Retrospective reopening under section 34 upheld where later amendment validated a notice otherwise barred by limitation.

A notice under section 34 was challenged as time-barred because it was issued after the ordinary limitation period. The 1953 proviso to section 34(3) was treated as incapable of reviving a reopening right that had already become barred, absent clear retrospective language, and the proviso relating to action taken in consequence of a finding or direction was held not clearly applicable on the facts. By contrast, section 34(4), inserted by the 1959 amendment, was construed as giving retrospective power to issue notices even where the earlier right had expired, consistently with the amended limitation scheme in section 34(1). The notice was therefore held valid.

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Issues: Whether the notice issued under section 34 for the assessment year 1942-43 was barred by limitation, and whether the later amendments to section 34 saved the notice from challenge.

Analysis: The notice was issued after the expiry of the ordinary period of limitation. The amendment of 1953 introducing the proviso to section 34(3) could not revive a right to reopen an assessment that had already become barred before the amendment came into force, since retrospective effect is not to be given so as to impair accrued rights unless the statute clearly so provides. The Court also accepted that the proviso dealing with action taken in consequence of a finding or direction did not clearly govern a notice issued on the facts of the case. By contrast, section 34(4), introduced by the 1959 amendment, was construed as conferring a retrospective power to issue notices even in respect of years for which the right to issue notice had already become barred, and as operating consistently with the amended limitation scheme in section 34(1).

Conclusion: The notice was held to be valid and not barred by limitation, and the assessee's challenge failed.

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