Limitation for income-tax reassessment is procedural, so an extended time rule can apply to pending proceedings.

Limitation for reassessment under section 34(1)(a) of the Indian Income-tax Act, 1922 was held to be procedural, so the Finance Act, 1956 amendment removing the earlier time limit applied to pending proceedings. Because the reassessment notice had been issued and served within the limitation then in force, and the Income-tax Officer's remedy was not already time-barred when the amendment took effect, no vested right had accrued to the assessee. The reassessment was therefore not barred by limitation, and the issue was answered in favour of the Revenue.

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Issues: Whether the reassessment made pursuant to section 34(1)(a) of the Indian Income-tax Act, 1922, was barred by limitation after the amendment introduced by section 18 of the Finance Act, 1956.

Analysis: Notice for reassessment was issued and served within the limitation then prevailing under section 34(1)(a). While the reassessment proceedings were pending, section 34 was amended by the Finance Act, 1956, which removed the earlier time limit for making an order of reassessment in cases falling under section 34(1)(a). The governing principle is that limitation is procedural, and where the right to proceed has not already become barred, the extended limitation applies to pending proceedings. No vested right had accrued to the assessee because the Income-tax Officer's remedy had not become time-barred when the amendment came into force.

Conclusion: The reassessment was not barred by limitation and the question was answered in the negative, in favour of the Revenue and against the assessee.

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