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TMI Blog1978 (3) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 28th February, 1962, by virtue of our business having been charged under the provisions of the Indian Income-tax Act, 1918 (VII of 1918), we hereby claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period, and accordingly request that an assessment shall be made on this basis." It was submitted by the assessee that the claim had been filed under the provisions of the 1922 Act and, therefore, it was filed before the enforcement of the 1961 Act which came into effect from 1st April, 1962. The ITO rejected the assessee's claim under s. 25(3) of the Indian I.T. Act, 1922, on the ground that the relevant date of discontinuance of business fell in the previous year for the assessment year 1963-64 which was governed by the provisions of the I.T. Act, 1961. According to him, the provisions of s. 25(3) of the Indian I.T. Act, 1922, were not attracted under the new Act. The assessee filed appeals before the AAC against the order of the ITO and submitted that once the option was exercised by the assessee, the exemption was also applicable for the immediately preceding year, that is, 1961, for substitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new Act, i.e., April 1, 1961. We do not find any different intention of the legislature expressly mentioned in any of the provisions of the new Act. We, accordingly, hold that section 6 of the General Clauses Act, in the instant case, saved the position and kept the assessee's claim alive. The position would have been different if the assessee had not made the claim before 31st March, 1962, which in the instant case was not so, the claim having been made on 27th March, 1962. We, however, find that the authorities below have considered only the legal aspect of the matter and have not given any findings on fact, such as, whether the assessee was assessed to income-tax in the earlier year on the basis of the Income-tax Act, 1918, or on the basis of the previous year under the Indian Income-tax Act, 1922, and also whether all other requisite conditions enabling the assessee to get the requisite relief were, in the instant case, complete or not. As such, we accept the assessee's contention that he was entitled to relief claimed by him under section 25(3) of the Indian Income-tax Act, 1922, and would set aside the order of the Appellate Assistant Commissioner and restore the case to his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny time charged under the provisions of the Indian Income-tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. Where any such claim is made, an assessment shall be made, on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference: Provided that sub-sections (3) and (4) shall not apply- (a) to super-tax except where the income, profits and gains of the business, profession or vocation were assessed to super-tax for the first time either for the year beginning on the 1st day of April, 1920, or for the year beginning on the 1st day of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, of the tax levied on the income of the previous year with reference to the profits of the said period and a refund of the excess tax, if any, already collected. In the present case the petitioner sought only concession (1). To obtain that concession the assessee does not have to call upon the ITO to do anything. The Act exempts the income of the period in question and the officer has merely to take note of the exemption and abstain from assessing such income ; while for concession (2) the assessee has to make a 'claim' before the Officer, as it involves the officer doing something, namely, an assessment of the income of the said period and adjustment of the tax paid on the income of the previous year with reference to the income so assessed and a refund of the excess tax, if any, already paid. If the ITO has to take action in this manner for granting this relief, it stands to reason that a time limit should be imposed for a claim to be made in that behalf, as the task of making a proper assessment for the relevant period might become increasingly difficult with the lapse of time. But what reason could there be for imposing a time limit for asking the income-tax autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cope of these sub-sections, observed, inter alia, at page 386 of the report as follows : " It must in the first place be borne in mind that under section 3 of the Indian I.T. Act, 1922 (which in this respect differs from the English Income-tax Acts), the subject of charge is not the income of the year of assessment but the income of the previous year. This was a change introduced by the 1922 Act. Previously under the 1918 Act the subject of charge was the actual income of the year of assessment. The result of this change was that, if a business was in existence and earning profits in the year 1921 when the 1918 Act was in force and continued in existence in the year 1922 when the 1922 Act was in force, the owner would pay income-tax twice over on his 1921 profits. It was accordingly necessary in the 1922 Act to differentiate for the purpose of discontinued businesses between those which had, and those which had not, been charged to tax under the 1918 Act. Section 25 of the 1922 Act deals with assessment in the case of discontinued businesses. By sub-section (1) it provides that, where any business on which income-tax was not at any time charged under the provisions of the 1918 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Indian I.T. Act, 1918, and transferred the business as a going concern to a private limited company on 1st March, 1940. The firm's year of account was a period of 12 months ending with 30th June each year and the firm was charged to tax in the year 1939-40 in respect of the profits of the year of account ending on 30th June, 1938. For the assessment year 1940-41, the assessee claimed that the firm was not liable to pay any income-tax on the income of its business from the end of the accounting year ending 30th June, 1938, to 29th February, 1940, under s. 25(4) of the Act. The income-tax authorities held that the exemption claimed applied only to the income of the period 1st July, 1939, to 29th February, 1940. The Tribunal and the High Court (Satyanarayana Rao J., affirming the decision of the Tribunal-Viswanatha Sastri J. contra) allowed the claim of the assessee for the entire period of 20 months. It was held by the Supreme Court that the period, the profits of which were entitled to exemption from the payment of tax under s. 25(4), was the period commencing from the 1st July, 1939, and ending with 29th February, 1940. The scheme of the Indian I.T. Act, according to the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not- (a) revive anything not in force or 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 incurred 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." Therefore, unless a contrary intention appears, repeal of an Act does not affect any right, privilege, obligation or liability. The ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 297 of the I.T. Act, 1961, repeals the Indian I.T. Act, 1922, and sub-s. (2) of s. 297 provides for what would happen in certain specified cases notwithstanding the repeal of the Indian I.T. Act, 1922. It keeps alive certain provisions of the Indian I.T. Act, 1922. Reliance was placed on cl. (h) of sub-s. (2) of s. 297. The said clause read as follows: " (h) any election or declaration made or option exercised by an assessee under any provision of the repealed Act and in force immediately before the commencement of this Act shall be deemed to have been an election or declaration made or option exercised under the corresponding provision of this Act." There is, however, no doubt that there is no corresponding provision under the 1961 Act dealing with the type of claims mentioned in cl. (3) or (4) of the Indian I.T. Act, 1922. Counsel for the revenue, therefore, submitted that what was not said was destroyed and such intention was apparent from cl. (h) of sub-s. (2) of s. 297 of the I.T. Act, 1961. We have, therefore, to find out whether Parliament has expressed an intention to destroy any right or option which was exercisable by the assessee by virtue of the law in force i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (SC). There, the Supreme Court was dealing with the Commissioner's jurisdiction to issue notice under s. 33B of the Indian I.T. Act, 1922, after coming into operation of the I.T. Act, 1961, in respect of assessment years 1952-53 to 1960-61, completed under the Indian I.T. Act, 1922. The Supreme Court held that s. 297(2)(a) of I.T. Act, 1961, included within its scope a proceeding under s. 33B of the Indian I.T. Act, 1922, as the Supreme Court was of the view that the word "assessment" would bear a very comprehensive meaning. The Supreme Court further observed that s. 297 was meant to provide as far as possible for all contingencies which might arise in view of the repeal of the Act of 1922 and s. 6 of the General Clauses Act would not apply because s. 297(2) evinced an intention to the contrary. Reliance was, therefore, placed heavily by counsel for the revenue on this aspect of the matter. The said decision of the Supreme Court was considered by the Supreme Court again in the case of T. S. Baliah v. T. S. Rangachari, ITO [1969] 72 ITR 787 (SC). There, the Supreme Court observed that the provisions of s. 52 of the Indian I.T. Act, 1922, did not alter the nature or quality of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to destroy them. s. 6 of the General Clauses Act, therefore, will be applicable unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section. Such incompatibility would have to be ascertained from a consideration of all the relevant provisions of the new statute and the mere absence of a saving clause is by itself not material. In other words, the provisions of s. 6 of the General Clauses Act will apply to a case of repeal even if there is a simultaneous re-enactment unless a contrary intention can be gathered from the new statute. Having examined the provisions of cl. (2) of s. 297 of the 1961 Act we are of the opinion that it is not the intention of Parliament to take away the right of instituting prosecution in respect of proceedings which are pending at the commencement of the Act. It is true that there is no express sub-clause in s. 297(2) of the 1961 Act which provides for the continuation of such proceedings but our concluded opinion is that Parliament did not intend s. 297(2) of the 1961 Act to be completely exhaustive and in regard to such matters as are not expressly saved by s. 297(2) of the 1961 Act the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28(4) of the Indian I.T. Act, 1922, which provided that "no prosecution for an offence against this Act shall be instituted in respect of the same fact on which penalty has been imposed under this section" did not bar the institution of a prosecution for an offence against the 1922 Act or the 1961 Act when a penalty had been imposed not under s. 28(1) of the 1922 Act but under s. 271(1) of the 1961 Act. s. 28(4) did not obliterate the factum of the commission of the offence under s. 52 of the 1922 Act and did not transmute the offence into an innocent act because of the imposition of penalty under s. 28. Such imposition merely barred the prosecution for the trial and conviction of the commission of the offence. Where penalty was imposed under s. 271 of the 1961 Act the launching of the prosecution became permissible and was not hit by art. 20(1) of the Constitution of India. The accused would be entitled to rely upon art. 20(1) only to the extent of awarding of the lesser punishment under s. 52 of the 1922 Act. Where a false statement was made in a declaration in a return submitted under the 1922 Act prior to the coming into force of the 1961 Act, it was not correct to take recour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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