TaxTMI 
TaxTMI 
TaxTMI 
2012 (6) TMI 37
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.... an assessment order under Section 143(3) of the Act was passed on 28.2.2001. 3. As noticed above, the re-assessment notice under Section 148 of the Act was issued on 30.3.2009, i.e. after the expiry of nine years from the assessment year in which the return of income for the assessment year 1998-99 was filed. The question and issue raised by the petitioner is whether the notice under Section 148 of the Act dated 30.3.2009 is barred and beyond time. This issue is live and is required to be decided as the time limit for issuance of notice under Section 148 as stipulated and stated in Section 149 of the Act underwent substitution by Finance Act, 2001 with effect from 1.6.2001. By the Finance Act, 2001, the period was restricted to six years from the end of the relevant assessment year. Before the said substitution, till 31.5.2001 re-assessment proceedings could be initiated for up to 10 years from the end of the relevant assessment year. 4. For the sake of completeness, we are reproducing below Section 149 of the Act as amended by the Direct Tax Laws (second amendment) Act, 1989 with retrospective effect from 1.4.1989 before substitution by the Finance Act, 2001:- "149. Tim....
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...., 2001, reads as under:- "149. Time limit for notice.-- (1) No notice under section 148 shall be issued for the relevant assessment year,-- (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) ; (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. Explanation.--In determining income chargeable to tax which has escaped assessment for the purposes of this sub-section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of section 151. (3) If the person on whom a notice under section 148 is to be served is a person treated as the agent of a non- resident under section 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of tw....
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....ted is generally retroactive and applies from the day of its enforcement and to this extent it can be retrospective. The question raised is whether the amendment/substitution of the period with effect from 1.6.2001 in Section 149 of the Act, is procedural or substantive. 8. Law of limitation is a procedural law and the provision or the limitation period stipulated on the date when the suit is filed applies. (see, Mathukumalli Ramayya and Ors. v. uppalapati Lakshmayya, AIR 1942 PC 54 and C. Beepathuma v. Velasari Shankaranarayana Kadambolithaya, AIR 1965 SC 241). 9. In T. Kaliamurthi v. Five Gori Thaikkal Wakf, (2008) 9 SCC 306, it has been held as under:- "40. In this background, let us now see whether this section has any retrospective effect. It is well settled that no statute shall be construed to have a retrospective operation until its language is such that would require such conclusion. The exception to this rule is enactments dealing with procedure. This would mean that the law of limitation, being a procedural law, is retrospective in operation in the sense that it will also apply to proceedings pending at the time of the enactment as also to proceedings commenced....
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.... was enforced is applied. Bennion Statutory interpretation (1st addition page 446 para 191) has elucidated:- "Because a change made by the legislator in procedural provisions is expected to be for the general benefit of litigants and others, it is presumed that it applies to pending as well as future proceedings." 12. Law of limitation does not create any right in favour of a person or define or create any cause of action, but simply prescribes that the remedy can be exercised or availed of by or within the period stated and not thereafter. Subsequently, the right continues to exist but cannot be enforced. The liability to tax under the Act is created by the charging Section read with the computation provisions. The assessment proceedings crystallize the said liability so that it can be enforced and the tax if short paid or unpaid can be collected. If this difference between liability to tax and the procedure prescribed under the Act for computation of the liability (i.e. the procedure of assessment), is kept in mind, there would be no difficulty in understanding and appreciating the fallacy and the error in the primary argument raised by the Revenue. It is a settled position that....
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....pt for the provisions of Sections 34 and 35 but it is quite a different matter to say that a "vested right" arises in the assessee. On the expiry of the period the assessments, if any, may also become final and conclusive but only so long as the law is not altered retrospectively. Under the scheme of the Income Tax Act a liability to pay tax is incurred when according to the Finance Act in force the amount of income, profits or gains is above the exempted. That liability to the State is independent of any consideration of time and, in the absence of any provision restricting action by a time limit, it can be enforced at any time. What the law does is to prevent harassment of assessees to the end of time by prescribing a limit of time for its own officers to take action. This limit of time is binding upon the officers, but the liability under the charging section can only be said to be unenforceable after the expiry of the period under the law as it stands. In other words, though the liability to pay tax remains it cannot be enforced by the officers administering the tax laws. If the disability is removed or according to a new law a new time limit is created retrospectively, there i....
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....ssued under section 34(1)(a) of the Act, as amended by the Finance Act of 1956, but the present case was visualised by Sarkar J. in that case. He observed : " So, though section 4 of the 1959 Act freed a notice from the bar of limitation in respect of it imposed by the 1948 amendment, it did not altogether do away with all prescriptions of time. In spite of section 4, a notice contemplated by it would be subject to the prescription of time as to its issue under the 1939 Act and may be, under section 34 as it stood before the 1939 amendment. If the notice was issued after the 1956 amendment, it would also be subject to the prescription as to time provided by that amendment. (emphasis supplied) Then it was said that if section 4 applied to a notice issued more than eight years after the year in which the income escaped assessment but before the 1956 amendment came into force in a case where the escaped income of the year was less than Rs. 1,00,000, the position would be curious. A notice issued in a similar case after the 1956 amendment would be bad under section 34 as it then stood and section 4 could not save it for it saved notices only from the effect of the 1948 amendment. Th....