WP(C) No.23165 of 2025 Page 1 of 85

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: 5

th 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

4

th Floor, Aayakar Bhawan

Rajaswa Vihar

Bhubaneswar – 751007.

WP(C) No.23165 of 2025 Page 2 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, Advocates

For the Opposite parties : Mr. Avinash Kedia,

Junior Standing Counsel,

Income Tax Department

P R E S E N T:

HONOURABLE CHIEF JUSTICE

MR. HARISH TANDON

AND

HONOURABLE JUSTICE

MR. MURAHARI SRI RAMAN

Date of Hearing : 19.03.2026 :: Date of Judgment : 31.03.2026

JUDGMENT

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 assessment

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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;

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(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

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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

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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 7 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 8 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

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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 Sri

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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 11 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

Section 148

dated

29.03.2017

Despatch on

29.03.2017

vide despatch

No.11536

--- ---

Notice under

Section 142(1)

dated

14.06.2017

Despatch on

16.06.2017

vide despatch

No.2065

--- Annexure-

A

Notice under

Section 142(1)

dated

23.10.2017

Despatch on

26.10.2017

vide despatch

No.8319

Speed post No.

EO941011095IN

(postal delivery

report placed on

record)

Annexure-

B

Assessment

Order along

with Demand

Notice under

Section 156

dated

14.11.2017

Despatch on

14.11.2017

vide despatch

No.9637

Speed post No.

EO941014159IN

Annexure-

C

WP(C) No.23165 of 2025 Page 12 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 escaped

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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 of

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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 15 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 16 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

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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.—

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(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

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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 20 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 21 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 holding

WP(C) No.23165 of 2025 Page 22 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 23 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. Palitana

WP(C) No.23165 of 2025 Page 24 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 25 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 conte xt 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 26 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 plain

WP(C) No.23165 of 2025 Page 27 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 be

WP(C) No.23165 of 2025 Page 28 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) 3

WP(C) No.23165 of 2025 Page 29 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” is

WP(C) No.23165 of 2025 Page 30 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 Taxes

North Block, New Delhi, the 29

th 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 31 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 32 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 monetary

WP(C) No.23165 of 2025 Page 33 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 34 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); or

WP(C) No.23165 of 2025 Page 35 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 36 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 37 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 may

WP(C) No.23165 of 2025 Page 38 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 39 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 40 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 by

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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 42 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 43 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 44 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 finally

WP(C) No.23165 of 2025 Page 45 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 46 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)

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„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 48 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 49 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 50 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 51 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 52 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 53 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 irregularity

WP(C) No.23165 of 2025 Page 54 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 55 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 under

WP(C) No.23165 of 2025 Page 56 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, 1897

1 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 Order

1

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 57 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 58 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 59 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 penalty

WP(C) No.23165 of 2025 Page 60 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 61 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 62 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 63 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 the

WP(C) No.23165 of 2025 Page 64 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 65 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 66 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 67 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 68 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 to

WP(C) No.23165 of 2025 Page 69 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 70 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 71 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 72 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 73 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 74 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 75 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 76 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 77 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 78 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 of

WP(C) No.23165 of 2025 Page 79 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 the

WP(C) No.23165 of 2025 Page 80 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 81 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 a

WP(C) No.23165 of 2025 Page 82 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 trac king 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 83 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 84 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 85 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

High Court of Orissa, Cuttack

The 31

st March, 2026//Aswini/Bichi/MRS/Laxmikant