2002 (4) TMI 7 - SC - Income Tax

Whether the provisions of sub-section (1) of section 150 as amended can be availed of for reopening assessments which have attained finality and could not be reopened due to bar of limitation that was attracted at the relevant time to the proposed reassessment proceedings under the provisions of section 149 of the Act- Held no

Issues Involved:
1. Application and interpretation of the provisions of section 150 of the Income-tax Act, 1961.
2. Validity of reassessment notices issued under section 148 of the Act for assessment years barred by limitation.
3. Retrospective application of the amendment to section 150(1) of the Act effective from April 1, 1989.

Issue-wise Detailed Analysis:

1. Application and Interpretation of Section 150 of the Income-tax Act, 1961:
The main question in this appeal was the application and interpretation of section 150 of the Income-tax Act, 1961. The appellant's lands were acquired, and compensation was awarded, including a significant amount of interest. The appellant contended that tax on the interest should be assessed year-wise, and no tax was leviable on interest accrued up to March 31, 1982, as it was barred by time. The High Court had accepted the Department's contention that section 150(1) allowed reassessment beyond the limitation period prescribed under section 149, based on court orders in land acquisition proceedings. The Supreme Court critically examined section 150(1) and (2), noting that section 150(1) allows reassessment at any time based on findings or directions in orders by any authority or court, while section 150(2) restricts this if the reassessment was already barred by limitation at the time of the order.

2. Validity of Reassessment Notices Issued Under Section 148 of the Act for Assessment Years Barred by Limitation:
The appellant received notices under section 148 for reassessment for the years 1968-69 to 1971-72 and 1981-82, which were challenged on the ground that they were barred by the limitation period under section 149. The High Court upheld the validity of these notices, interpreting section 150(1) as overriding the limitation period. However, the Supreme Court disagreed, emphasizing that section 150(2) clearly restricts reopening assessments that had become final due to the bar of limitation. The Court held that the amendment to section 150(1) did not have retrospective effect and could not be used to reopen assessments barred by limitation before April 1, 1989.

3. Retrospective Application of the Amendment to Section 150(1) of the Act Effective from April 1, 1989:
The Supreme Court examined whether the amendment to section 150(1) could be applied retrospectively to reopen assessments that had already become final due to the bar of limitation. The Court concluded that the amendment was not expressed to be retrospective and should be applied prospectively from April 1, 1989. The Court cited the principle that fiscal statutes, particularly those regulating limitation periods, should be strictly construed and not given retrospective effect unless clearly stated. The Court referred to the case of S.S. Gadgil v. Lai and Co. [1964] 53 ITR 231, where a similar issue was decided, reinforcing that amendments cannot revive barred assessments unless explicitly stated.

Conclusion:
The Supreme Court allowed the appeal, setting aside the High Court's judgment and quashing the reassessment notices issued under sections 148 and 142 of the Act for the assessment years 1968-69 to 1971-72 and 1981-82. The Court held that the amendment to section 150(1) did not enable reopening of assessments that had become final due to the bar of limitation before April 1, 1989. The appeal was allowed with costs.

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