TMI Blog1970 (4) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was transferred to the account of one Amrithlal Ranchoddas, the father-in-law of the appellant. The Income-tax officer included the said amount as income of the appellant from undisclosed sources in the assessment for the assessment year 1949-50. On appeal to the Appellate Assistant Commissioner, the appellant contended that the amount could not be included in the assessment year 1949-50 because the credit appeared prior to March 31, 1948. The Appellate Assistant Commissioner allowed the appeal holding that the credit came into the books of the appellant on November 13, 1947, i.e., in the financial year 1947-48, which is the previous year for the assessment year 1948-49. On this finding, the Appellate Assistant Commissioner deleted the addition of Rs. 25,000 from the assessment of the appellant for the year 1949-50. In doing so, the Appellate Assistant Commissioner followed the decision in Commissioner of Income-tax v. P. Darolia Sons. Consequently, on November 3, 1958, the Income-tax Officer issued a notice under section 34(1)(a) of the Income-tax Act, 1922 (hereinafter referred to as " the Act "), to the appellant for the assessment year 1948-49. By his order dated Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sa, counsel for the respondent. Referring to the said contentions, the Supreme Court said : " Mr. Veda Vyasa referred to the decision of the Bombay High Court in Onkarmal Meghraj v. Commissioner of Income-tax, in which it was held that there was nothing in section 2 or 4 of the Amendment Act of 1959 to restrict the terms of the words 'at any time' occurring in section 4 of that Act as meaning 'at any time after April 1, 1956', viz., the date on which the amendments made by the Finance Act, 1956, came into force and there was nothing in the provisions of the Amendment Act of 1959 which limited the retrospective operation of section 4. It was also held that since the enactment of the Amendment Act of 1959, a notice issued after April 1, 1956, for reopening an assessment, by virtue of section 4, could not be permitted to be called in question on the ground that the notice was not issued within the period prescribed by the unamended section 34(1)(a). On behalf of the respondent reference was also made to the decision of this court in S. C. Prashar v. Vasantsen Dwarkadas, in which it was held that section 4 of the Amendment Act, 1959, operated on and validated notices issued under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e framework of the question already referred to the High Court and it is therefore competent to this court, in a case of this description, to allow a new contention to be advanced. It is, however, necessary that the case should be remanded to the High Court for examining the question of law referred to it after considering the impact of the Amending Act of 1959 (1 of 1959). For these reasons we allow this appeal, set aside the judgment of the High Court dated January 2, 1964, and remand the case to it for further hearing and answerirg the reference in the light of the Income-tax Amending Act, 1 of 1959. In the light of this, the questions referred to this court as above, under section 66(1) of the Act, have to be answered. In order to answer the questions, it is necessary to trace to a certain extent the scope of section 34 of the Act, as also the amendments made thereto from time to time and the impact of the Amending Act of 1959 (1 of 1959). Section 34 enables the Income-tax Officer to assess income which has escaped assessment or has been under-assessed in the relevant assessment year, even though such assessment has become final. The text of section 34 suffered verbal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been computed in excess, amount to, or are likely to amount to one lakh of rupees or more in the aggregate, either for that year, or for that year and any other year, or years after which or after each of which eight years have elapsed, not being a year or years ending before the 31st day of March, 1941 ; (iii) for any year, unless he has recorded his reasons for doing so, and, in any case falling under clause (ii), unless the Central Board of Revenue, and, in any other case, the Commissioner, is satisfied on such reasons recorded that it is a fit case for the issue of such notice : Provided further that the Income-tax Officer shall not issue a notice under this sub-section for any year, after the expiry of two years from that year, if the person on whom the assessment or reassessment is to be made in pursuance of the notice is a person deemed to be the agent of a non-resident person under section 43 : Provided further that the tax shall be chargeable at the rate at which it would have been charged had the income, profits or gains not escaped assessment or full assessment, as the case may be. Explanation.- Production before the Income-tax Officer of account books or ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scythe mows down the evidence of our rights, while the hour-glass measures the period which renders that evidence superfluous. Thus, if a notice under section 34 is issued after the statutory period of eight years, the question is, can such a lapsed remedy be revived without any express provision therefor. Ordinarily, the law of limitation is referred to as procedural law and by itself is retrospective in operation. But it is again fundamental that no law can be retrospective unless made so operative, so as to whittle down, alter or destroy any vested right or so as to bring to life any remedy already lost by efflux of time. But, in spite of the right becoming stale by operation of the law of limitation, yet the legislature in its wisdom can interfere and save such rights. Such a saving should be expressly provided or should patently appear by necessary intendment. On this aspect, there is no difference between procedural law and substantive law. The following excerpt from the judgment of the Privy Council in Delhi Cloth and General Mills Co. v. Income-tax Commissioner is apposite : " . . . . while provisions of a statute dealing merely with matters of procedure may properly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mischief and advance the remedy and to suppress subtle inventions and evasions for continuance of the mischief, and pro private commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono public. But it is well accepted that Acts deal with future and not with past events. This does not, however, mean that an Act is not intended to interfere with existing rights. If by express declaration or necessary intendment such interference is plausible and provided for in an Act then courts are bound to give effect to it. In the conspectus of such understanding of the law relating to interpretation of statutes, what was intended by the legislature in enacting section 4 of Act I of 1959 ? The law as it stood prior to 1956 was, if an escapement survived a period of eight years in the case of income less than rupees one lakh, no notice under section 34(1)(a) can be given ; but if it related to an income of rupees one lakh and more, then such a notice could be issued at any time, prior to the 1956 amendment and after the 1956 amendment, within eight years after the expiry of the year of escape. The observations of Veeraswami J., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion, introduced in 1959, wanted to cure. The true reason of the remedy is that, however ingenious a culpable assessee may be and howsoever he was able to hoodwink the revenue by allowing the march of time to steal a march over the remedy available to the revenue, the legislature thought such unsocial, screening (sic) and illegal escapement from the clutches of fiscal law ought not to be encouraged ; hence Parliament resolved to cure the defect. As it is the duty of courts to advance the remedy and suppress the mischief, it is necessary to see whether the argument of Mr. Swaminathan that the section has not provided for the revival of the remedy if the quantity of the escaped income is less than rupees one lakh, is well-founded. Almost to the level of exhaustion, Mr. Swarminathan strenuously argued that the parenthesis " under that section as in force before its amendment by clause (a) of section 18 of the Finance Act, 1956 (18 of 1956), had expired ", appearing in section 4 of the Amending Act I of 1959, can have reference to only income of rupees one lakh and above and not to income less than a lakh of rupees, because the 1956 amendment was intended to touch and deal only wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already referred to them in the language of the Supreme Court. As regards question No. 2, the appellant having succeeded before the Supreme Court, it is unnecessary for us to record our answer thereon. Questions Nos. 1 and 3 alone, therefore, survive. We have in extenso considered the full scope and content of section 34 with particular reference to its variegated amendments and finally we have also touched upon in detail the impact of the Amending Act of 1959 (Act I of 1959) on section 34. At this stage the observations of the Supreme Court in S. C. Prashar v. Vasantsen Dwarkadas and the analytical epitomization therefor in Hussain Bhai v. Commissioner of Income-tax may usefully be referred to. In S. C. Prashar v. Vasantsen Dwarkadas the following excerpts from the judgment rendered by their Lordships bring out the true effect of section 4 of the Amending Act of 1959. At page 21, S. K. Das J. observed: " It seems to me that on the contrary, the provisions of section 34(4) and section 4 of the Amending Act clearly indicate that the only effect of section 34(4) is to authorise action, and the only effect of section 4 of the Amending Act is to validate action, under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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