Limitation under section 153(2) cannot be applied retrospectively; prior assessment error justified review and recall.

The review was allowed because the earlier reference had been answered by applying the amended version of section 153(2) of the Income-tax Act, 1961, although the assessment had been completed before that amendment took effect on 1 April 1989. Since the assessment in question was completed on 30 July 1985 after notice under section 148 had been issued on 29 September 1983, the later limitation provision could not govern the dispute. That misapplication of the amended provision was treated as an error apparent on the face of the record, justifying recall of the earlier order and reconsideration on merits.

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Issues: Whether the review application should be allowed on the ground that the earlier answer to the reference proceeded on the amended version of section 153(2) of the Income-tax Act, 1961, although the assessment in question had been completed before that amendment came into force.

Analysis: The earlier order answering the reference had applied the amended form of section 153(2) of the Income-tax Act, 1961, which came into force from 1 April 1989. The assessment under challenge had, however, been completed on 30 July 1985, after notice under section 148 had been served on 29 September 1983. Since the assessment predated the amendment, the amended limitation provision could not have governed the controversy. The error in applying the later provision was held to be apparent on the face of the record and thus fit for review.

Conclusion: The review application was allowed and the earlier order dated 6 March 1996 was recalled, with the matter directed to be placed before the appropriate Bench for decision on merits.

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