THIRD INCOME-TAX OFFICER, MANGALORE vs M. DAMODAR BHAT

The Supreme Court held that the Income-tax Officer had the authority to issue notices under Section 156 and Section 226(3) of the Income-tax Act, 1961, for tax liabilities assessed under the Income-tax Act, 1922. The Court clarified that the provisions of Section 226(3) are applicable even if the assessment was made under the old Act, and that an assessee does not need to be 'in default' for such notices to be valid. Consequently, the Court dismissed the writ petition challenging the validity of the notice issued for recovery of tax and penalty, affirming the High Court's error in its interpretation of the statutory provisions.