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TMI Blog2013 (7) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... id that any new right has been acquired by the ITO or the said amendment has effected any vested right of the assessee. Re–assessment proceedings could be initiated within the time limits prescribed under the un–amended Section 149 of the Act subject to the fulfilment of certain conditions. If such conditions are satisfied, the revenue has right to initiate proceedings for reassessment. Such right cannot be curtailed by subsequent amendment, when no specific provision was made to curtail the period of limitation for initiating such proceedings. The amending Act changing the period of limitation for issuance of notice for reassessment has not made provision of the amending Act applicable retrospectively. Though the limitation is a provision dealing with procedure and all amendments in respect of procedure are retrospective but where the amendment has the effect to curtail a right vested, then the amended provisions cannot be applicable to the vested rights – Since the intimation of the assessment was given to the assessee, it cannot be said that the Assessing Officer has examined the return which may bar the Assessing Officer to reopen the assessment. Work in connection wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dates of issuance of show cause notices Dates on which revised returns were filed 1. CWP No.16897 of 1995 1984-85 04.08.1994 02.09.1994 2. CWP No.16894 of 1995 1985-86 30.03.1995 11.08.1995 3. CWP No.16899 of 1995 1986-87 04.08.1994 02.09.1994 4. CWP No.16890 of 1995 1987-88 30.05.1995 11.08.1995 5. CWP No.16896 of 1995 1988-89 30.05.1995 11.08.1995 6. CWP No.16898 of 1995 1989-90 30.05.1995 11.08.1995 7. CWP No.16895 of 1995 1990-91 19.08.1994 30.11.1990 8. CWP No.16893 of 1995 1991-92 19.08.1994 30.09.1994 2. In respect of Assessment Years 1984-85, 1985-86, 1986-87 1990-91, the returns filed by the petitioner have been finalized in terms of Section 143(3) of the Act; in respect of Assessment Years 1987-88 1988- 89, the returns were accepted finalized under the then existing provisions of Section 143(1) of the Act; whereas in respect of Assessment Years 1989-90, 1991-92 1992-93, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (3A) shall not apply in relation to any income of a trust or an institution, being profits and gains of business, unless the business is incidental to the attainment of the objectives of the trust or, as the case may be, institution, and separate books of account are maintained by such trust or institution in respect of such business. Section 147 - Income escaping assessment As it existed in the year 1984 As substituted by the Direct Tax Laws (Amendment) Act w.e.f. 1.4.1989 147. If (a) the Assessing Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Assessing Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o furnish within such period, not being less than thirty days, as may be specified in the 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. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. Section 149 Time limit for notice As it existed in the year 1984 As Substituted by the Direct Tax Laws (Amendment) Act w.e.f. 1.4.1989 149. (1) No notice under section 148 shall be issued, (a) in cases falling under clause (a) of section147 (i) for the relevant assessment year, if eight years have elapsed from the end of that year, unless the case falls under sub-clause (ii); (ii) for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nge 5. Learned counsel for the petitioner vehemently argued that the returns for the Assessment Years 1984-85, 1985-86, 1986-87 1990-91 were finalized in terms of Section 143(3) of the Act. The petitioner has truly and completely disclosed all the facts and the assessment was completed thereafter. Learned counsel for the petitioner referred to the order of assessment dated 18.09.1986 respect of assessment for the year 1984-85, which reads as under: Return declaring Nil income has been filed on 30.03.1985. The return is supported by Statement of Income and Expenditure statements, Balance Sheet, Audit Report in Form No.10B. In response to notice u/s 143(2), Shri Partap Singh, Accountant appeared alongwith Sh. J.K.Sood, Advocate. The case has been discussed with them. On examination of the account, I find that the income has been applied for the purpose of trust. It is a case of public Charitable trust. The registration has been granted to the trust u/s 12A(a) of the Income Tax Act by the Commissioner of Income Tax, Jull. vide order dated 12.11.1979. The object of the trust for this year is the same as in the earlier years. Keeping in view the past history of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the reasons recorded that the Assessing Officer has not examined the question; whether the Trust fulfilled the conditions laid down in Section 13 read with Section 11 and that income earned from the business has escaped assessment is merely a change of opinion of the Assessing Officer. Reliance is, inter alia, placed upon Supreme Court judgments reported as Calcutta Discount Co. Ltd. Vs. Income Tax Officer, Companies District I, Calcutta another 1961 (41) ITR 191; Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers(P) Ltd. (2007) 291 ITR 500 Commissioner of Income Tax Vs. Kelvinator of India Ltd. (2010) 320 ITR 561 apart from the judgment of this Court in Vipin Khanna Vs. Commissioner of Income Tax (2002) 255 ITR 220. 8. Learned counsel for the petitioner has also argued that the provisions including the provisions in respect of time limits as are existed on the date of issuance of show cause notices of re-assessment have to be examined to determine the legality and validity of the show cause notices and not the provisions as were in existence during the Assessment Years in question. In support of such argument, reliance is placed upon Circular No.549 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent approach from the assessment years 1993-94. The said argument raised in the aforesaid case was misleading inasmuch as the present writ petitions challenging the reassessment proceedings pertaining to assessment years 1984-85 to 1992-93 were pending before this Court at the time of hearing of the said appeals. Be as it may, the fact remains that the Division Bench of this Court in the aforesaid order has examined the provisions of Section 11(4A) of the Act as substituted on 01.04.1992. The Court upheld the findings recorded by Tribunal that the assessee was entitled to exemption under Section 11 of the Act, but in respect of exemption of income, the Court referred to the Supreme Court judgment in Assistant Commissioner of Income Tax Vs. Thanthi Trust (2001) 247 ITR 785 and returned the following finding: 30. Under Section 11(1)(a) of the Act, the income derived from property held under trust only for charitable or religious purpose is exempt of its utilization for that purpose. However, wherever there is accumulation or setting aside for application to such purposes in India, the accumulation or setting apart is not to be in excess of twenty five per cent of the income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic religious purposes and it is of printing and publishing books or any other notified kind, or (b) it is carried on by an institution wholly for charitable purposes and the work in connection with the business in mainly carried on by the beneficiaries off the institution, provided, in both cases, separate books of accounts are maintained by the trust or the institution in respect of such business. It was held that the Trust was not entitled to the exemption contained in Section 11 in respect of the income of its newspaper. 14. The Supreme Court further noticed that substituted sub-section (4A) as substituted vide Finance Act No.2 of 1991 is couched in wide language and a trust is entitled to the benefit of Section 11 if it utilized the income of its business for the purposes of achieving its objects. The Court observed that the scope of substituted sub-section (4A) is more beneficial to a Trust or institution than was the scope of sub-section (4A) as originally enacted. The Court observed as under: 25. The substituted sub-section (4A) states that the income derived from a business held under trust wholly for charitable or religious purposes shall not be included in the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t years will have to be taken in accordance with the amended provisions. The following examples will clarify the position:- (i) No notice under s. 148 can now be issued for the asst. yrs. 1973- 74 to 1978-79, even if the escaped income is Rs.50,000 or more in each year, although under the old provisions this could have been done with the Board s approval. (ii) Notice under s. 148 can now be issued for any of the asst. yrs. 1979-80 to 1981-82, if the following conditions are fulfilled:- (a) In a scrutiny case (i.e. where an assessment order had been passed under s. 143(3) or 147), if the escaped income is Rs.1 lakh or more in each year and approval of the Chief CIT or CIT has been obtained. (b) In a non-scrutiny case, if the escaped income is Rs.50,000/- or more in each year, and approval of the Dy. CIT has been obtained. (Under the old provisions, there was no distinction between a scrutiny and a non-scrutiny case. Action could have been taken in respect of both types of cases for the asst. yr. 1981-82, with the approval of the Chief CIT or CIT, whatever be the amount of escaped income, while for the asst. yrs. 1979-80 and 1980-81, action could have been taken with the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing at the time at which the repeal takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurrent under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed. 19. The above said circular issued by the Board has been referred to by Rajasthan High Court in a judgment reported as Chandi Ram s case (supra), wherein the Court has held that the provisions of amended Act would be applicable only in those cases where the limitation in respect of old law has not expired. The Court held to the following effect: 19. It is an establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was competent to invoke the provisions after 1st April, 1989 in accordance with the amended law, in respect of previous year which have not become time barred. 20. Hon ble Supreme Court in a judgment reported as Vinod Gurudas Raikar v. National Insurance Co. Ltd., (1991) 4 SCC 333, examined the provisions of the Motor Vehicle Act, 1988 in respect of filing of claim petitions with an application for condonation of delay. The argument raised was that the right to seek condonation of delay under the un-amended statute is vested right and cannot be curtailed. The Court observed as under: 7. It is true that the appellant earlier could file an application even more than six months after the expiry of the period of limitation, but can this be treated to be a right which the appellant had acquired. The answer is in the negative. The claim to compensation which the appellant was entitled to, by reason of the accident was certainly enforceable as a right. So far the period of limitation for commencing a legal proceeding is concerned, it is adjectival in nature, and has to be governed by the new Act subject to two conditions. If under the repealing Act the remedy suddenly stands barr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im. xxx xxx xxx 39. Section 107 lays down that nothing contained in the Limitation Act, 1963 shall apply to any suit for possession of immovable property comprised in any wakf or for possession of any interest in such property. Thus, it can be said that this section virtually repeals the Limitation Act, 1963 so far as the wakf properties are concerned. Therefore, it can be concluded without any hesitation in mind that there is now no bar of limitation for recovery of possession of any immovable property comprised in a wakf or any interest therein. 40. In this background, let us now see whether this section has any retrospective effect. It is well settled that no statute shall be construed to have a retrospective operation until its language is such that would require such conclusion. The exception to this rule is enactments dealing with procedure. This would mean that the law of limitation, being a procedural law, is retrospective in operation in the sense that it will also apply to proceedings pending at the time of the enactment as also to proceedings commenced thereafter, notwithstanding that the cause of action may have arisen before the new provisions came into force. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocedure is always retrospective and, therefore, Section 107 should be given retrospective effect. xxx xxx xxx 57. After considering this submission of the learned counsel for the respondents, it may appear that the controversy has narrowed down to the point whether Section 6 of the General Clauses Act would apply in this case or not. That is to say, it may appear that if we answer this question in the negative thereby holding that Section 112 is self-contained, the appeal would fail because then the question of reviving a barred claim would not arise at all because Section 112 does not contemplate or provide for any such provision. However, if we answer this question in the affirmative, the inevitable result would be that the appeal would have to be allowed because on all other points discussed hereinearlier, the arguments of the learned counsel for the appellants have been accepted. However, in our view, the authorities relied upon by the respondents deal only with the question of repeal and savings but do not answer the question raised by the learned counsel for the appellants, i.e. whether Section 107 can revive an extinguished right. 58. We may note that the authority rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment. 25. In relation to assessment year 1984-85, the record of which was produced by learned counsel for the petitioner, there is a communication addressed by the petitioner to the Income Tax Officer on 15.03.1984, wherein it is asserted by the petitioner that the petitioner is a Trust wholly for charitable purposes; the business is in furtherance of the objects of the Trust and is wholly for charitable purposes; the work in connection with the business in mainly carried on by the beneficiaries of the Trust and not the Trustees and the separate books of account are maintained by the Trust in respect of such business. In the revised returns filed pursuant to the show cause notice served, the petitioner has asserted that total amount of income applied to charitable purposes. In part IV of the return, it is asserted that the business of the Trust is incidental to the attainment of the objective of the institution and separate books of accounts are maintained in respect of business and such is not hit by Section 11(4A) of the Income Tax Act. 26. However, we may observe that in the communication dated 15.03.1984, it is asserted that the work in connection with the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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