P. Sam Koshy, J.

1. Heard Mr. S.Ravi, learned Senior Counsel for the petitioner; and Ms. J.Sunita, learned Senior Standing Counsel for Income Tax Department appearing on behalf of the respondent.

2. The instant writ petition has been filed by the petitioner under Article 226 of the Constitution of India challenging the second notice dated 03.10.2008, passed by the respondent under Section 148 of the Income Tax Act, 1961 (for short the ‘Act’) as illegal, arbitrary and contrary to the provisions of Section 147, 148 and 153(2) of the Act.

3. The facts of the case, are that, the petitioner filed its income tax return for the Assessment Year 2003-2004 on 24.11.2003 declaring an income of Rs.1,37,32,680/- which was processed under Section 143(1) of the Act without variations. On 28.03.2007, the respondent issued a notice under Section 148 of the Act to reopen the assessment citing concerns about cash payments exceeding Rs.20,000/- made to successful punters and their treatment under Section 40A(3) of the Act. The petitioner responded by requesting reasons for reopening and clarified that the original return should be treated as compliance with the notice while reserving the right to file detailed objections. On 28.09.2007, the Assessing Officer issued hearing notices under Section 143(2) of the Act fixing the date of hearing on 19.10.2007, during which the petitioner’s representatives appeared but no progress was made in the proceedings. Under the second proviso of Section 153(2) of the Act, (which was amended with effect from 01.04.2005) reassessments pursuant to notice under Section 148 of the Act issued after 01.04.2005, must be completed within 9 months from the end of the financial year in which the notice was issued. Since the notice was issued on 28.03.2007 (within the financial year ending 31.03.2007), the assessment should have been completed by 31.12.2007. When the Assessing Officer issued another hearing notice on 22.08.2008, the petitioner pointed out the statutory time-bar in a letter dated 29.08.2008 whereupon the Assessing Officer realizing the limitation, issued a fresh notice under Section 147 of the Act on 03.10.2008 followed by a notice under Section 142(1) of the Act on 04.11.2008 requiring the petitioner to file a return and produce documents by 14.11.2008.

4. Therefore, the petitioner challenges this second notice as illegal and without jurisdiction contending that once the statutory time limit for completing the reassessment had expired the assessment becomes final and the Assessing Officer cannot circumvent the mandatory time limit by issuing a fresh notice for the same assessment year, as such repetitive notice defeats the legislative intent behind imposing strict time limits and deprives the assessee of the statutory protection and finality contemplated by Section 153 (2) of the Act, leaving assesses’ perpetually vulnerable to reassessment proceedings contrary to the principles of certain and finality in tax matters.

5. Learned Senior Counsel for the petitioner contended that the first notice under Section 148 of the Act was issued on 28.03.2007 within the financial year ending on 31.03.2007 which triggered the mandatory time limit prescribed under the second proviso of Section 153(2) of the Act as amended with effect from 01.04.2005. This provision categorically mandates that reassessments pursuant to notice issued under Section 148 of the Act after 01.04.2005 must be completed within 9 months from the end of the financial year in which the notice was issued. Accordingly, the assessment should have been completed by 31.12.2007; however, the Assessing Officer failed to complete the assessment within this statutory period despite issuing hearing notice on 28.05.2007 and started conducting hearing on 19.10.2007. When the petitioner pointed out this statutory bar in his letter dated 29.08.2008, the respondent having realized the limitation, attempted to circumvent the mandatory provisions by issuing a fresh notice on 03.10.2008 for the same assessment year 2003-04. Therefore, the learned Senior Counsel for the petitioner submits that once the statutory time limit expired, the assessment proceedings stood concluded and became final without any recourse to the respondent.

6. Further, the learned Senior Counsel for the petitioner contended that the issuance of repetitive notices under Section 148 for the same assessment year is destructive of the statutory rights conferred upon the assessee under the Act and defeats the very legislative intent behind Section 153(2). The Parliament, in its wisdom, consciously reduced the time limit from 1 year to 9 months through the Finance Act to ensure expeditious completion of reassessment proceedings and to provide certainty and finality to assessees’. The purpose of these strict limits is that assesses should not be left in a state of perpetual uncertainty, never knowing when the tax authorities might come knocking on their door. He submitted that it is well established principle of law that when a statute contemplates a particular act to be done in a particular manner within a specified time, the act must be done in that manner and within that time limit or not at all. The respondent cannot be permitted to defeat these statutory mandates by circumventing the provisions through the issuance of fresh notice after the expiry of the limit. Such a practice would leave assessees perpetually vulnerable to reassessment proceedings contrary to the principles of certainty, finality, and statutory protection contemplated by the legislature.

7. Furthermore, the learned Senior Counsel for the petitioner contended that Section 147 is not merely procedural but impinges upon the petitioner's substantive statutory rights, and therefore, a Writ of Prohibition lies for interdicting the respondent from acting beyond their authority. Moreover, petitioner’s accounts are audited in a transparent manner, and a part of certain additions made by the Assessing Officer for Assessment Years 2004-2005 and 2005- 2006 which the Income Tax Appellate Tribunal didn’t uphold, thus, there are no real issues with their tax return. However, irrespective of merit, the respondent completely and totally lacks jurisdiction to initiate fresh proceedings by way of the impugned notice dated 03.10.2008.

8. Lastly, the learned Senior Counsel for the petitioner contended that with the proceedings based on an invalid notice is an abuse of the legal system and causes irreparable injury to the petitioner by wasting precious time and energy in contesting proceedings that are fundamentally without jurisdiction. Therefore, the needless process of suffering through the assessment and filing appeals thereafter is not an adequate alternative remedy in these circumstances, particularly when the very jurisdiction to issue the second notice is challenged. Thus, the petitioner prayed that this Hon'ble Court may be pleased to issue an direction or order declaring the second notice dated 03.10.2008 as illegal, arbitrary and contrary to the provisions of Sections 147, 148, and 153(2) of the Act.

9. Per contra, the learned Senior Standing Counsel for the income Tax Department contended that the first notice issued on 28.03.2007 became infructuous upon the expiry of the statutory time limit on 31.12.2007 without culminating in a complete assessment order. Just because the assessment wasn’t finished on time it doesn’t mean the assessee automatically wins. It simply means that particular notice period expired and can’t be used anymore.

10. Further, the learned Standing Counsel argues that the provisions of Section 147 and 148 are independent charging provisions that confer jurisdiction upon the Assessing Officer to reopen assessments where income has escaped assessment and this jurisdiction is not extinguished merely because an earlier attempt to reassess under Section 148 could not be completed within the statutory time limit. Moreover, the power to issue a fresh notice under Section 148, provided all other conditions precedent are satisfied, including the existence of reasons to believe that income has escaped assessment and compliance with the limitation period prescribed under Section 149 of the Act remains available to the Assessing Officer. It was also submitted that Section 153(2) merely prescribes the time limit for completing reassessment proceedings once initiated, but does not prohibit the issuance of a fresh notice if the earlier proceedings have lapsed due to non- completion within the stipulated time.

11. Learned Senior Standing Counsel further contended that the petitioner’s interpretation of Section 152(2) is erroneous and would lead to absurd consequences effectively granting immunity to assessees’ in case where income has genuinely escaped assessment merely because the Assessing Officer failed to complete the proceedings within the prescribed time limit due to administrative reasons or other procedural delay. Such an interpretation would defeat the very purpose of Sections 147 and 148, which are designed to ensure that all taxable income is brought to tax and no income escapes assessment. Moreover, the legislature, while imposing strict time limits for completion of reassessment proceedings to ensure expeditious disposal and protect assessees’ from indefinite proceedings, never intended to create a situation where established cases of escaped income could not be assessed at all simply because of procedural lapses in earlier attempts. It was further submitted that the second notice dated 03.10.2008 is issued after due application of mind, based on the same reasons to believe that income has escaped assessment i.e. the cash payments exceeding Rs.20,000/- made to successful punters without proper deduction of tax at source and their disallowance under Section 40A(3) of the Act. The issuance of this fresh notice is well within the limitation period prescribed under Section 149 of the Act for the Assessment Year 2003-04, and all conditions precedent for exercising jurisdiction under Section 148 are duly satisfied.

12. Lastly, the learned Senior Standing Counsel submitted that the petitioner’s remedies lies in following the statutory appellate mechanism provided under the Income Tax Act rather than invoking the extraordinary jurisdiction. Moreover, the writ jurisdiction should not be exercised to short-circuit the statutory appellate hierarchy, particularly when questions of fact regarding whether income has escaped assessment need to be examined through the reassessment proceedings. She denies that the impugned notice is illegal and arbitrary and submits that it is issued in accordance with law to protect the interests of revenue and ensure that all taxable income is properly assessed. Therefore, she prays that the writ petition be dismissed and the petitioner be directed to co-operate in the reassessment proceedings initiated pursuant to the notice dated 03.10.2008 and avail the statutory remedies provided under the Act

13. Having carefully considered the materials on record and also the contentions advanced by both parties, the questions that arise for consideration in this writ petition are:-

               1. Whether the second notice dated 03.10.2008, issued under Section 148 of the Act for Assessment Year 2003-04 is legal and valid, or whether it is barred by the provisions of Section 153(2) of the Act?

               2. Whether the Assessing Officer having failed to complete the reassessment proceedings within the statutory time limit of 9 months prescribed under the second proviso to Section 153(2) of the Act in respect of the first notice dated 28.03.2007, can issue a fresh notice under Section 148 of the Act for the same assessment year?

               3. Whether the assessment became final upon expiry of the statutory time limit or did the assessment for Assessment Year 2003-04 attain finality and become conclusive when the Assessing Officer failed to complete the reassessment by 31.12.2007, thereby precluding any further reassessment proceedings for the same assessment year?

14. For better understanding of the dispute, it would be necessary at this juncture to take note of the relevant provisions of the Act. Firstly, Section 147 of the Act dealing with income escaping assessment for ready reference is reproduced hereunder, viz.,

               “147. Income escaping assessment.

               If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year).Explanation.—For the purposes of assessment or reassessment or recomputation 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, irrespective of the fact that the provisions of section 148A have not been complied with.]”

15. Next comes Section 148 of the Act which deals with issue of notice where the income has escaped assessment. For ready reference, the said Section is also reproduced hereunder, viz.,

               “148. Issue of notice where income has escaped assessment.

               Before making the assessment, reassessment or recomputation under section 147, and subject to the provisions of section 148A, the Assessing Officer shall serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A, 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 no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice

               [Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section.]

               Explanation 1.—For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,—

               (i) any information [***] in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time;

               [(ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or

               (iii) any information received under an agreement referred to in section 90 or section 90A of the Act; or

               (iv) any information made available to the Assessing Officer under the scheme notified under section 135A; or

               (v) any information which requires action in consequence of the order of a Tribunal or a Court.]

               Explanation 2.—For the purposes of this section, where,—

               (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or

               (ii) a survey is conducted under section 133A, other than under sub-section (2A) [***] of that section, on or after the 1st day of April, 2021, in the case of the assessee; or

               (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or

               (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or requisitioned under section 132 or section 132A in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee, the Assessing Officer shall be deemed to have information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee [where] the search is initiated or books of account, other documents or any assets are requisitioned or survey is conducted in the case of the assessee or money, bullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person.

               Explanation 3.— For the purposes of this section, specified authority means the specified authority referred to in section 151.]”

16. Section 153(2) of the Act which is also relevant to the dispute in the instant case, is also reproduced hereunder, viz.,

               “No order of assessment, reassessment or recomputation shall be made under section 147 after the expiry of nine months from the end of the financial year in which the notice under section 148 was served Provided that where the notice under section 148 is served on or after the 1st day of April, 2019, the provisions of this sub-section shall have effect, as if for the words "nine months", the words "twelve months" had been substituted.”

17. Taking into consideration the aforesaid statutory provisions of the Act, this Bench is of the considered opinion that when the first notice was issued on 28.03.2007, the clock stated ticking on a 9 months deadline that expired on 31.12.2007, as clearly prescribed by the second proviso to Section 153(2) of the Act. The Assessing Officer had ample opportunity during this period to complete the reassessment, hearings were held, notices were issued, yet the deadline came and went without a completed assessment order. However, this wasn’t a case of the petitioner being evasive or uncooperative rather it was simply a failure on the part of Revenue to manage its own statutory obligations. The existing law doesn't provide for extensions or do-overs in such situations.

18. The Parliament also deliberately reduced the time frame from one year to nine months sending a signal that tax authorities must act with dispatch and that taxpayers deserve finality and certainty in their affairs aren't merely procedural technicalities, but they represent fundamental protections for citizens against indefinite exposure to reassessment proceedings. If we were to accept the learned Senior Standing Counsel’s argument that a fresh notice can simply be issued whenever an earlier attempt fail, we would essentially be rewriting the statute to say that these time limits mean nothing at all. The Assessing Officer could take multiple bites at the apple, issuing notice after notice whenever convenient; transforming what should be a time-bound proceeding into an endless cycle. This would leave taxpayers like the petitioner in a perpetual state of anxiety, never knowing when the matter is truly closed. Such a result would be antithetical to the very purpose of Section 153(2) and would render its protections entirely hollow.

19. Further, when a statutory authority lacks jurisdiction to act in the first place and the affected party need not exhaust alternative remedies before seeking constitutional relief. To require the petitioner to go through the entire reassessment process, gather and submit documents, attend hearings, and then pursue appeals through multiple levels of the Income Tax hierarchy would be forcing them to participate in proceedings that are void from the inception. This would not only waste months or even years of the petitioner's time and resources but would also legitimize an action that the law simply does not authorize. The principles of natural justice demand that when an authority acts beyond its jurisdiction, immediate judicial intervention is not just appropriate but necessary. The writ jurisdiction exists precisely for situations like this, where fundamental statutory rights are at stake and where requiring a litigant to proceed through prolonged proceedings would itself constitute an injustice.

20. In light of all these considerations, this Bench concludes that the second notice dated 03.10.2008, is wholly without jurisdiction, illegal, and contrary to the clear provisions of Sections 147, 148, and 153(2) of the Act. The second notice dated 03.10.2008 is accordingly set aside / quashed holding that the assessment for the year 2003-04 is hereby declared to have attained finality upon the expiry of the statutory deadline on 31.12.2007.

21. Accordingly, the instant writ petition stands allowed.

22. As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs.