The Tribunal is not justified in refusing to consider the validity of a notice under Section 148 even though the ground challenging the same has not been pressed before the Appellate Assistant Commissioner.

D.K.Mahajan, J.

1. The Income-tax Appellate Tribunal has referred the following question of law for the opinion of this court:

"Whether the Tribunal was justified in refusing to consider the validity of notice under Section 148 even though the ground challenging the same had not been pressed before the Appellate Assistant Commissioner ?"

2. The assessee is an individual. The assessment year in question is 1965-66. The assessee obviously did not file the return of income within the time allowed by Sections 139(1) and 139(2) of the Income-tax Act, 1961. He filed his return of income on 28th March, 1969, and this return would be a valid return in view of Section 139(4) and (8). However, the Income-tax Officer who was oblivious of this provision treated the return dated 28th March, 1969, as invalid as it was, according to him, outside the period prescribed by Section 139(3). No order was passed by him on the said return. He proceeded to issue a notice under Section 148 on 9th March, 1970, in response to which the assessee filed a return on the same day declaring the loss of Rs. 4/128 as per the original return. It may be mentioned that in the original return dated 28th March, 1969, the same amount of loss had been declared. The Income-tax Officer completed the assessment on 24th March, 1970, and assessed him on a total income of Rs. 32,431 on the basis of the return filed on 9th March, 1970. The assessee, being dissatisfied, preferred an appeal to the Appellate Assistant Commissioner of Income-tax. In the grounds of appeal to the Appellate Assistant Commissioner, the following five grounds were raised :

"(1) The learned Income-tax Officer has erred in assessing interest received from the firms twice. Account version may please be accepted;

(2) The learned Income-tax Officer has erred in issuing the notice under Section 148 of the Act;

(3) The learned Income-tax Officer has erred in levying penal interest ;

(4) The assessment order is against law and facts of the case ; and

(5) The status of the assessee is Hindu undivided family and not individual as held by the Income-tax Officer."

3. The Appellate Assistant Commissioner dealt with ground No. 1 and with regard to grounds Nos. 2 to 5 observed as follows :

"These contentions have not specifically been pressed before me. Hence rejected."

4. Again dissatisfied, the assessee preferred an appeal to the Income-tax Appellate Tribunal, Chandigarh Bench. The Tribunal dealt with the first ground which had been dealt with by the Appellate Assistant Commissioner, but refused to deal with grounds Nos. 2 to 5 for the reason that they were specifically given up by the assessee before the Appellate Assistant Commissioner. The assessee then moved an application under Section 254(2) for rectification of its order dated 6th April, 1972, rejecting its appeal with regard to grounds Nos. 2 to 5. This application was rejected by the Tribunal on 6th September, 1972. The assessee then moved an application before the Income-tax Appellate Tribunal under Section 256(1) requiring it to state the question of law already referred to for our opinion. This application was allowed by the Tribunal and that is how the matter has been placed before us.

5. The contention of the learned counsel for the assessee is that the notice under Section 148 was invalid. The argument proceeds thus: The assessees had not filed his return as required by Section 139, Sub-sections (1) and (2), within the time specified therein. No notice under Section 139(3) was served on the assessee. The assessee took advantage of Sub-section (4) of Section 139, which is in the following terms :

"139. (4)(a) Any person who has not furnished a return within the time allowed to him under Sub-section (1) or Sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in Clause (b), and the provisions of Clause (iii) of the proviso to Sub-section (1) shall apply