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TMI Blog1968 (8) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... 47-48 by an assessment order dated January 31, 1952. The Income-tax Officer thereafter received information that a certain profit made by the assessee in the name of Natwarlal Manilal Pandit who was a benamidar of the respondent had escaped assessment by reason of the respondent not having disclosed it at the time of the original assessment. The Income-tax Officer, therefore, after obtaining the approval of the Commissioner of Income-tax issued a notice dated March 27, 1956, under section 34(1)(a) of the Income-tax Act, 1922 (hereinafter referred to as " the old Act "). The notice could not be served personally, and, therefore, was served by affixing on a conspicuous part of the respondent's house. The respondent objected to the service of the notice and did not file a return stating that there had been no valid service. When the Income-tax Officer threatened to proceed as parte a return was filed under protest on January 16, 1957, and in that return the respondent showed the same amount of income which was determined in the original assessment. Despite the objection of the respondent that there was no proper service of notice under section 34(1)(a), the Income-tax Officer proceede ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in order to reopen the assessment of the respondent and to reassess the income of the respondent relying on the provisions enacted under section 297(2)(d)(ii) of the new Act. The High Court accordingly allowed the Special Civil Application preferred by the respondent and set aside the notices dated November 13. 1963, and January 9, 1964. It is necessary at this stage to set out the relevant provisions of the two statutes. Section 34 of the Income-tax Act, 1922 (it of 1922), as it stood immediately prior to its amendment by the Finance Act, 1956, is in the following terms: " 34. (1) If-- (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an 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 have escaped assessment for that year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act or excessive loss or depreciation allowance has been computed, or (b) notwithstanding that there has been no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable to income-tax which have escaped assessment or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under this Act, or the loss or depreciation allowance which has been computed in excess, amount to, or are likely to amount to, one lakh of rupees or more in the aggregate, either for that year, or for that year and any other year or years after which or after each of which eight years have elapsed, not being a year or years ending before the 31st day of March, 1941; (iii) for any year, unless he has recorded his reasons for doing so, and, in any case falling under clause (ii), unless the Central Board of Revenue, and, in any other case, the Commissioner, is satisfied on such reasons recorded that it is a fit case for the issue of such notice; ... " The Income-tax Act, 1961 (43 of 1961), came into force from 1st April, 1962. Sub-section (1) of section 297 of the new Act repealed the old Act and by sub-section (2) of that section the new Act enacted certain saving provisions consequent upon the repeal of the old Act. The material provision is set out in clause (d) : " 297. Repeals and Savings.--(1) ... (2) Notwithst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of that year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year;..." Section 150 (1) makes an exception in cases where assessment or reassessment is sought to be made in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act by way of appeal, reference or revision and provided that in such cases there should be no time limit and notice under section 148 may be issued at any time unless of course the case fell within sub-section (2) of section 150. Section 151 made it a condition precedent to the issue of the notice under section 148 that the Income-tax Officer should obtain the previous sanction of the Central Board of Revenue or the Commissioner of income-tax according as the notice is proposed to be issued after the expiry of 8 years from the end of the relevant assessment year or after the expiry of 4 years from the end of the relevant assessment year. On behalf of the appellants Mr. Narasaraju stressed the argument that the High Court was in error in holding that the provisions of the new Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to reopen the assessment in respect of any assessment year was or was not barred under the repealed Act. We considered that the language of the new section must be read as applicable only to those cases where the right of the Income-tax Officer to reopen the assessment was not barred under the repealed section. 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 borne out by the decision of his court in S. S. Gadgil v. Lai Co. In that case, a notice was issued against the assessee as an agent of a non-resident on 27th March, 1957, and that notice related to the assessment year 1954-55. Under clause (iii) of the proviso to section 34(1), as it stood prior to its amendment by the Finance Act, 1956, a notice of assessment or reassessment could not be issued against a person deemed to be an agent of a non-resident after the expiry of one year from the end of the year of assessment. The right to commence a proceeding for assessment against the assessee as agent of a nonresident for the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expiry of the time provided under the old Act and the commencement of the amending Act. The legislature has given to section 18 of the Finance Act, 1956, only a limited retrospective operation, i.e., up to April 1, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retros pectivity 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 provided become barred." In our opinion, the principle of this decision applies in the present case and it must be held that, on a proper construction of section 297(2)(d)(ii) of the new Act, the Income-tax Officer cannot issue a notice under section 148 in order to reopen the assessment of an assessee in a case where the right to reopen the assessment was barred under the old Act at the date when the new Act came into force. It follows, therefore, that the notices dated November 13, 1963, and January 9, 1964, issued by the Income-tax Officer, Ahmedabad, were illegal and ultra vires ..... X X X X Extracts X X X X X X X X Extracts X X X X
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