Reassessment limitation under the earlier income-tax law was displaced by later amendment validating reopening under the successor statute.

Section 147(a) read with Section 148 of the Income-tax Act, 1961 was considered against the background of limitation under Section 34(1)(a) of the 1922 Act for reassessment of escaped income. The Court examined the 1948 and 1956 amendments to Section 34 and held that the 1959 insertion of Section 34(4) manifested legislative intent to revive or validate notices even after expiry of the earlier eight-year period. On that construction, the assessee's vested limitation defence was displaced, and reopening under the successor statute was treated as valid.

---

---

Issues: Whether the reopening of the assessment under Section 147(a) read with Section 148 of the Income-tax Act, 1961 was barred because the right to reopen had already become time-barred under Section 34(1)(a) of the Indian Income-tax Act, 1922 before the 1961 Act came into force.

Analysis: The assessment year in question was 1947-48 and the escaped income was one lakh rupees. Under the 1948 version of Section 34(1)(a) of the 1922 Act, the limitation period of eight years expired on 31 March 1956. The 1956 amendment removed the eight-year limit for cases where the escapement was one lakh rupees or more, and the 1959 amendment introduced sub-section (4) to Section 34, which authorised issue of a notice notwithstanding expiry of the earlier eight-year period. Reading the legislative history and the purpose of the 1959 amendment, the Court held that the vested right claimed by the assessee on expiry of the earlier limitation was taken away by Section 34(4). The reassessment power was therefore not barred before 1 April 1962, and the notice issued under the 1961 Act was valid.

Conclusion: The reopening of the assessment was not bad in law and the answer to the reference was against the assessee and in favour of the Revenue.

Ratio Decidendi: Where a subsequent amendment clearly evinces legislative intent to revive or validate reassessment proceedings that had become time-barred under the earlier law, the earlier vested right of limitation is displaced and reopening under the successor statute is valid.

---