TaxTMI 
TaxTMI 
2022 (2) TMI 274
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....0 for A.Y. 1998-99 (Revenue's appeal) 3. The grounds of appeal raised by Revenue in ITA No.112/Rjt/2020 for A.Y. 1998-99 read as under: "1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in quashing the proceedings u/s 147 of the Act in the case of the assessee. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the notice u/s 148 being issued beyond the period of four years from the end of the relevant assessment year was barred by limitation without appreciating that the Explanation below sec. 149(3), introduced w.e.f. 1.4.2012, clearly gave retrospective operation to section 149(1)(c) and therefore, the Assessing Officer was justified in issuing notice u/s 148 for A.Y. 1998-99. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in quashing the notice u/s 148 of the Act without appreciating that the facts found during the course of search proceedings showed that the members of the assessee group were holding undisclosed foreign bank account in various foreign banks including HSBC Geneva and ABN AMRO Bank, Zurich and, therefore, the ingredie....
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....a mehta and he was also controlling the funds in this account. Accordingly, as per the assessing officer interest income earned out of the said fund was taxable in the hands of Shir Ravichandra Mehta on substantive basis. 4.2 In view of the discussion made in the assessment order that the funds in the foreign accounts belonged to Shri Ravichandra mehta and therefore interest from the said the bank account are to be taxed in the hand of Shri Ravichandra Mehta on substantial basis and to be taxed in ththe hands of, Shir i Balkrishna Mehta on protective basis only. Accordingly for the assessment years 1998-99 the amount of Rs.l7882389 was treated as total income on protective basis. 5. During the course of appellate proceeding before learned CIT(A), the assessee has made the detailed submission which has been incorporated at page numbers 23-29 of the order of the learned CIT(A). The assessee has stated that whatever investments made was not out of his escape income in India but there was his legitimate investments earned from business in Dubai. The funds were transferred from UAE to ABN AMR bank and HSBC Geneva at the later stage and in the year 1997, after the death of assessee....
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.... prescribed u/s. 149 of the Act and therefore the assessment framed pursuant to such invalid notice is void ab initio. 6.2 In this regard it has been contented by the appellant that the above referred additional ground is purely legal in nature and therefore, requires admission and adjudication. It is case of the appellant that a search was conducted in his case on 20.3.2013, that Notice u/s 148 was issued for the captioned years on 27.02.2015 that the same has been issued in view of Section 149 (1)(c) of the Income Tax Act which was inserted by the Finance Act, 2012 with effect from 1.7.2012. As per provision of Section 149 as prevalent before the insertion of sub clause (c) to Sub section (1) of Section 149, it was provided that no Notice u/s 148 shall be issued for the relevant assessment year if not more than 4 or 6 years on the case may be, have elapsed from the end of the relevant Assessment Year. Therefore, prior to insertion of sub clause (c) to Section 149(1) the limitation period for issuance of Notice u/s 148 for the captioned years expired on 31.3.2005 for Assessment Year 1998-99 and on 31.03.2012 for Assessment Year 2005-06. Though sub-clause (c) to Section 14....
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....T/2017, 410/RJT/2017 and 451/RJT/2017) and also the subsequent order of ITAT Rajkot dated 25-06-2019 in the case of the assessee, Shri Balkrishna R Mehta himself for AY 1996-97 and AY 1997-98 ( in ITA No.(s) 407/RJT/2017, and 408/RJT/2017) were the order dated 25-02-2019 in the case of Shri Ravichandra V Mehta has been followed. 6.5 In the case of Shri Ravichandra V Mehta the additional ground of the appellant was that notice u/s.148, pursuant to which impound assessment order is framed is barred by limitation u/s.149 of the act and therefore assessment framed pursuant to such a valid notice is void ab initio. The ground of the Revenue was that the Ld. CIT(A) has erred in law and/or on facts virtually setting aside the order of AO passed u/s.143 rws 147 of the Act dated 27-02-2015, whereas no such power rests with him under the Act and the additional ground was that the Ld. CIT(A) had erred in holding that as per the provision section 5 of the Act the funds of the assesses outside India could not be taxable in the hands of appellant if his status was Resident but Not Ordinarily Resident, even though the section excludes only income accruing or rising outside India to such ....
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....llant. The Hon'ble ITAT has followed its decision dated 25-02-2019 in the case of Shri Ravichandra V Mehta and has held that proceedings initiated u/s.147 of the Act werre not sustainable and accordingly the assessment orders were quashed and appeal of the assessee were allowed. 6.8 These orders of jurisdictional ITAT are binding and the appeals for AY 1998-99 to AY 2004-05 under consideration are covered by the earlier decisions of the Hon'ble ITAT Rajkot as the notices u/s.148 were issued for these years on 27.02.2015 on the strength of the amended provisions w.e.f.01.07.2012 where on as per the pre-amended provision those notices could not have been issued after 31.03.2005 for Assessment Year 1998-99, 31.03.2006 for Assessment Year 1999-2000, 31.03.2007 for Assessment Year 2000-01, 31.03.2008 for Assessment Year 2001-02, 31.03.2009 for Assessment Year 2002-03, 31.03.2010 for Assessment Year 2003-04 and 31.03.2011 for Assessment Year 2004-05. Following there from the assessment orders u/s. 144 rws 147 made on 31-03-2015 for AY 1998-99 to AY 2004-05 on the strength of the notices u/s. 148 dated 27.02.2015, under consideration in the present appeals, are required to be qua....
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.... "The assessee has not filed the return of income for A1996-97 On perusal of documents/records forwarded by the DDIT (Inv.)-I, Rajkot, it is noticed that the assessee has opened a bank account No.130756 on 3rd June, 1970 in the joint name of himself and Shri Balkrishna Ravichandra Mehta and Jawahar Ravichandra Mehta with HSBC Republic Bank, (Suisse), A.A. Geneva. The said account number was changed into account No.432541 on 04.07.2000. Therefore, it is clear that the assessee was holding the said bank account during the period F.Y. 1995-96 relevant to AY 1996-97. 3. During the course of statement recorded u/s.132(4) of the I.T.Act during the course of search from Shri Ravichandra V.Mehta in reply to question No.13 he has submitted that the return of income has not been filed by him from 1994 to 1997. In his statement Shri Ravichandra Mehta in reply to question No.12 has submitted that there was a balance of Rs. 1 crore dollar in the said account in the year 1997. 4. As per second proviso to section 147 of the I.T.Act which has been inserted by the Finance Act, 2012 w.e.f.01.07.2012 nothing contained in the first proviso shall apply in a case where an....
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....vant previous financial year, the same represents asset located outside India, within the meaning of explanation 2(d) to section 147 of the I.T. Act. Since these asset has not been disclosed to the Department, the income chargeable to tax had escaped assessment within the meaning of section 147 of the I.T. Act. Again as per section 149(1)(c) of the I.T. Act, no notice shall be issued if more than 16 years have elapsed, as can be seen from the language of the Act, which is reproduced herein below: "149(1) No notice under section 148 shall be issued for the relevant assessment year.- (c) If your years, but not more than sixteen years, have elapsed from the end of the relevant assessment years unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment." In the present case it is seen that provision of Section 147 has been amended by insertion of 2nd proviso to Section 147 and amending explanation 2 by inserting clause (b) to explanation 2 by Finance Act 2012 with effect from 1.7.2012. Clause (c) to Section 149(1) is also simultaneously inserted, which provides a tim....
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....31-3- 2005 in terms of provisions of section 149 as applicable at relevant time - Held, yes - Whether subsequent amendment to section 149, by Finance Act, 2012, which extended limitation for initiation of reassessment proceedings to sixteen years, could not be resorted for reopening concluded proceedings in respect of which limitation had already expired/lapsed before amendment became effective - Held, yes - Whether thus, impugned reassessment notice and all consequent proceedings were to be quashed and set aside - Held, year [Paras 14, 15, 16 an 19] [In favour of assessee]" 8. On the other hand, Ld.DR relied upon the finding of Ld.CIT(A) extracted hereinabove. 9. We have considered rival submissions and gone through the impugned order and the case-laws relied upon by the Ld.AR. The assessee has not challenged the vires of the amendment but has raised legal contention that for a concluded assessment, the subsequent amendment will not revive the time limit for issue of notice u/s.148. Therefore, Ld.CIT(A) misread the provisions to hold that since the time limit prescribed in law has been extended the notice is within the time. We are inclined to differ with the vie....
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....o commence a proceeding for assessment against the assessee as agent of a non-resident for the asst. yr. 1954-55, therefore, ended on 31st March, 1956, under the new Act before its amendment in 1956. This provision was, however, amended by the Finance Act, 1956, and under the amended provision the period of limitation was extended to two years from the end of the assessment year. The amendment was made on 8th Sept., 1958, but was given effect to from 1st April, 1956. Since the time within which notice could be issued against a person deemed to be an agent of a non-resident was extended to two years from the end of the assessment year, it was contended on behalf of the ITO that the notice issued by him was within the terms of the amended provision and was, therefore, a valid notice. Now the notice issued on 27th March, 1957, was clearly within a period of two years from the end of the assessment year 1954-55 and if the amended provision applied, the notice would be a valid notice. It was, however, held by this Court that the notice was not a valid notice inasmuch as the right of the ITO to reopen the assessment of the assessee under the unamended provision became barred on 31st Marc....
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....High Court by the grant of a writ. For the reasons expressed, we hold that the judgment of the High Court of Gujarat dt. 14/15th Dec., 1964, is correct and this appeal must be dismissed with costs." 7. In view of the above decision, since the assessment could not have been reopened for Assessment Years 1996-97 to 2005-06, which has become barred by limitation on 31st March 2012, the Amending Act being Finance Act, 2012 inserting sub clause (c) Section 149 (1) w.e.f. 01-07-2012 cannot give a fresh lease of life for reopening the same which has already become barred by limitation on 31.12.2012. In view of the above, the Notice issued u/s.148 being beyond the limitation prescribed u/s.149 is bad in law and hence consequential assessment framed pursuant to such invalid notice is also required to be quashed and set aside." 9.2. Once against that issue arose before the Hon'ble Supreme Court in the matter of K.M. Sharma vs. ITO 254 ITR 772 (SC), wherein the Hon'ble Court held as under:- "13. In KM Sharma's case (supra) the assessee‟s land was acquired under the Land Acquisition Act, 1894 and an award was passed in 1967 granting compen....
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....sub-section (2) can be read as giving more than intended operation to the said provision. The provisions, it is argued, do not permit the authorities to reopen assessments, which have become final and reassessment of which had become barred by time before 1.4.1989 when section 150(1) was amended Reliance is placed on the decision in S.S. Gadgil v. Lal & Co. [1964] 53 ITR 231. 12. The learned counsel appearing on behalf of the department has made an effort to persuade this Court to accept his construction of the provisions of section 150(1)and (2). It is argued that it is for the specific purpose of assessing income, which might accrue on the basis of any decision of any Court in any proceeding in any other law, that the provision has been amended to lift bar of limitation for reassessment. 13. Fiscal statute, more particularly a provision such as the present one regulating period of limitation must receive strict construction. The law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events. Proceedings, which have attained finality under ....
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....r of Court passed in any proceedings in any law in cases where prescribed period of litigation for reassessment had already expired. 17. We do not find the above reasoning of the High Court is sound. The plain language of sub-section (2) of Section 150 clearly restricts application of subsection (1) to enable the Authority to reopen assessments which have not already become final on the expiry of prescribed period of limitation under Section 149. As is sought to be done by the High Court, sub-section (2) of Section 150 cannot be held applicable only to reassessments based on Orders 'in proceedings under the Act' and not to Orders of Court 'in proceedings under any other law'. Such an interpretation would make the whole provision under Section 150 discriminatory in its application to assessments sought to be reopened on the basis of Orders under the IT Act and other assessments proposed to be reopened on the basis of Orders under any other law. Interpretation, which creates such unjust and discriminatory situation, has to be avoided. We do not find that sub-section (2) of section 150 has that result. Sub-section (2) intends to insulate all proceedings of ass....
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.... Officer issued a notice calling upon the assessee to show cause why, in respect of the assessment year 1954-55, the assessee should not be treated as an agent under Section 43 in respect of certain non- residents. The case of the assessee, inter alia, was that the proposed action was barred by limitation as right to commence proceedings of assessment against the assessee as an agent of non-resident for the assessment year 1954-55 ended on 31.3.1956, under the Act before it was amended in 1956. This Court in the case of S.S. Gadgil (supra) accepted the contention of the assessee and held as under: ". The legislature has given to section 18 of the Finance Act, 1956, only a limited retrospective operation, i.e., up to April 1, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorise the Income-tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided become barred." 20. On a proper construction of t....
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.... to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year." 16. It has been said that "the government in all its actions is bound by rules fixed and announced beforehand--rules which make it possible to foresee with fair certainty how the authority will use its coercive powers in given circumstances, and to plan one's affairs on the basis of this knowledge" (Ref. FA Hayek, "Road to Serfdom", 1944). In this case, the interpretation proposed by the revenue has the potential of arming its authorities to re-open settled matters, in respect of issues where the citizen could genuinely be sanguine and had no obligation of the kind which the Revenue seeks to impose by the present amendment. All the more significant, is the fact that absent a clear indication, every statute is presumed to be prospective. The revenue had sought to contend that the amendment (to Section 149) is merely procedural and no one has a vested right to procedure; and that procedural amendments can be given effect any time, even in ongoing proceedings. 17. This court is of the opinion that there is no merit in the revenue‟s contention. I....
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....year, i.e., the first day of April, any change in law upsetting the position and imposing tax liability after that date, even if made during the currency of the assessment year, unless specifically made retrospective, does not apply to the assessment for that year. These principles were reiterated in Commissioner of Income Tax v Vatika Township (P) Ltd [2014] 49 taxmann.com 249/227 Taxman 121/367 ITR 466(SC). 19. In view of the above discussion, it is held that the petition has to succeed; the impugned reassessment notice and all consequent proceedings are hereby quashed and set aside. The writ petition is allowed; however without order on costs." 10. Thus, in all above cases Courts have held that when the time limit for issuing notice u/s.148 has expired before any amendment in law from a prospective date will not revive. The time limit for those years for which limitation has already expired on the date of amendment. There was no challenge to vires of the amendment but still the Courts have held that notice issued u/s.148 is beyond limitation period. In the present case in our hand, prior to amendment in section 149 and the time limit for issuance of notice u/s.....
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....06 by the Revenue in the case of Shiri Ravichandra V.Mehta:- 11. During the course of assessment interest income of Rs. 110,00000/- from account number 4432541 with HS BC bank Geneva owned up and shown by Shiri Jawahir Mehta (though not taxable in the hands of Jawahar Mehta being non resident) and of Rs. 77,67,720/- from account number 44325331 with HSBC bank Geneva owned up and shown by Shri Balkrishna Mehta ( and offered by Sh. Balkrishan Mehta being resident) were to be taxed in the hand of the assessee because the assessee was resident during the year and was liable to be taxed in India on a global income including the income from whatever sources derived which accrue or arises to him outside India as per section 5(l)(c) of the act. Similarly the interest of Rs. 4,71,207/- shown why Shiri Jawahir Mehta have to be added on substantive basis in the hands of the assessee. 12. ITA No.86/Rjt/2020 by the assessee & ITA No. 119/Rjt/2020 for A.Y. 2005-06 by the Revenue in case of Sh. Balkrishna Ravichandra Mehta:- 13. Both these appeal by the assessee and revenue are interconnected on similar facts therefore for the sake of convenience both these appeals are adjudicated togeth....
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....ion of Rs. 23,76,000/-, the assessee submitted that in the case of his father, the substantive addition has been set aside by the learned CIT(A) to the file of Assessing Officer for verification to see it is not double tax. The proceeding before the Assessing Officer are pending on date therefore pleaded that same may be set aside to the Assessing Officer in the case of the assessee also. 18. Herd both the sides and perused the material on record on this issue. With the assistance of learned representatives we have gone through the above referred decision of the coordinate bench of the ITAT. The relevant part of the decision is reproduced as under:- "19. Thus, upon considering the entire aspect of the matter, in view of the above we do not find any case in favour of the Revenue holding that the assessee is the owner of the funds who has acted on the basis of the power of attorney for giving instructions to transfer of funds from one account to another that too to the accounts belong to his two sons in the absence of any clinching evidence in support of the said observation and conclusion thereon. 20. Further fault in making addition of income of the son Balkris....
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.... amount of tax with surcharge and penalty was deposited thereon. The same has been deleted on the ground of double taxation. 21. Another judgment passed by the Jurisdictional High Court in the case of B. Nanji Enterprise Ltd. vs. DCIT reported in (2017) 84 taxman.com 155 (Guj.) as relied upon by the Ld. AR has been carefully considered by us wherein the Ld. AO added the cash seized from the bank locker of the assessee company as undisclosed cash receipt of the assessee. Subsequently, tax was paid on such income by the Directors of the company upon filing settlement application owning up such amount as his undisclosed income. The addition made on the company was then held to be bad and deleted since the same was suffering from the principle of double taxation. The income which was taxed in the case of the partnership farm cannot be taxed in the hands of the partner again as has been held by the Hon'ble Gujarat High Court in the case of Kanubhai Maganlal Patel reported in (2017) 79 taxman.com 257 as relied upon by the Ld. AR has also been considered by us. 22. Thus, considering the above facts and proposition of law we do not hesitate to hold that the addition made ....
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....Ravichandra V. Mehta are similar and identical therefore for the sake of convenience all these three appeals are adjudicated together by taking the ITA No. 83/Rjt/2020 for A.Y. 2010-11 as lead case and its finding will be applied to the other two appeals filed by the assessee as referred above. 26. In the course of assessment interest on funds in the account number 4432533( held with Balakrishnan Mehta and account number 4432541 (held with Jawahir Mehta) with HSBC Geneva , the Assessing Officer assessed these interest on substantive basis in the hands of Ravichandra V Mehta and also taxed on protective basis in the hands of Sh.Balkrishna R.Mehta. The Assessing officer has also estimated the interest income at the rate of 10% and added the same on substantive basis in the hands of Shiri Ravichandra V. Mehta and on protective basis in the hands of Balakrishnan Mehta. 27. The learned CIT(A) has dismissed the appeal of the assessee. 28. In the course of appellant proceeding before us the learned counsel contended that the identical issue on similar facts has been adjudicated by the ITAT as referred above in the cases of the assessee vide ITAT order in own case in IT(SS)A Nos.1....
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....rising acknowledgment of return of income, along with computation of income, flow chart of transfer of funds from the assessee's bank account, summary of bank account statement etc. The learned counsel has also placed reliance on the decision of the ITAT rajkot in own case of the assessee vide ITA No. 120, 121/Rjt/-2020 dated 22nd of June 2020 at paragraph 40 page number 49 of the order. On the other hand the learned departmental representative has relied on the order of lower authorities. 35. Heard both the sides and perused the material on record on this issue. The Assessing Officer had made addition of interest income of the foreign bank on estimated bases at the rate of 10% Rs. 57,21,806/- on protective basis and substantive addition was made in the hand of father of the assessee Shiri Ravichandra V. Mehta. During the course of assessment as per the material placed in the paper book the assessee had filed the sporting documents and details and the learned CIT(A) in his finding made at para 7.3 of the appellant order has commented that the submission made by the assessee was referred to the assessing officer for examination and his comments but no proper remand report was....
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....espective interests were credited by the bank. The contention of Ld. AR in context of interest income of Rs. 1,32,94,549/- is found correct as per the respective ledger furnished in the paper book. Thus it has to be held that the AO had no basis to reject the amount shown by the appellant and to vary the amount adopting a different exchange rate and make further addition to the total income on account of such difference. The addition of Rs. 43,99,544/- (on account of diff of Rs. 1,32,94,549/- and Rs. 1,76,94,093/-) is directed to be deleted. The related ground succeeds." The appellant has applied the exchange rate on the dates the respective interests were credited by the bank and as per the respective ledger furnished before the Revenue. The interest income of Rs. 1,32,94,549/- has been found correct. Thus, the interest income of Rs. 1,76,94,093/- as admitted by the Ld. AO by applying the exchange rate as on 31st March of that year has been rightly rejected by the Ld. CIT(A) and consequently deletion of addition of the difference amount of Rs. 43,99,544/- is in our considered opinion just and proper and without any ambiguity so as to warrant interference. Hence, the groun....
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....n the Hon'ble Gujarat High Court in the case of Induprasad Bhatt Vs J.P. Jani (ITO) (58 ITR 559) wherein the Hon'ble High Court of Gujarat held that on proper construction of section 297(2)(d)(ii) of the act the ITO cannot issue notice under section 148 to reopen the assessment of an assessee in the case where the right to reopen the assessment was barred under the old (pre-amended) act and the date when new act (new amendment ) came into force. The learned CIT(A) has also placed reliance on the decision of ITAT Rajkot in assessee's case dated 25-02-2019 in the case of Shri Ravichandra V. Mehta for assessment year 1996-97 and assessment year 1997- 1998 (in ITA No. 409/ RJT/ 2017, 450/ RJT/ 2017, 410/ RJT/ 2017 and 451/RJT/ 2017 and also the subsequent order of ITAT Rajkot dated 25th June, 2019 in the case of the assessee. 42. The relevant Part of the decision of learned CIT appeal is reproduced as under:- "5.2 It has already been mentioned before that during the appeal proceedings, the appellant has taken two additional grounds separately - one related to the residential status of the appellant and other related to the legality of the notices u/s.148 which l....
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....ent Year 1998-99 and on 31.03.2011 for Assessment Year 2004-05. Though sub-clause (c) to Section 149(1) provides that Notice u/s 148 can be issued if not more than 16 years have elapsed from the end of the relevant Assessment Year if the income in relation to any asset located outside India chargeable to tax has escaped assessment, however, said sub clause (c) of Section 149(1) cannot help to extend the time limit which has already expired before the insertion of sub clause (c) to Section 149(1) which is inserted with effect from 1.7.2012 only. The time limit for all the captioned years (Assessment Year 1998-99 to 2004-05) had already expired on 31.3.2011 which cannot be further extended in view of the amendment as carried out with effect from 1.7.2012. For the purpose reliance has been placed on the decision of Hon'ble Gujarat High Court in the case of Induprasad Bhatt Vs. J.P. Jani (ITO) (58 ITR 559) where the Hon'ble High Court of Gujarat held that on proper construction of section 297(2)(d)(ii) of the Act the ITO cannot issue notice u/s. 148 to reopen the assessment of an assessee in the case where the right to reopen the assessment was barred under the old (pre-amended) Act at....
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....ands of appellant if his status was Resident but Not Ordinarily Resident, even though the section excludes only income accruing or rising outside India to such assesses from ambit of taxation. 5.7 In the judgement dated 25-02-2019 in the case of Shri Ravichandra V Mehta, the Hon'ble ITAT has relied upon the decision of Hon'ble Delhi High Court in the case of Braham Dutt Vs. ACIT 100 taxmann.com 324, the decision of Hon'ble Supreme Court in the case of S.S Gadgil Vs. Lal & Co. 53 ITR 231, and in the matter of K M Sharma v/s ITO 254 ITR 772 where in it has been held that when the time limit for issuing notice u/s. 148 has expired before any amendment in law from a prospective date will not revive. The decision of the Hon'ble ITAT in the case of Shri Ravichandra V Mehta is as under "10. Thus, in all above cases Courts have held that when the time limit for issuing notice u/s. 148 has expired before any amendment in law from a prospective date will not revive. The time limit for those years for which limitation has already expired on the date of amendment. There was no challenge to vires of the amendment but still the Courts had held the u/s. 148 is be....
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....al submissions and gone through the impugned order and the case-laws relied upon by the Ld.AR. The assessee has not challenged the vires of the amendment but has raised legal contention that for a concluded assessment, the subsequent amendment will not revive the time limit for issue of notice u/s.148. Therefore, Ld.CIT(A) misread the provisions to hold that since the time limit prescribed in law has been extended the notice is within the time. We are inclined to differ with the view of Ld.CIT(A). The issue is no more res integra. The issue has first came up before the Hon'ble Supreme Court in the case of S.S. Gadgil vs.Lal & Co. reported in 53 ITR 231(SC). Taking note of the said case, Hon'ble Gujarat High Court in the case of Induprasad Bhatt(supra) held as under: "We are, therefore, of the view that on a true construction of s. 297(2)(d)(ii), the ITO cannot issue a notice under s. 148 in order to reopen the assessment of an assessee in cases where the right to reopen the assessment was barred under the old Act at the date when the new Act came into force. The right of the ITO to reopen the assessment of the petitioner in the present case was admittedly barred u....
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....by him was within the terms of the amended provision and was, therefore, a valid notice. Now the notice issued on 27th March, 1957, was clearly within a period of two years from the end of the assessment year 1954-55 and if the amended provision applied, the notice would be a valid notice. It was, however, held by this Court that the notice was not a valid notice inasmuch as the right of the ITO to reopen the assessment of the assessee under the unamended provision became barred on 31st March, 1956, and the amended provision did not operate against him so as to authorise the ITO to commence proceedings for reopening the assessment of the assessee in a case where, before the amended provision came into force, the proceedings had become barred under the unamended provision. At page 240 of the report, Shah, J., speaking for the Court, observed as follows : "As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non-resident party under the IT Act before it was amended, ended on 31st March, 1956. It is true that, under the amending Act, by s. 18 of the Finance Act, 1956, authority was conferred upon the ITO to as....
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....prescribed u/s.149 is bad in law and hence consequential assessment framed pursuant to such invalid notice is also required to be quashed and set aside." 9.2. Once against that issue arose before the Hon'ble Supreme Court in the matter of K.M. Sharma vs. ITO 254 ITR 772 (SC), wherein the Hon'ble Court held as under:- "13. In KM Sharma's case (supra) the assessee‟s land was acquired under the Land Acquisition Act, 1894 and an award was passed in 1967 granting compensation in favour of the assessee. Thereafter, the Additional District Judge by judgment dated 20.05.1980 held the assessee to be entitled to 1/32th share of the compensation and the assessee was granted total compensation of Rs. 1,18,810 in the year 1981. Subsequently, by another judgment dated 31.07.1991, the assessee was awarded sum of Rs. 1,10,20,624, which was received by it between 15.10.1992 and 25.05.1993. The said amount comprised of principal compensation as well as interest up to 18.05.1992. As land acquired was agricultural land, principal amount was not chargeable to tax; however, interest amounting to Rs. 76,84,829 was chargeable on year to year basis. The assessee claimed that pro....
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....roceeding in any other law, that the provision has been amended to lift bar of limitation for reassessment. 13. Fiscal statute, more particularly a provision such as the present one regulating period of limitation must receive strict construction. The law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events. Proceedings, which have attained finality under existing law due to bar of limitation cannot be held to be open for revival unless the amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which had already been concluded and attained finality. The amendment to subsection (1) of section 150 is not expressed to be retrospective and, therefore, has to be held as only prospective. The amendment made to sub- section (1) of section 150 which intends to lift embargo of period of limitation under section 149 to enable authorities to reopen assessments not only on the basis of orders passed in proceedings under the Act but also on order of a Court in any proceedings under any law, has to be applied pros....
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....er law'. Such an interpretation would make the whole provision under Section 150 discriminatory in its application to assessments sought to be reopened on the basis of Orders under the IT Act and other assessments proposed to be reopened on the basis of Orders under any other law. Interpretation, which creates such unjust and discriminatory situation, has to be avoided. We do not find that sub-section (2) of section 150 has that result. Sub-section (2) intends to insulate all proceedings of assessments, which have attained finality due to the then existing bar of limitation. To achieve the desired result it was not necessary to make any amendment in sub-section (2) corresponding to sub-section (1), as is the reasoning adopted by the High Court. 18. Sub-section (2) aims at putting embargo on reopening assessments, which have attained finality on expiry of prescribed period of limitation. Sub-section (2) in putting such embargo refers to whole of sub-section (1) meaning thereby to insulate all assessments, which have become final and may have been found liable to reassessments or re-computation either on the basis of Orders in proceedings under the Act or Orders of Court....
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....ed retrospective operation, i.e., up to April 1, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorise the Income- tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided become barred." 20. On a proper construction of the provisions of Section 150 (1) and the effect of its operation from 1.4.1989, we are clearly of the opinion that the provisions cannot be given retrospective effect prior to 1.4.1989 for assessments which have already become final due to bar of limitation prior to 1.4.1989. Taxing provision imposing a liability is governed by normal presumption that it is not retrospective and settled principle of law is that the law to be applied is that which is in force in the assessment year unless otherwise provided expressly or by necessary implication. Even a procedural provision cannot in the absence of clear contrary intendment expressed therein be given greater retrospectivity than is expre....
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.... kind which the Revenue seeks to impose by the present amendment. All the more significant, is the fact that absent a clear indication, every statute is presumed to be prospective. The revenue had sought to contend that the amendment (to Section 149) is merely procedural and no one has a vested right to procedure; and that procedural amendments can be given effect any time, even in ongoing proceedings. 17. This court is of the opinion that there is no merit in the revenue‟s contention. In Sri Prithvi Cotton Mills Vs Broach Borough Municipality, AIR 1970 SC 192, examined the validity of the retrospective amendment of a statute in light of Article 19(1)(g) of the Constitution of India, i.e. a fundamental right to practice any profession, or to carry on any occupation, trade or business. The court said: "In testing whether a retrospective imposition of a tax operates so harshly as to violate fundamental rights under article 19(1)(g), the factors considered relevant include the context in which retroactivity was contemplated such as whether the law is one of validation of taxing statute struck-down by courts for certain defects; the period of such retroactivity,....
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....ove cases Courts have held that when the time limit for issuing notice u/s.148 has expired before any amendment in law from a prospective date will not revive. The time limit for those years for which limitation has already expired on the date of amendment. There was no challenge to vires of the amendment but still the Courts have held that notice issued u/s.148 is beyond limitation period. In the present case in our hand, prior to amendment in section 149 and the time limit for issuance of notice u/s.148 for AY 1996-97 expired on 31/03/2003 and that for 1997-98 expired on 31/03/2004. The amendment of section 149 is with effect from 01/07/2012 and is not retrospective in nature. Thus, the time limit which have already been expired could not have been revived by subsequent amendment. For all these reasons and complying the ratio laid down by above cited cases, we hold that notice issued u/s.148 on 25/03/2013 for both the above years is beyond jurisdiction and accordingly quashed. Since the notice is held to be invalid, subsequent assessment order pursuant to the said notices are also quashed and set aside." 44. We find that issues raised before the tribunal in these years are sim....