J. P. JANI, INCOME-TAX OFFICER, CIRCLE IV, WARD-G, AHMEDABAD & ANR. vs. INDUPRASAD DEVSHANKAR BHATT

CIVIL APPEAL No. 972/1967Supreme Court[1969] 1 S.C.R. 71420 August 1968Bench: 3 JudgesAuthor: J.C. SHAH, V. RAMASWAMI, A.N. GROVER I10 pages
AI SummaryDismissed

What were the facts?

The assessee, Induprasad Devshankar Bhatt, was assessed for the assessment year 1947-48. The Income Tax Officer (ITO) issued a notice under Section 34(1)(a) of the Income Tax Act, 1922, for reassessment. The service of this notice was found to be improper, and despite objections, the ITO determined the total income at Rs. 89,000. The Appellate Assistant Commissioner allowed the assessee's appeal on January 5, 1963, due to invalid notice service. Meanwhile, the Income Tax Act, 1922, was repealed and replaced by the Income Tax Act, 1961, effective April 1, 1962. By this date, the right to reopen the assessment under the old Act was time-barred. Subsequently, the ITO issued a notice under Section 148 of the 1961 Act to reopen the assessment. The assessee filed a writ petition, which was allowed by the High Court.

What did the Supreme Court hold?

The Supreme Court held that on a proper construction of Section 297(2)(d)(ii) of the Income Tax Act, 1961, the Income Tax Officer cannot issue a notice under Section 148 to reopen an assessment if the right to reopen under the repealed Income Tax Act, 1922, was already barred at the commencement of the 1961 Act. The Court reasoned that statutes should not be given retrospective operation to affect acquired rights or revive lost remedies unless expressly provided or by necessary implication. The phrase "where in respect of any assessment year after the year ending on the 31st day of March 1940" in Section 297(2)(d)(ii) cannot override the fact that the right to reopen was barred under the repealed Act. The Court followed the principle laid down in S. S. Gadgil v. Lal & Co., which held that an amended provision does not revive a right that had already become barred under the unamended provision before the amendment came into force. Therefore, the notices issued under Section 148 of the 1961 Act were illegal and ultra vires. The appeal was dismissed.

What were the issues?

1. Whether the Income Tax Officer, under Section 297(2)(d)(ii) of the Income Tax Act, 1961, could issue a notice under Section 148 to reopen an assessment where the right to reopen under the repealed Income Tax Act, 1922, was already barred at the commencement of the 1961 Act? Assessee's Contention: The assessee argued that the right to reopen the assessment under the old Act was time-barred before the new Act came into force, and therefore, the ITO could not issue a notice under the new Act to revive a lost remedy. The High Court's decision to quash the notices was based on this interpretation. Revenue's Contention: The revenue contended that Section 297(2)(d)(ii) of the 1961 Act, with its opening phrase "where in respect of any assessment year after the year ending on the 31st day of March 1940," allowed for the reopening of assessments even if the right was barred under the old Act, as the new Act enlarged the period of limitation.

Which sections of the Income-tax Act were involved?

Section 34,Section 148,Section 297(2)(d)(ii),Section 147(a),Section 142(1)

AI-generated summary — verify with the full judgment below

7 I 4 J. P. JANI, INCOME-TAX OFFICER, CIRCLE IV, A WARD·G, AHMEDABAD & ANR. v. INDUPRASAD DEVSHANKAR BRA TT .1 ugust 20, 1968 [J. C. SHAH, .V. JlAMASWAM! ASO A. N. GROVER, JJ.) /ncom•-tax Act (43 o/ 1961). ss. 148 and 297 (2)(d)(ii)-Right of ltu:onJe-J'ax Officer to reopen assessment under s. 34 of the Income-tax Act, 1922, barred on the date of commencement of thl! 1961 Act-- JVherher notice under s. 148 to reopen assessment rould be issued.

Under s. 297(2) (d) (ii) Of the Income.tax Act, 1961. dealing with repeals and sa\ings, notwithstanding the repeal of the 1922-Act, where in r""pect of any assc&smcnt year afte'r the year ending on 31st day of March. 1940. any income had escaped assessment and no proe<>edings under s. 34 of the repealed Act are pending at the commencement of the 1961-Act, a notice under s. 148 of the 1961-Act may be issued for re- opening the assessment. 'fhe respondent was a~sesscd to income-tax for the assessment year 1947~8. Thereafter the Income-Tax Officer issued a notice under s. 34( 1) (a) of the Income-tax Act, 1922, for reassessment. There was no proper 5crvice of the notice, and despite the respondent's objection, the Income

The order continues below.

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