Limitation for tax recovery under the new Act governs deemed-default cases, making post-repeal recovery time-barred.

Recovery of tax arrears initiated after repeal of the Income-tax Act, 1922 was analysed under the Income-tax Act, 1961, which supplies a specific limitation rule for a person deemed to be in default. The text explains that section 231 governs such recovery and runs from the last day of the financial year in which default is deemed to have occurred, while section 297(2)(j) preserves recovery of sums payable under the repealed Act. A broader reliance on section 297(2)(a) was rejected because "assessment" does not extend to recovery proceedings. On that construction, the recovery action was time-barred and the recovery certificates were invalid.

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Issues: Whether recovery proceedings initiated in 1967 for tax defaults under the repealed Income-tax Act, 1922 were barred by limitation and therefore whether the recovery certificates could stand.

Analysis: The liability arose when tax was not deducted at source from payments treated as commission and the assessee became a deemed assessee in default. Under the 1922 Act, the recovery period under section 46(7) ran from the demand made under that Act, but after the Income-tax Act, 1961 came into force, section 231 introduced a specific limitation rule for a person deemed to be in default, namely one year from the last day of the financial year in which the assessee was deemed to be in default. The recovery proceedings were commenced after the new Act had replaced the old Act, and section 297(2)(j) specifically provided that sums payable under the repealed Act could be recovered under the new Act. The broader reliance on section 297(2)(a) was rejected because the term "assessment" could not be stretched to include recovery proceedings so as to make the specific recovery provision otiose. On that construction, the proceeding was governed by section 231 and was time-barred.

Conclusion: The recovery proceedings were barred by limitation under the Income-tax Act, 1961, and the recovery certificates were invalid.

Final Conclusion: The petitions succeeded, the impugned recovery certificates were quashed, and the respondents were restrained from pursuing recovery on their basis.

Ratio Decidendi: Where the new income-tax statute contains a specific limitation provision for recovery against a person deemed to be in default, that specific provision governs recovery commenced after the repeal of the old Act, and the general reference to assessment cannot be used to displace it.

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