Procedural amendment under section 154 applied retrospectively, allowing rectification of a penalty order by the IAC.

Section 154(1)(bb) of the Income-tax Act was held to apply to rectification of a penalty order, even though the underlying assessment year was 1963-64, because the provision had come into force before the rectification order was made. The Court treated section 154 as procedural in character and held that an amendment to procedural law is ordinarily retrospective, since no vested right exists in procedure. On that basis, the IAC was found to have jurisdiction to rectify the mistake apparent from the record under section 274(2).

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Issues: Whether section 154(1)(bb) of the Income-tax Act, 1961, which came into force during the financial year 1964-65, could be applied to penalty proceedings relating to assessment year 1963-64 and whether the IAC had jurisdiction to rectify the penalty order under that provision.

Analysis: Section 154(1)(bb) authorises the IAC to amend any order passed by him in proceedings under section 274(2) of the Income-tax Act, 1961, to rectify a mistake apparent from the record. The provision had come into force before the penalty order was passed on 4 March 1970. The Court held that the contention that the provision could not apply to the assessment year 1963-64 was untenable. It further held that section 154 is procedural in character, and an amendment of procedural law is ordinarily retrospective because no one has a vested right in procedural law.

Conclusion: Section 154(1)(bb) applied, the IAC had jurisdiction to rectify the mistake, and the question was answered in the affirmative against the assessee.

Ratio Decidendi: An amendment to a procedural provision governing rectification of mistakes is ordinarily retrospective and may be applied to pending or later rectification proceedings, since no vested right exists in procedural law.

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