Assessment under an unamended tax provision cannot be sustained where the later amendment was not in force at the time.

An assessment could not be sustained at the maximum rate under the first proviso to Section 41(1) of the Indian Income-tax Act, 1922, because the amendment enlarging that provision was not in force when the assessment order was made. The unamended section then applicable did not extend to the executor or testamentary trust arrangement involved, so the provision could not be invoked to justify the levy. A later amendment could not validate an assessment completed on a wrong legal basis. The issue was resolved against the Revenue and in favour of the assessee.

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Issues: Whether the income received by the executor of an estate was assessable at the maximum rate under the first proviso to Section 41(1) of the Indian Income-tax Act, 1922, when the amendment enlarging the provision had not come into force on the date of assessment.

Analysis: The assessment had been made on the footing of the amended provision, but the amendment to Section 41 came into force only after the assessment order was passed. On the date of assessment, the unamended section applied, and it did not extend to the kind of testamentary trust or executor arrangement involved here. The section therefore could not be invoked to justify levy at the maximum rate. The later amendment could not validate an assessment already completed on a wrong basis.

Conclusion: The question was answered against the Revenue and in favour of the assessee; the assessment at the maximum rate under the first proviso to Section 41(1) was not sustainable.

Ratio Decidendi: A tax liability cannot be imposed under an amended provision when the amendment was not in force on the date of assessment and the unamended section did not cover the case.

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