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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 ..... acts are similar. 2.. In the appeal of Lohia Machines Limited [arising out of S.L.P.(C) No. 11015 of 1997] assessment for the year 1985-86 under the U.P. Trade Tax Act, 1948 (for short, "the Act") was completed on November 27, 1989. The Act is also called the U.P. Sales Tax Act. In the appeal of Jyoti Traders [arising out of S.L.P.(C) No. 8866 of 1997] assessment for the year 1985-86 was completed on February 28, 1990. Period for assessment or reassessment, which is four years under section 21 of the Act, for the assessment year 1985-86 expired, on March 31, 1990. 3.. The Act was extensively amended by the U.P. Sales Tax (Amendment and Validation) Act, 1991. The amending Act received the assent of the Governor of Uttar Pradesh on August 19, 1991. Different dates were prescribed for coming into force of various provisions of the amending Act. Section 21 of the Act also underwent an amendment and the relevant provision with which we are concerned came into force with effect from February 19, 1991. 4.. Taking advantage of the amendment to section 21, which now prescribed a period of eight years, the Sales Tax Officer after taking sanction from the Commissioner of Sales Tax issued n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding that such assessment or reassessment may involve a change of opinion." There are other amendments in section 21 which were made by subsequent amending Acts but with those we are not concerned. As noted above, the proviso to sub-section (2) of section 21 as inserted by the amending Act, 1991 came into force with effect from February 19, 1991. 6.. The High Court had held that sanction issued by the Commissioner of Sales Tax for 'initiation of proceedings under section 21 of the Act for the assessment year 1985-86 was barred by limitation and that the proviso to section 21(2) of the Act which had been introduced with effect from February 19, 1991, and wag inapplicable to the assessment year 1985-86 as the assessment order for this year had been made much before the introduction of the proviso to section 21(2) of the Act. The High Court was thus of the view that when the period for assessment or reassessment for the year 1985-86 under section 21 of the Act before insertion of the proviso to sub-section (2) thereof had expired on March 31, 1990, the amendment had no effect. 7.. Mr. Goel, learned counsel for the appellant submitted that if we accept the interpretation to sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alcutta High Court by writ petition questioning the legality of the notices. The High Court upheld the contention of the respondent-assessee that, by the amendment of the rule, assessments which had been completed could be revised within six years of the date of such completion, but when the right to revise the assessments under the unamended provision of the rule stood barred on the date of the amendment, such assessments could not be reopened or revised. The High Court said that the notification did not either expressly or necessary implication confer any power of revision of assessment which stood barred on the date on which it was issued. After referring to decision of this Court in the cases of Income-tax Officer v. S.K Habibullah [1962] 44 ITR 809, S.S. Gadgil v. Lal and Co. [1964] 53 ITR 231 and J.P. Jani, Income-tax Officer v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 this Court held as under: "12. What, therefore, we have to seek is the clear meaning of the said notification. If there be no doubt about the meaning, the amendment brought about by the said notification must be given full effect. If the language expressly so states or clearly implies, retrospectivity mus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said section had not been issued against the assessees contemplated therein. This Court said that the Income-tax Officer had purported to act under section 34(1)(a) against the assessee and proceeded to hold as under: "The said sub-section provides, inter alia, that 'if the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of the assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax has been under-assessed', he may, within, the time prescribed, 'serve on the assessee a notice containing all or any of the requirements which may be included in the notice under sub- section (2) of section 22 and may proceed to reassess such income, profits or gains'. The argument is that the service of the requisite notice on the assessee is a condition precedent to the validity of any reassessment made under section 34; and if a valid notice is not issued as required, proceedings taken by the Income- tax Officer in pursuance of an invalid notice and consequent orders of reassessment passed by him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or reassessment is to be made in pursuance of the notice is a person deemed to be the agent of a non-resident person under section 43." 13.. The Income-tax Officer, therefore, could issue a notice to a person deemed to be the agent of a non-resident after the expiry of two years from the date of the expiry of the assessment year. It was common ground that section 18 of the Finance Act, 1956 was not given retrospective operation before April 1, 1956. The question before this Court was whether the Income-tax Officer could issue a notice of assessment to a person as an agent of a non-resident party under the amended provisions when the period prescribed for such notice had, before the amended Act came into force, expired. This Court said that the amending Act came into force after the period provided for issue of a notice under section 34, before it was amended, had expired. The court said that in considering whether the amending statute applied, the question was one of interpretation, i.e., to ascertain whether it was the intention of the Legislature to deprive a tax-payer of the plea that action for assessment or reassessment could not be commenced, on the ground that before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of assessment on the ground that there was no valid service of notice. By this time, Income- tax Act, 1961, had come into force. On January 4, 1963, the Income-tax Officer issued a notice calling upon the assessee to show cause why proceedings should not be taken under section 147(a) of the new Act for bringing to tax the escaped profit of the assessee. Subsequently, notice under section 148 of the new Act was issued. Assessee protested against this new notice on the ground that action under the old Act had become time-barred and the new Act had no application to his case. After considering the provisions of the old Act and section 297 of the new Act which repealed the old Act and on the effect of the repeal, this Court said that all the new sections must be read as applicable only to those cases where right of the Income-tax Officer to reopen the assessment was not barred under the repealed section. The court held as under "In our view the new statute does not disclose in express terms or by necessary implication that there was a revival of the right of the Income-tax Officer to reopen an assessment which was already barred under the old Act. This view is home out by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer shall re-compute the tax payable by the company by reducing the rebate originally allowed". The subsection in substance permits a rebate duly allowed in any year before it came into force to be withdrawn if "subsequently" the amount on which the rebate was allowed "is availed of" "for declaring dividends in any year. The appellant contended that the sub-section did not apply unless the amount on which the rebate was granted was availed of for declaring dividends after the sub-section had come into force, that is after April 1, 1956 and, therefore, it did not apply to the present case. It was said that if it were not so, the sub-section would be given a retrospective operation and the rule was that it was to be presumed that a statute dealing with substantive rights was not to have such operation. This Court, per majority (3:2), held that sub-section (10) of section 35 was intended to have a retrospective operation and was applicable to the present case. Sarkar, J., who was in majority, in his concurring judgment, observed as under: "There is no dispute that by sub-section (10) the Legislature intended to penalise a case where subsequent to its enactment, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be beyond the power of the Income-tax Officer to recall. This meaning is the only meaning which the plain words of the section can bear. Any other meaning might make sub-section (10) unworkable because no company, with the knowledge that rebate would be recalled, would like to declare dividends after April 1, 1956, out of amounts on which rebate was earned. If the other meaning was attributed, sub-section (10) might well be a dead letter. The sub-section was obviously the result of noting how rebates were earned and later were being utilized to fill the pockets of the shareholders. The amendment met this situation and did it in very clear terms." 17.. We do not think that decisions in the cases of Y. Narayana Chetty v. Income-tax Officer [1959] 35 ITR 388 (SC), S.S. Gadgil v. Lal and Co. [19641 53 ITR 231 (SC) and J.P. Jani, Income-tax Officer v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 (SC) are of any help in interpreting the provisions of law now before us. In Narayana Chetty's case [1959] 35 ITR 388 this Court upheld the contention of the assessee that the notice on the assessee is a condition precedent to the validity of reassessment made under section 34 of the Income- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 4 years from the end of such year. However, after the amendment, a proviso was added to sub- section (2) under which Commissioner of Sales Tax authorises the assessing authority to make assessment or reassessment after the expiration of 4 years from the end of such year notwithstanding that such assessment or reassessment may involve a change of opinion. The proviso came into force with effect from February 19, 1991. We do not think that sub-section (2) and the proviso added to leave anyone in doubt that as on the date when the proviso came into force, the Commissioner of Sales Tax could authorise making of assessment or reassessment after the expiration of 4 years from the end of that particular assessment year. It is immaterial if a period for assessment or reassessment under sub-section (2) of section 21 before the addition of the said proviso had expired. Here, it is the completion of assessment or reassessment under section 21 which is to be done before the expiration of 8 years of that particular assessment year. Read as it is, these provisions would mean that the assessment for the year 1985-86 could be reopened up to March 31, 1994. Authorisation by the Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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