1912 PLP 611 (PTD)

(i) the Income‑tax Officer shall not issue a notice under this subsection, unless he has recorded his reasons for doing so a the Commissioner is satisfied on such reasons recorded that is a fit case for the issue of such notice ; ......... Provided further that nothing contained in this section limiting the time within which any action may be taken or any order assessment or re‑assessment may be made, shall apply to assessment made under section 27 or to an assessment assessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31, section 33, section 33‑A section 33‑B, section 66 or section 66‑A. By the Finance Act, 1956, certain amendments were made in section 34 with effect from 1st April 1956. The time limit 6 years in subsection (1) in respect of cases falling within clause (a) was removed and the following provisos were substituted for the existing proviso in subsection (1): "Provided that the Income‑tax Officer shall not issue a notice under clause (a) of subsection (1)‑ (i) for any year prior to the year ending on the 31st day March 1941 ; (ii) for any year, if eight years have elapsed after the expiry of that year, unless the income, profits of gains chargeable income‑tax which have escaped assessment or have been und, 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, amour to, or are likely to amount to, one lakh of rupees or more 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 Commissions is satisfied on such reasons recorded that it is a fit case for fl. issue of such notice ; ..." The Income‑tax Act, 1961 (XLIII of 1961), came into fort from 1st April 1962. Subsection (1) of section 297 of the new Ai repealed the old Act and by subsection (2) of that section the new.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) Notwithstanding the repeal of the Indian Income‑tax Act, 1922 (XI of 1922) (hereinafter referred to as the repeals; Act),‑ ...... (d) where in respect of any assessment year after the year ending on the 31st day of March 1940,‑ (i) a notice under section 34 of the repealed Act had been issued before the commencement of this Act, the proceedings pursuance of such notice may be continued and disposed of as if this Act had not been passed ; (ii) any income chargeable to tax had escaped assessment within the meaning of that expression in section 147 and no proceedings under section 34 of the repealed Act in respect of any such income are pending at the commencement of this Act a notice under section 148 may, subject to the provisions contained in section 149 or section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly ;..." Sections 147 to 150 referred to in section 297(2)(d)(ii) and sections 151 to 153 were the provisions of the new Act corresponding to section 34 of old Act. In the new Act, section 34 of the old Act was split up into sections 147 to

153. Section 147 empower ed the Income‑tax Officer to assess or re‑assess escaped income in the same kind of cases in which he could do so under section 34 but that right could be exercised subject to the provisions of sections 148 to

153. Subsection (1) of section 148 provided that, before making any assessment or re‑assessment under section 147, the Income‑tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under section 139(2) and subsection (2) of that section imposed an obligation on the Income‑tax Officer be fore issuing such notice, to record his reasons for doing so. Section 149 laid down different time limits for issuing notices and in cases falling within clause (a) of section 147 corresponding to clause (a) of subsection (1) of section 34 time limits were prescribed as follows: "

149. Time limit for notice.‑(1) No notice under section 148 shall be issued,‑ (a) in cases falling under clause (a) of section 147‑ (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 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 re‑assessment is sought to be made in consequence of or to give effect to any finding or direction contained in an order passed 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 issued at any time unless of course the case fell within sub section (2) of section

150. Subsection 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 years from the end of the relevant assessment year or after the Airy 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 of 1961, were not applicable in cases ere the time limit fixed in the old Act had expired before the coming into force of the new Act. It was contended that section 297(2)(d)(ii) of the new Act was wide in its sweep and it took in all assessment years after the year ending on March 1940, irrespective of the question whether the right to reopen the assessment in respect of any such assessment years is barred or not under the old Act at the date when the new came into force. According to Mr. Narasaraju, the legislative intention was that once the new Act came into force, the question Whether the assessment in respect of any assessment year after the year ending on 31st March 1940, was liable to reopened or not should be decided with reference to the provisions of the new Act. It was argued that the new Act authorised such assessment to be reopened whatever might be the position in regard to the right to reopen such assessment under old Act. In our opinion, the argument put forward v, Mr. Narasaraju is not warranted. It is admitted in this case at the right of the Income‑tax Officer to reopen the assessment for the year 1947‑48 was barred under the old Act before the new Act came into force. In our opinion it is not permissible to construe section 297(2)(d)(ii) of the new Act as reviving the right of the Income‑tax Officer to reopen the assessment which was already barred under the old Act. The reason is that such construction of section 297(2)(d)(ii) would be tantamount to ring of retrospective operation to that section which is not warranted either by the express language of the section or by necessary implication. The principle is based on the well‑known rule of interpretation that, unless the terms of the statute expressly so provide or unless there is a necessary implication retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive remedy already lost by efflux of time. On behalf of the appellants reference was made to the opening phrase "where in respect of any assessment year after the year ending on the 31s of March 1940" occurring in section 297(2)(d)(ii) of the new Act, but these general words cannot take in their sweep all assessment years subsequent to the year ending on 31st March 1940 without regard to the question whether the right to reopen the assessment in respect of any assessment year was or was not barred under the repealed Act. We consider that the language of new section must be read as applicable only to those cases sere the right of the Income tax Officer to reopen the assessment is 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 Office reopen an assessment which was already barred under the old Act. This view is borne out by the decision of this Court in S. S Gadgil v. Lal & Co. ((1964) 53 I T R 231 (S C)). 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 re‑assessment 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 non resident for the assessment year 1954‑55, therefore, ended on 31st March 1956 under the new Act before its, amendment in 1956. This provision was, however, amended by the Finance Act, 1956, and under the amended provision the period of limitation was extended to two years from the end of the assessment year. The amendment was made on 8th September 1953, but is given effect to from 1st April 1956. Since the time within which notice could be issued against a person deemed to be an went of a non‑resident was extended to two years from the end the assessment year, it was contended on behalf of the Income ta x officer that the notice issued by him was within the terms of e amended provision and was, therefore, a valid notice. Now e notice issued on 27th March 1957, was clearly within a period 'two years from the end of the assessment year 1954‑55 and if e amended provision applied, the notice would be a valid Notice. It was, however, held by this Court that the notice was of a valid notice inasmuch as the right of the Income‑tax Officer reopen the assessment of the assessee under the unamended provision became barred on 31st March 1956, and the amended provision did not operate against him so as to authorise the come‑tax Officer to commence proceedings for reopening the assessment of the assessee in a case where, before the amended provision came into force, the proceedings had become barred under the unamended provision. At page 240 of the report, Shah, speaking for the Court, observed as follows: "As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a son‑resident party under the Income‑tax Act before it was amended, ended on March 31, 1956. It is true that, under the amending Act, by section 18 of the Finance Act, 1956, authority vas conferred upon the Income‑tax Officer to assess a person as in agent of a foreign party under section 43 within two years "nom the end of the year of assessment. But the authority of she Income‑tax Officer under the Act before it was amended by he Finance Act of 1956, having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date when he issued the notice it is within the period provided by that amending Act. This‑will be so, notwithstanding the fact that there has been no determin able point of time between the 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 mending provision a greater retrospectivity than is expressly mentioned, nor to authorise the Income‑tax Officer to com mence 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 Lion 297(2)(d)(ii) of the new Act, the Income‑tax Officer cannot tee a notice under section 148 in order to reopen the assessment an asseasee in a case where the right to reopen the assessment was barred under the old Act at the date when the ne:1 Act came into force. It follows, therefore, that the notices dated Novem ber 13, 1963, and January 9, 1964, issued by the Income‑tax Officer, Ahmedabad, were illegal and ultra vires and were rightly quashed by the Gujarat High Court by the grant of a writ. For the reasons expressed, we hold that the judgment of the High Court of Gujarat dated 14th/15th December 1964, is correct and this appeal must be dismissed with costs. Appeal dismissed.