1978 (7) TMI 96 - HC - Income Tax

Retrospective Application of Tax Law for Rectifying Mistakes

The High Court of Calcutta held that Section 154(1)(bb) of the Income Tax Act, 1961 could be applied retrospectively to rectify a mistake in a penalty ... Rectification of mistake apparent from the record under s.154(1)(bb) - jurisdiction of the IAC to amend an order in proceedings under s.274(2) - procedural amendment construed as retrospectiveRectification of mistake apparent from the record under s.154(1)(bb) - jurisdiction of the IAC to amend an order in proceedings under s.274(2) - procedural amendment construed as retrospective - Applicability of s.154(1)(bb) to permit the IAC to rectify a mistake in the penalty order dated 4th March, 1970 relating to assessment year 1963-64. - HELD THAT: - Section 154(1)(bb), introduced by the Direct Taxes (Amendment) Act, 1964 with effect from 6th October, 1964, empowers the IAC to rectify any mistake apparent from the record by amending any order passed by him in proceedings under sub-s. (2) of s.274. The penalty order under challenge was passed on 4th March, 1970, which is after the commencement of s.154(1)(bb). Consequently the provision was in force at the time the impugned penalty order was made and thus was available to the IAC. Further, s.154 being procedural in character, its amendment is ordinarily retrospective in operation because no vested right attaches to procedural law. Applying these principles, the Court held that s.154(1)(bb) could be invoked to rectify the mistake in the penalty order for assessment year 1963-64 and that the IAC had jurisdiction to do so.S.154(1)(bb) applied and the IAC had jurisdiction to rectify the mistake in the penalty order for assessment year 1963-64.Final Conclusion: The reference is answered in the affirmative: s.154(1)(bb) applied to the penalty order made in 1970 relating to assessment year 1963-64, and the IAC had jurisdiction to rectify the mistake; no order as to costs. The High Court of Calcutta held that Section 154(1)(bb) of the Income Tax Act, 1961 could be applied retrospectively to rectify a mistake in a penalty order for the assessment year 1963-64. The Court rejected the argument that the provision was not retrospective, stating that procedural laws are generally retrospective. The appeal by the assessee was dismissed.