1967 (5) TMI 2 - SC - Income Tax

Supreme Court upholds Income-tax Commissioner's jurisdiction post-repeal, citing specific provisions.

The Supreme Court held that the Commissioner of Income-tax had jurisdiction to initiate proceedings under section 33B of the 1922 Act post-repeal, as ... Power to revise assessments under section 33B of the Indian Incometax Act, 1922 - scope of the expression 'proceedings for the assessment' in a repealing and savings provision - repeal and savings-continuance of pending assessment proceedings - nonapplication of the General Clauses Act where a contrary intention appears - power to remove difficulties and validity of an executive Removal of Difficulties OrderPower to revise assessments under section 33B of the Indian Incometax Act, 1922 - repeal and savings-continuance of pending assessment proceedings - Whether the Commissioner could initiate revision proceedings under section 33B of the repealed 1922 Act in respect of assessments already made after the 1961 Act came into force. - HELD THAT: - The Court held that section 297(2)(a) of the 1961 Act, which saves that proceedings for assessment may be taken and continued as if the 1961 Act had not been passed where a return had been filed before commencement, must be given a comprehensive meaning. Authorities were cited to show that the word 'assessment' can embrace the whole procedure for ascertaining and imposing liability, including remedies and review. In the context of section 297(2), Parliament provided for a range of contingencies arising from repeal (pending appeals, escaped income, penalties, elections, refunds, recovery, continuance of orders and notifications), and that scheme indicates an intention to preserve proceedings relating to assessment broadly. Consequently proceedings under section 33B of the 1922 Act fall within the scope of the saved 'proceedings for the assessment' and the Commissioner could initiate revision under section 33B in respect of the specified assessment years.Proceedings under section 33B of the 1922 Act could be initiated and continued after commencement of the 1961 Act in respect of the assessments for the listed years.Nonapplication of the General Clauses Act where a contrary intention appears - Whether section 6 of the General Clauses Act operates to preserve or revive powers under the repealed Act in preference to the specific provisions of section 297(2) of the 1961 Act. - HELD THAT: - The Court found that section 297(2) of the 1961 Act evidences a contrary intention to that which would operate under section 6 of the General Clauses Act. By expressly dealing with numerous consequences of repeal (including continuance of proceedings, penalties, elections, refunds, and notifications), Parliament showed it intended the specific savings scheme in section 297(2) to govern. Where such contrary intention appears in the repealing statute, section 6 does not apply to displace the specific provisions enacted by Parliament.Section 6 of the General Clauses Act does not operate to override the scheme of savings in section 297(2) of the 1961 Act.Power to remove difficulties and validity of an executive Removal of Difficulties Order - repeal and savings-continuance of pending assessment proceedings - Whether the Incometax (Removal of Difficulties) Order, 1962 issued under section 298 of the 1961 Act (in particular paragraph 4) validly removes doubts and permits continuance of revision/appeal proceedings under the 1922 Act. - HELD THAT: - The Court upheld the validity of the Removal of Difficulties Order made under section 298, applying prior authority that the executive may be entrusted with making orders to remove difficulties arising from enactment of taxation legislation. Paragraph 4 of the Order, which deems proceedings by way of appeal, reference or revision in respect of orders under the 1922 Act to be instituted and disposed of as if the repealed Act had not been passed, was held to cover the present case and to remove any doubt about the power of the Commissioner to issue the impugned notice. The decision relied on precedent validating similar executive orders made to remove difficulties in taxation statutes.The Removal of Difficulties Order, 1962 is valid and paragraph 4 thereof removes any doubt, thereby supporting the Commissioner's jurisdiction to issue the notice.Final Conclusion: The appeal is dismissed. The Court affirmed that proceedings under section 33B of the repealed 1922 Act may be initiated and continued after commencement of the 1961 Act in respect of the specified assessment years; section 6 of the General Clauses Act does not displace the specific savings in section 297(2); and the Removal of Difficulties Order, 1962 validly removes any doubt and sustains the Commissioner's jurisdiction to issue the impugned notice. Issues Involved:1. Jurisdiction of the Commissioner of Income-tax under section 33B of the Indian Income-tax Act, 1922, post repeal by the Income-tax Act, 1961.2. Applicability of Section 6 of the General Clauses Act to proceedings initiated under the repealed 1922 Act.3. Scope of Section 297(2) of the 1961 Act and its relation to Section 33B of the 1922 Act.4. Validity of the Income-tax (Removal of Difficulties) Order, 1962, issued under Section 298 of the 1961 Act.Detailed Analysis:1. Jurisdiction of the Commissioner of Income-tax under section 33B of the Indian Income-tax Act, 1922:The primary issue was whether the Commissioner had the authority to initiate proceedings under section 33B of the 1922 Act after its repeal by the 1961 Act. The court held that Section 297(2)(a) of the 1961 Act includes within its scope a proceeding under section 33B of the 1922 Act. The court reasoned that the word 'assessment' has a comprehensive meaning that includes the entire process of imposing liability on the taxpayer, thereby encompassing the revisional proceedings under section 33B.2. Applicability of Section 6 of the General Clauses Act:The court examined whether Section 6 of the General Clauses Act, which saves certain proceedings from being affected by the repeal of an enactment, applied to the initiation of proceedings under the repealed 1922 Act. The court concluded that Section 6 would not apply because Section 297(2) of the 1961 Act evidenced an intention to the contrary. The comprehensive provisions in Section 297(2) indicated that Parliament intended to cover all possible contingencies arising from the repeal of the 1922 Act, thus negating the need for the application of Section 6.3. Scope of Section 297(2) of the 1961 Act:The court interpreted Section 297(2) to mean that it was designed to provide for all contingencies arising out of the repeal of the 1922 Act. This section was found to cover pending appeals, revisions, non-completed assessments, and assessments based on returns filed after the commencement of the 1961 Act. The court rejected the appellant's argument that the term 'proceedings for the assessment' in Section 297(2)(a) should be narrowly construed to exclude revisional proceedings. The court found that the term should be given a comprehensive meaning to include all proceedings related to the assessment of tax liability.4. Validity of the Income-tax (Removal of Difficulties) Order, 1962:The court upheld the validity of the Income-tax (Removal of Difficulties) Order, 1962, issued under Section 298 of the 1961 Act. The appellant's reliance on the case of Jalan Trading Company (Private) Ltd. v. Mill Mazdoor Union to argue that Section 298 was void was rejected. The court referred to its decision in Commissioner of Income-tax v. Dewan Bahadur Ramgopal Mills, which upheld a similar order under the Finance Act, 1950. The court found that Section 298 was valid and that the Removal of Difficulties Order was appropriately issued to clarify any ambiguities in the transition from the 1922 Act to the 1961 Act.Conclusion:The Supreme Court dismissed the appeal, holding that the Commissioner of Income-tax had the jurisdiction to initiate proceedings under section 33B of the 1922 Act, even after its repeal. The court found that Section 297(2) of the 1961 Act was comprehensive enough to include such proceedings, and that Section 6 of the General Clauses Act did not apply due to the specific provisions of Section 297(2). The validity of the Income-tax (Removal of Difficulties) Order, 1962, was also upheld. The appeal was dismissed with costs.