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TMI Blog1998 (11) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... e, thus, of the view that High Court was not right in quashing the sanction given by the Commissioner of Sales Tax and notices issued by the assessing authority in pursuance thereto. - Civil Appeal No. 5817-5818 of 1998, W.P. No. 323 of 1995, and 882 of 1994 - - - Dated:- 20-11-1998 - VENKATASWAMI K. AND WADHWA D.P. JJ. A.K. Goel, Additional Advocate-General, U.P. (Kavin Gulati and Pradeep Misra, Advocates, with him), for the appellants. Bharatji Agrawal, Senior Advocate (vijay Hansaria, S.K. Jain, Dhruv Agrawal and Praveen Kumar, Advocates, with him) for the respondents. -------------------------------------------------- The judgment of the Court was delivered by D.P. WADHWA, J. -Leave granted. In both these appeals which are against two separate judgments of the same Division Bench of the Allahabad High Court, a common question of law arises. It is that in the circumstances could a completed assessment under the U.P. sales tax law be reopened after the prescribed period when that period was enlarged by amending the law. Facts are similar. 2.. In the appeal of Lohia Machines Limited [arising out of S.L.P.(C) No. 11015 of 1997] assessment fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect thereof, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or reassess the dealer or tax according to law: Provided that the tax shall be charged at the rate at which it would have been charged had the turnover not escaped assessment, or full assessment, as the case may be. ................. Explanation .-............... (2) Except as otherwise provided in this section, no order of assessment or reassessment under any provision of this Act for any assessment year shall be made after the expiration of four years from the end of such year." By the amending Act a proviso was added to sub-section (2) as under: "Provided that if the Commissioner of Sales Tax, on being satisfied on the basis of reasons recorded by the assessing authority, that it is just and expedient so to do authorises the assessing authority in that behalf, such assessment or reassessment may be made after the expiration of the period aforesaid but not after the expiration of eight years from the end of such year notwithstanding that such assessment or reassessment may involve a change of opinion." There are other amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omulgated which was later replaced by the Bengal Finance (Sales Tax) (Third Amendment) Act, 1974. This amending Act substituted section 26(1) of the principal Act under which now the State Government was empowered to make Rules, with prospective or retrospective effect for carrying out the purposes of the Act. With this new power conferred on the State Government rule 80(5) was amended by notification issued on March 30, 1974, amending the same with effect from November 1, 1971, and in relevant part now it reads as under: "80(5) The Commissioner or any other authority to whom power in this behalf Ms been delegated by the Commissioner shall not, of his own motion, revise any assessment made or order passed under the Act or the Rules thereunder if-- ................ (ii) the assessment has been made or the order has been passed more than six years previously." 9.. After this amendment to rule 80(5) as aforesaid Commercial Tax Officer issued notices on November 7, 1974, reopening the completed assessments for the years Chaitra Sudi 2023 and 2024. These notices were challenged in the Calcutta High Court by writ petition questioning the legality of the notices. The High Court up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as unambiguous as this is employed, it, must be assumed that the Legislature intended the amended provision to apply even to assessments that had so become final; if the intention was otherwise the Legislature would have so stated." 10.. Mr. Agrawal, who appeared for Lohia Machines Ltd. and Mr. Hansaria, for Jyoti Traders, submitted that the amendment would not have any retrospective operation and that High Court was right in its view. To get support for their arguments reference was made to the decisions of this Court in Y. Narayana Chetty v. Income-tax Officer [1959] 35 ITR 388, S.S. Gadgil v. Lal and Co. [1964] 53 ITR 231, J.P. Jani, Income-tax Officer v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 and Ahmedabad Manufacturing and Calico Printing Co. Ltd. v. S.G. Mehta, Income-tax Officer [1963] 48 ITR 154; [1963] Supp 2 SCR 92. 11.. In Y Narayana Chetty v. Income-tax Officer [1959] 35 ITR 388 (SC) one of the questions raised was that proceedings taken by the Income-tax Officer under section 34 of the Income-tax Act, 1922, were invalid because the notice required to be issued under the said section had not been issued against the assessees contemplated therein. This Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .............. he may in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that year, 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 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance; ............... Provided that.................. (iii) Where the assessment made or to be made is an assessment made or to be made on a person deemed to be the agent of a non-resident person under section 43, this sub-section shall have effect as if for the periods of eight years and four years a period of one year was substituted." By section 18 of the Finance Act, 1956, section 34 was extensively amended and clause (iii) of the proviso was substituted by the following proviso: "Provided further that the Income-tax Officer shall not issue a notice under this sub-section for any year after the expiry of two years from that year if the person on whom an assessment or reassessment is to be made in pursuance of the notice is a person deemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion or clear implication, the Legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorise the Income-tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period." 14.. In JR Jani, Income-tax Officer v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 (SC) the assessment for the assessment year 1947-48 was completed on January 31, 1952, under the Income-tax Act, 1922. Thereafter, the Income- tax Officer received information that a certain profit made by the assessee had escaped assessment by reason of the assessee not having disclosed at the time of the original assessment. The Income-tax Officer, therefore, after obtaining the approval of the Commissioner of Income-tax issued notice dated March 27, 1956, under section 34(1)(a) of the Income-tax Act, 1922. By order dated March 29, 1957, the Income-tax Officer completed reassessment proceedings. Assessee went in appeal to the Appellate Assistant Commissioner who allowed the same by order dated January 5, 1963, and set aside the order of assessment on the ground that there was no valid service of notice. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35 of the Income-tax Act, 1922, was brought into force then. By an order made on March 27, 1958, under that sub-section, the aforesaid rebate was withdrawn and the appellant was called upon to refund it. The appellant then, applied to the High Court at Bombay for a writ to quash the order of March 27, 1958, on the ground that sub-section (10),was not applicable to the facts of this case. That application was dismissed by the High Court. The appeal in the Supreme Court was against this decision of the High Court at Bombay dismissing the application. Now sub-section.(10) of section 35 of the Income-tax Act was enacted by the Finance Act of 1956. That sub-section, in so far as it is necessary to state for the purpose of this case, provided that where in any of the assessment years 1948-49 to 1955-56, a rebate of income-tax was allowed to a company under the Finance Act prevailing in that year on a part of its total income "and subsequently the amount on which the rebate of income- tax was allowed as aforesaid is availed of by the company, wholly or partly, for declaring dividends in any year ........... the Income-tax Officer shall re-compute the tax payable by the company by reduci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g more in the language of the sub-section to give it operation from an earlier date it would have operated only' from April 1, 1956, but the language of the sub-section gave it additional retrospectivity and said so in such clear and unambiguous language as to leave no doubt. He then observed: "In the present case, this is so. The assessee-company declared dividends in the calendar year 1952. The assessment year was April 1, 1953 to March 31, 1954. The letter written on March 18, 1958, asking the assessee-company to show cause was within the four years reckoned from the end of the financial year March 31, 1954) in which the amount on which rebate of Income-tax was availed of for declaring dividends. It complied with the letter of the sub-section. Since the power commenced on April 1, 1956, the utmost reach of the Income-tax Officer would be the end of the assessment year 1952, Any declaration of dividend after 1st day of April, 1952, out of accumulated profits of any of the years in which rebate was earned would be within time for the recall of the rebate. But a declaration prior to April 1, 1952 would be beyond the power of the Income-tax Officer to recall. This meaning is the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion that matters and when meaning is clear, it has to be given full effect. In both these cases this Court held that the proviso which amended the existing provision gave it retrospectivity. When the provision of law is explicit, it has to operate fully and there could not be any limits to its operation. This Court in Biswanath Jhunjhunwala case (1996) 5 SCC 626 said that if the language expressly so states or clearly implies. retrospectivity must be given to the provision. Under section 34 of the Income- tax Act, 1922, it is the service of the notice which is sine qua non, an indispensable requisite, for the initiation of assessment or reassessment proceedings where income had escaped assessment. That is not so in the present case. Under sub-section (1) of section 21 of the Act before its amendment, the assessing authority may, after issuing notice to the dealer and making such inquiry as it may consider necessary, assess or reassess the dealer according to law. Sub- section (2) provided that except as otherwise provided in this section no order for any assessment year shall be made after the expiry of 4 years from the end of such year. However, after the amendment, a proviso was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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