadhav, 1966 SC 153, while dealing with the
question of jurisdiction, observed that a plea of
limitation or plea of res judicata is a plea of law
which concerns the jurisdiction of the court which
tries the proceeding. The Bench held:
„10. The provisions of Section 115 of the Code have
been examined by judicial decisions on several
occasions. While exercising its jurisdiction
under Section 115, it is not competent to theWP(C) No.23165 of 2025 Page 63 of 85
High Court to correct errors of fact however
gross they may, or even errors of law, unless
the said errors have relation to the jurisdiction
of the court to try the dispute itself. As clauses
(a), (b) and (e) of Section 115 indicate, it is only
in cases where the subordinate court has
exercised a jurisdiction not vested in it by law,
or has failed to exercise a jurisdiction so
vested, or has acted in the exercise of its
jurisdiction illegally or with material
irregularity that the revisional jurisdiction of
the High Court can be properly invoked. It is
conceivable that points of law may arise in
proceedings instituted before subordinate
courts which are related to questions of
jurisdiction. It is well settled that a plea of
limitation or a plea of res judicata is a plea of
law which concerns the jurisdiction of the court
which tries the proceedings. A finding on these
pleas in favour of the party raising them would
oust the jurisdiction of the court, and so, an
erroneous decision on these pleas can be said
to be concerned with questions of jurisdiction
which fall within the purview of Section 115 of
the Code. But an erroneous decision on a
question of law reached by the subordinate
court which has no relation to questions of
jurisdiction of that court, cannot be corrected by
the High Court under Section 115.‟
46. In the case of Manick Chandra Nandy Vrs. Debdas
Nandy, (1986) 1 SCC 512, this Court, while
considering the nature and scope of High Court‟s
revisional jurisdiction in a case where a plea was
raised that the application under Order IX Rule 13
WP(C) No.23165 of 2025 Page 64 of 85
was barred by limitation, held that a plea of
limitation concerns the jurisdiction of the court which
tries a proceeding for a finding on this plea in favour
of the party raising it would oust the jurisdiction of
the court. In the case of National Thermal Power
Corpn. Ltd. Vrs. Siemens Atkeingesellschaft, (2007)
4 SCC 451, this Court considering the similar
question under the Arbitration and Conciliation Act
held as under:
„17. In the larger sense, any refusal to go into the
merits of a claim may be in the realm of
jurisdiction. Even the dismissal of the claim as
barred by limitation may in a sense touch on
the jurisdiction of the court or tribunal. When a
claim is dismissed on the ground of it being
barred by limitation, it will be, in a sense, a
case of the court or tribunal refusing to exercise
jurisdiction to go into the merits of the claim. In
Pandurang Dhoni Chougule Vrs. Maruti Hari
Jadhav this Court observed that: (AIR p. 155,
para 10)„It is well settled that a plea of limitation or a
plea of res judicata is a plea of law which
concerns the jurisdiction of the court which
tries the proceedings. A finding on these pleas
in favour of the party raising them would oust
the jurisdiction of the court, and so, an
erroneous decision on these pleas can be said
to be concerned with questions of jurisdiction
which fall within the purview of Section 115 of
the Code.‟
47. In the case of Official Trustee Vrs. Sachindra Nath
Chatterjee, AIR 1969 SC 823, a three Judges Bench
WP(C) No.23165 of 2025 Page 65 of 85
of this Court while deciding the question of
jurisdiction of the Court under the Trust Act
observed:
„15. From the above discussion it is clear that
before a Court can be held to have jurisdiction
to decide a particular matter it must not only
have jurisdiction to try the suit brought but
must also have the authority to pass the orders
sought for. It is not sufficient that it has some
jurisdiction in relation to the subject-matter of
the suit. Its jurisdiction must include the power
to hear and decide the questions at issue, the
authority to hear and decide the particular
controversy that has arisen between the
parties.‟
48. In the case of ITW Signode India Ltd. Vrs. CCE,
(2004) 3 SCC 48, a similar question came before a
three Judges Bench of this Court under the Central
Excise Act, 1944, when this Court opined as under:
„69. The question of limitation involves a question of
jurisdiction. The finding of fact on the question
of jurisdiction would be a jurisdictional fact.
Such a jurisdictional question is to be
determined having regard to both fact and law
involved therein. The Tribunal, in our opinion,
committed a manifest error in not determining
the said question, particularly, when in the
absence of any finding of fact that such short-
levy of excise duty related to any positive act
on the part of the appellant by way of fraud,
collusion, wilful misstatement or suppression of
facts, the extended period of limitation could
not have been invoked and in that view of the
WP(C) No.23165 of 2025 Page 66 of 85
matter no show-cause notice in terms of Rule
10 could have been issued.‟
49. In the case of Kamlesh Babu Vrs. Lajpat Rai
Sharma, (2008) 12 SCC 577, the matter came to this
Court when the trial court dismissed the suit on
issues other than the issue of limitation. The Bench
held:
„23. The reasoning behind the said proposition is
that certain questions relating to the
jurisdiction of a court, including limitation, goes
to the very root of the court‟s jurisdiction to
entertain and decide a matter, as otherwise,
the decision rendered without jurisdiction will
be a nullity. However, we are not required to
elaborate on the said proposition, inasmuch as
in the instant case such a plea had been raised
and decided by the trial court but was not
reversed by the first appellate court or the High
Court while reversing the decision of the trial
court on the issues framed in the suit. We,
therefore, have no hesitation in setting aside
the judgment and decree of the High Court and
to remand the suit to the first appellate court to
decide the limited question as to whether the
suit was barred by limitation as found by the
trial court. Needless to say, if the suit is found
to be so barred, the appeal is to be dismissed.
If the suit is not found to be time-barred, the
decision of the first appellate court on the other
issues shall not be disturbed.‟
50. Mr. Shekhar Naphade, learned senior counsel
appearing for the respondent relied upon a recent
decision of a Division Bench of this Court in Civil
WP(C) No.23165 of 2025 Page 67 of 85
Appeal No. 1085 of 2015 (Kamalakar Eknath
Salunkhe Vrs. Baburav Vishnu Javalkar & Ors.)
where this Court while considering Section 9A of the
Maharashtra Amendments of CPC observed that the
expression „jurisdiction‟ in Section 9A is used in a
narrow sense i.e. territorial and pecuniary
jurisdiction and not question of limitation. The Court
observed:
„17. The expression „jurisdiction‟ in Section 9A is
used in a narrow sense, that is, the Court’s
authority to entertain the suit at the threshold.
The limits of this authority are imposed by a
statute, charter or commission. If no restriction
is imposed, the jurisdiction is said to be
unlimited. The question of jurisdiction, sensu
stricto, has to be considered with reference to
the value, place and nature of the subject
matter. The classification into territorial
jurisdiction, pecuniary jurisdiction and
jurisdiction over the subject-matter is of a
fundamental character. Undoubtedly, the
jurisdiction of a Court may get restricted by a
variety of circumstances expressly mentioned
in a statute, charter or commission. This
inherent jurisdiction of a Court depends upon
the pecuniary and territorial limits laid down
by law and also on the subject-matter of the
suit. While the suit might be barred due to
noncompliance of certain provisions of law, it
does not follow that the non-compliance with
the said provisions is a defect which takes
away the inherent jurisdiction of the Court to
try a suit or pass a decree. The law of
limitation operates on the bar on a party toWP(C) No.23165 of 2025 Page 68 of 85
agitate a case before a Court in a suit, or other
proceedings on which the Court has inherent
jurisdiction to entertain but by operation of the
law of limitation it would not warrant
adjudication.
19. Thus, with the intention to put the aforesaid
practice to rest, the State Legislature
introduced Section 9A by the amendment Act of
1969 requiring the Court to decide the issue of
jurisdiction at the time of granting or vacating
the interim relief. In other words, the legislature
inserted Section 9A to ensure that a suit which
is not maintainable for want of jurisdiction of
the concerned Court, ought not be tried on
merits without first determining the question of
maintainability of the suit as to jurisdiction of
the Court, approached by the plaintiff, as a
preliminary issue.
20. The provision contemplates that when an issue
of jurisdiction is raised, the said issue should
be decided at first as expeditiously as possible,
and not be adjourned to a later date. The
primary reason is that if the Court comes to
finding that it does not have jurisdiction vested
in it in law, then no further enquiry is needed
and saves a lot of valuable judicial time.
21. A perusal of the Statement of Object and
Reasons of the Amendment Act would clarify
that Section 9A talks of maintainability only on
the question of inherent jurisdiction and does
not contemplate issues of limitation. Section 9A
has been inserted in the Code to prevent the
abuse of the Court process where a plaintiff
WP(C) No.23165 of 2025 Page 69 of 85
drags a defendant to the trial of the suit on
merits when the jurisdiction of the Court itself
is doubtful.
22. In the instant case, the preliminary issue
framed by the Trial Court is with regard to the
question of limitation. Such issue would not be
an issue on the jurisdiction of the Court and,
therefore, in our considered opinion, the Trial
Court was not justified in framing the issue of
limitation as a preliminary issue by invoking its
power under Section 9A of the Code. The High
Court has erred in not considering the statutory
ambit of Section 9A while approving the
preliminary issue framed by the Trial Court
and thus, rejecting the writ petition filed by the
appellant.‟ ***”
7.2. The Hon’ble Supreme Court of India has succinctly made
it clear regarding objection as to jurisdiction in the case
of Harshad Chiman Lal Modi Vrs. DLF Universal Ltd. and
another, (2005) 7 SCC 791 with the following
observations:
“30. We are unable to uphold the contention. The
jurisdiction of a court may be classified into several
categories. The important categories are–
(i) Territorial or local jurisdiction;
(ii) Pecuniary jurisdiction; and
(iii) Jurisdiction over the subject-matter.
So far as territorial and pecuniary jurisdictions are
concerned, objection to such jurisdiction has to be
WP(C) No.23165 of 2025 Page 70 of 85
taken at the earliest possible opportunity and in any
case at or before settlement of issues. The law is
well settled on the point that if such objection is not
taken at the earliest, it cannot be allowed to be
taken at a subsequent stage. Jurisdiction as to
subject-matter, however, is totally distinct and
stands on a different footing. Where a court has no
jurisdiction over the subject-matter of the suit by
reason of any limitation imposed by statute, charter
or commission, it cannot take up the cause or matter.
An order passed by a court having no jurisdiction is
nullity.”
7.3. With the above perspective, when the present matter is
examined, it emanates that the Assessing Officer in
order to assess escaped income under Section 147 for
the assessment year 2012-13, initiated proceeding on
29.03.2017 by exercising power conferred under Section
148 read with Section 149. The alleged non-service of
notice would not deter the Assessing Officer from
exercising power under Section 148. The learned Junior
Standing Counsel on written instruction could
demonstrate that the Notice dated 29.03.2017 was
issued after recording reason to believe that there was
escapement of income and such notice was despatched.
However, he could not throw light on the mode of
despatch. Yet, it could be shown that a Notice dated
23.10.2017 under Section 142(1) was issued for
production of books of account, etc. by Speed Post with
delivery report. Therefore, it is obvious that the
WP(C) No.23165 of 2025 Page 71 of 85
petitioner-assessee was aware of assessment
proceedings, namely proceeding under Section 148, was
pending on the date of service of such Notice under
Section 142(1). The petitioner, however, chose not to
participate by producing such evidence as required by
the Assessing Officer. Furthermore, the fact of
participation in the year 2018 in course of the penalty
proceeding under Section 271C of the IT Act has been
admitted by the petitioner. Since the mode of service of
statutory notice could not be established by the opposite
parties, the Assessment Order dated 14.11.2017 is liable
to be set aside for violation of principles of natural
justice.
Conclusion:
8. At paragraph 3.12 of the writ petition the petitioner has
asserted as follows:
“The petitioner-assessee asserts that no Notice under
Section 148 was served on him as well as the order of
assessment was never served on the Assessee. Therefore
the initiation of the assessment proceeding and the order
of assessment is in gross violation of rules of natural
justice as well as the mandates of statute and hence the
order of assessment is liable to be quashed. Since the
assessee came to know about the demand only after the
initiation of the recovery proceeding, the delay caused in
approaching this Hon‟ble Court is liable to be condoned.”
WP(C) No.23165 of 2025 Page 72 of 85
8.1. However, such a contention is falsified by assertion
made in paragraph 3.4 of the writ petition wherein it has
been admitted that after Assessment Order dated
14.11.2017 being passed under Section 147 of the IT
Act, upon initiation of proceeding for imposition of
penalty under Section 271C by issue of a show cause
notice, the petitioner appeared in the penalty proceeding
and the Assessing Officer passed an order imposing
penalty under Section 271C of the IT Act on 13.04.2018.
8.2. It is, thus, emanated that there was violation of
principles of natural justice due to non-service of
statutory Notice under Section 148 of IT Act. No pleading
is available to contend that no notice was ―issued‖ under
Section 148. It is seen that such statutory notice has
been issued within the period of limitation stipulated
under Section 149 of the IT Act. Had it been a case of
―no notice‖ the matter would have been different in view
of Orissa Stores Vrs. State of Odisha, 1990 SCC OnLine
Ori 407, wherein in answer to question of law “whether,
on the facts and in the circumstances of the case, the
learned Tribunal was justified in remanding the matter for
fresh assessment instead of annulling the entire
assessment?”, this Court held,
“5. No assessment can be completed without
notice. Order without notice is liable to be
vacated. Order being vacated proceeding
WP(C) No.23165 of 2025 Page 73 of 85
remains pending. It is true that limitation fixed
would not be attracted to fresh order of assessment
made or passed under section 23 as is provided in
the third proviso to section 12(7). But such fresh
assessment means where notice had been validly
served. On the assessment order being set aside it
goes to the stage where the defect or deficiency is
found out. Where the defect or deficiency as found
affects the jurisdiction as in the case of absence of
notice, protection under third proviso is not
available. Merely because the Tribunal sets aside
the order of assessment under Section 23 for
absence of notice, the third proviso cannot give
protection to Revenue. Accordingly, as on April 16,
1974, completion of assessment has become barred
by limitation and there was no scope for any
assessment.”
8.3. In the present case, as the initiation of proceeding under
Section 148 by issue of Notice dated 29.03.2017 and
passing the Assessment Order dated 14.11.2017 under
Section 147 read with Section 144 of the Income Tax
Act, 1961 with respect to assessment year 2012-13 is
not hit by limitation under Section 149, on appreciating
that statutory notice being not served on the petitioner
as required under Section 148 of the IT Act before
assessment under Section 147, it would be apposite to
set aside the Assessment Order and remit the matter to
the Assessing Officer to serve notice under Section 148.
8.4. In Radha Krishan Industries Vrs. State of Himachal
Pradesh, (2021) 3 SCR 406 the parameters for
WP(C) No.23165 of 2025 Page 74 of 85
approaching a writ Court under Article 226 has
succinctly been laid down as follows:
“27. The principles of law which emerge are that:
(i) The power under Article 226 of the Constitution
to issue writs can be exercised not only for the
enforcement of fundamental rights, but for any
other purpose as well;
(ii) The High Court has the discretion not to
entertain a writ petition. One of the restrictions
placed on the power of the High Court is where
an effective alternate remedy is available to the
aggrieved person;
(iii) Exceptions to the rule of alternate remedy arise
where,–
(a) the writ petition has been filed for the
enforcement of a fundamental right
protected by Part III of the Constitution;
(b) there has been a violation of the
principles of natural justice;
(c) the order or proceedings are wholly
without jurisdiction; or
(d) the vires of a legislation is challenged;
(iv) An alternate remedy by itself does not divest
the High Court of its powers under Article 226
of the Constitution in an appropriate case
though ordinarily, a writ petition should not be
entertained when an efficacious alternate
remedy is provided by law;
WP(C) No.23165 of 2025 Page 75 of 85
(v) When a right is created by a statute, which
itself prescribes the remedy or procedure for
enforcing the right or liability, resort must be
had to that particular statutory remedy before
invoking the discretionary remedy under Article
226 of the Constitution. This rule of exhaustion
of statutory remedies is a rule of policy,
convenience and discretion; and
(vi) In cases where there are disputed questions of
fact, the High Court may decide to decline
jurisdiction in a writ petition. However, if the
High Court is objectively of the view that the
nature of the controversy requires the exercise
of its writ jurisdiction, such a view would not
readily be interfered with.”
8.5. With respect to interference of this Court in exercise of
power under Article 226 of the Constitution of India, in
Rajendra Singh Vrs. State of Madhya Pradesh, (1996) 5
SCC 460 (465) in the context of violation of principles of
natural justice it has been enunciated in as follows:
“6. It has been held by a Constitution Bench of this
Court in Har Shankar Vrs. Dy. Excise and Taxation
Commr., (1975) 1 SCC 737 that:
„[T]he writ jurisdiction of High Courts under Article
226 of the Constitution is not intended to facilitate
avoidance of obligations voluntarily incurred.‟At the same time, it was observed that the licensees
are not precluded from seeking to enforce the
statutory provisions governing the contract. It must,
however, be remembered that we are dealing with
WP(C) No.23165 of 2025 Page 76 of 85
parties to a contract, which is a business
transaction, no doubt governed by statutory
provisions. [Reference may also be made to the
decision of this Court in Asstt. Excise Commr. Vrs.
Issac Peter, (1994) 4 SCC 104.] While examining
complaints of violation of statutory rules and
conditions, it must be remembered that violation of
each and every provision does not furnish a ground
for the court to interfere. The provision may be a
directory one or a mandatory one. In the case of
directory provisions, substantial compliance would
be enough. Unless it is established that
violation of a directory provision has resulted
in loss and/or prejudice to the party, no
interference is warranted. Even in the case of
violation of a mandatory provision,
interference does not follow as a matter of
course. A mandatory provision conceived in the
interest of a party can be waived by that party,
whereas a mandatory provision conceived in
the interest of the public cannot be waived by
him. In other words, wherever a complaint of
violation of a mandatory provision is made, the
court should enquire– in whose interest is the
provision conceived. If it is not conceived in the
interest of the public, question of waiver and/or
acquiescence may arise– subject, of course, to the
pleadings of the parties. This aspect has been dealt
with elaborately by this Court in State Bank of
Patiala Vrs. S.K. Sharma, (1996) 3 SCC 364 and in
Krishan Lal Vrs. State of J&K, (1994) 4 SCC 422 on
the basis of a large number of decisions on the
subject. Though the said decisions were rendered
with reference to the statutory rules and statutory
provisions (besides the principles of natural justice)
WP(C) No.23165 of 2025 Page 77 of 85
governing the disciplinary enquiries involving
government servants and employees of statutory
corporations, the principles adumbrated therein are
of general application. It is necessary to keep
these considerations in mind while deciding
whether any interference is called for by the
court– whether under Article 226 or in a suit.
The function of the court is not a mechanical
one. It is always a considered course of action.”
8.6. Culling out distinction between invocation of ―irregular‖
and ―illegal‖ jurisdiction, in Central Potteries Ltd. Vrs.
State of Maharashtra, (1963) 1 SCR 166 it is succinctly
explained as follows:
“It is contended that the jurisdiction of the Sales Tax
Officer to take proceedings for assessment with respect to
non-registered dealers depends, on the issue of a notice
such as is prescribed by Section 10 and Rule 22 and that
as no such notice had been issued in the case of the
appellant, the assessment proceedings must be held to be
incompetent, if the registration certificate is invalid. We
see no force in this contention. The taxing authorities
derive their jurisdiction to make assessments under
Section 3 and 11 of the Act, and not under Section
10, which is purely procedural. The appellant had
itself, acting under Section 10(1) been submitting
voluntarily returns on which the assessments had been
made and it is now idle for it to contend that the
proceedings taken on its own returns are without
jurisdiction.
In this connection it should be remembered that there is a
fundamental distinction between want ofWP(C) No.23165 of 2025 Page 78 of 85
jurisdiction and irregular assumption of
jurisdiction, and that whereas an order passed by an
authority with respect to a matter over which it has no
jurisdiction is a nullity and is open to collateral attack, an
order passed by an authority which has jurisdiction
over the matter, but has assumed it otherwise than
in the mode prescribed by law, is not a nullity. Lt
may be liable to be questioned in those very proceedings,
but subject to that it is good, and not open to collateral
attack. Therefore even if the proceedings for assessment
were taken against a non-registered dealer without the
issue of a notice under Section 10(1) that would be a mere
irregularity in the assumption of jurisdiction and the order
of assessment passed in those proceedings cannot be
held to be without jurisdiction and no suit will lie for
impeaching them on the ground that Section 10(1) had not
been followed. This must a fortiori be so when the
appellant has itself submitted to jurisdiction and made a
return. We accordingly agree with the learned Judges that
even if the registration of the appellant as a dealer under
Section 8 is bad that has no effect on the validity of the
proceedings taken against it under the Act and the
assessment of tax made thereunder.”
8.7. In the context of irregular or erroneous orders touching
limitation in the case of Deepak Agro Foods Vrs. State of
Rajasthan, (2008) 10 SCR 877 it has been stated thus:
“12. *** On a bare reading of the provision, it becomes
abundantly clear that if an assessment order is set
aside by an Appellate Authority, fresh assessment
has to be completed within a period of two years
from the date of communication of the order in
appeal to the Assessing Authority and not from theWP(C) No.23165 of 2025 Page 79 of 85
date of order in appeal; as is·pleaded by the
appellant.
***
15. All irregular or erroneous or even illegal orders
cannot be held to be null and void as there is a fine
distinction between the orders which are null and
void and orders which are irregular, wrong or illegal.
Where an authority making order lacks
inherent jurisdiction, such order would be
without jurisdiction, null, non est and void ab
initio as defect of jurisdiction of an authority
goes to the root of the matter and strikes at its
very authority to pass any order and such a
defect cannot be cured even by consent of the
parties. (See: Kiran Singh & Ors. Vrs. Chaman
Paswan & Ors., (1955) 1 SCR 117). However,
exercise of jurisdiction in a wrongful manner
cannot result in a nullity– it is an illegality,
capable of being cured in a duly constituted
legal proceedings.
16. Proceedings for assessment under a fiscal statute
are not in the nature of judicial proceedings, like
proceedings in a suit inasmuch as the assessing
officer does not adjudicate on a lis between an
assessee and the State and, therefore, the law on
the issue laid down under the civil law may not
strict sensu apply to assessment proceedings.
Nevertheless, in order to appreciate the distinction
between a „null and void‟ order and an „illegal or
irregular‟ order, it would be profitable to notice a few
decisions of this Court on the point.
WP(C) No.23165 of 2025 Page 80 of 85
17. In Rafique Bibi (Dead) By LRs. Vrs. Sayed Waliuddin
(Dead) By LRs. & Ors., 2003 Supp.3 SCR 100,
explaining the distinction between „null and void
decree‟ and „illegal decree‟, this Court has said that
a decree can be said to be without jurisdiction, and
hence a nullity, if the Court passing the decree has
usurped a jurisdiction which it did not have; a mere
wrong exercise of jurisdiction does not result in a
nullity. The lack of jurisdiction in the court passing
the decree must be patent on its face in order to
enable the executing court to take cognisance of such
a nullity based on want of jurisdiction. The Court
further held that a distinction exists between a
decree passed by a court having no jurisdiction
and consequently being a nullity and not
executable and a decree of the court which is
merely illegal or not passed in accordance with
the procedure laid down by law. A decree
suffering from illegality or irregularity of
procedure, cannot be termed inexecutable.
18. In view of the above, in the present case, apart from
the fact that on a plain reading of Section 29(8)(b) of
the Act, it is manifestly clear that fresh assessment
for the assessment year 1995-96, framed pursuant
to the order passed by the appellate authority on 8th
June, 2000, was well within the prescribed time,
even otherwise, in the light of the afore-stated
settled law, the assessments orders in question
could not be held to be null and void on
account of the stated irregularities committed
by the assessing officer during the course of
assessment proceedings. In our opinion, therefore,
despite scathing observations by the Division Bench
on the conduct of the Assessing Officer, it was aWP(C) No.23165 of 2025 Page 81 of 85
case of an irregularity in assessment proceedings by
the Officer, who was not bereft of authority to
assess the appellant. At best, it was an illegality,
which defect was capable of and has been cured by
the High Court by setting aside the orders and by
granting consequential relief.”
8.8. It is nobody’s case that the Assessing Officer, namely the
Deputy Commissioner of Income Tax, Circle 1(2),
Bhubaneswar had no jurisdiction over the subject-
matter– income stated to have escaped assessment as
found mentioned on the Order dated 29.03.2017– for
assessment. Nonetheless, the Assessing Officer exercised
power seemingly without verifying whether service of
Notice dated 29.03.2017 was in fact effected on the
petitioner. Hence, it may be said that having ―issued‖
Notice within the period stipulated under Section 149, it
cannot be comprehended that the Assessing Officer had
exercised power ―illegally‖ and/or having lack of
jurisdiction. As has already been stated, there is no
denial of the fact that Notice dated 23.10.2017 was
―issued‖ under Section 142(1) of the IT Act and sent by
Speed Post vide Postal Acknowledgement
No.EO941011095IN with postal tracking report ―item
delivered‖ on 26.10.2017. The service, hence, shall be
deemed to have been effected in view of Order V, Rule 9
of the Code of Civil Procedure, 1908 read with Section 27
of the General Clauses Act, 1897. This apart, the
petitioner has admitted to have participated in the
WP(C) No.23165 of 2025 Page 82 of 85
proceeding for penalty under Section 271C after passing
of the Assessment Order vide Annexure-5. Thus, the
Assessment undertaken by irregular assumption of
jurisdiction, the same can be corrected at this stage as
the initiation of assessment was within the period of
limitation envisaged under Section 149 of the IT Act.
8.9. In such view of the matter, on the facts and in the
circumstances of the case, the exercise of power to
assess the petitioner under Section 147 by issue of
Notice dated 29.03.2017 under Section 148 being within
the period stipulated under Section 149, this Court is
not persuaded to hold that there is infirmity or latent
lack of jurisdiction on the part of the Assessing Officer.
The mode of despatch for the purpose of ascertaining
service of the Notice dated 29.03.2017 issued under
Section 148 on the petitioner could not be demonstrated;
as a result of which the assessment proceeding cannot
be stated to be null and void. It may be stated at the cost
of repetition that Notice dated 23.10.2017 under Section
142(1) despatched by Speed Post, which was stated to
have been delivered at the addressee, would clinch the
issue with regard to knowledge of proceeding. This case,
thus, attracts vice of principles of natural justice
warranting interference in the Assessment Order dated
14.11.2017 (Annexure-5) by exercise of power under
Article 226 of the Constitution of India.
WP(C) No.23165 of 2025 Page 83 of 85
8.10. Under the above premises, the Assessment Order dated
14.11.2017 passed under Section 147 read with Section
144 of the IT Act (Annexure-5) and the consequential
Demand Notice dated 14.11.2017 under Section 156 of
the IT Act (Annexure-5A) are set aside.
8.11. The matter is, therefore, remanded to the Assessing
Officer for fresh assessment upon affording opportunity
of hearing and production of documents/evidence by the
petitioner. For availing such opportunity, the petitioner
is directed to appear before the Assessing Officer within
a period of three weeks from date and upon such
appearance, the Assessing Officer shall serve Notice
under Section 148 on him.
8.12. Upon consideration of material placed by the petitioner
and such other material available on record, the
Assessing Officer shall pass Assessment Order in
accordance with law within a period of three months
from the date of appearance of the petitioner. Copy of
such Assessment Order shall also be served on the
petitioner forthwith.
8.13. Needless to indicate that no unnecessary adjournments
shall be allowed and/or granted in order to give scope
for protraction of the proceeding. The Assessing Officer
is at liberty to take independent decision without being
influenced by any of the observations made hereinabove
WP(C) No.23165 of 2025 Page 84 of 85
touching the merit of the assessment. In other words,
nothing contained in the foregoing paragraphs shall be
deemed to be opinion of the Court on the merit.
8.14. It goes without saying that in the event the petitioner
defaults in carrying out the above direction(s), the
Assessment Order dated 14.11.2017 (Annexure-5) and
the Demand Notice dated 14.11.2017 (Annexure-5A)
shall revive and thereby, there would be no impediment
for the Authority concerned to proceed further with the
matter in accordance with law.
9. Ergo, the writ petition stands allowed to the extent
indicated above and pending interlocutory application(s),
if any, shall be disposed of, but in the circumstances
there shall be no order as to costs.
I agree.
(HARISH TANDON) (MURAHARI SRI RAMAN)
CHIEF JUSTICE JUDGE
Signature Not
Verified
Digitally Signed
Signed by: ASWINI KUMAR
SETHY
Designation: Personal
Assistant (Secretary-in-charge)
Reason: Authentication
Location: ORISSA HIGH
High Court of Orissa, Cuttack
COURT, CUTTACK
Date: 31-Mar-2026 20:03:02
The 31st March, 2026//Aswini/Bichi/MRS/Laxmikant
WP(C) No.23165 of 2025 Page 85 of 85
