1964 (12) TMI 59 - HC - Income Tax

Issues Involved:
1. Validity of the notice dated 13th November 1963 under Section 148 of the Income-tax Act, 1961.
2. Applicability of Section 297(2)(d)(ii) of the Income-tax Act, 1961.
3. Interpretation of the terms "issued" and "served" in the context of Section 34 of the Income-tax Act, 1922.
4. Retrospective operation of Section 297(2)(d)(ii).
5. Continuation of proceedings under the old Act after the repeal by the new Act.

Issue-wise Detailed Analysis:

1. Validity of the Notice Dated 13th November 1963 under Section 148 of the Income-tax Act, 1961:
The petitioner challenged the validity of the notice dated 13th November 1963 issued by the Income-tax Officer under Section 148 of the Income-tax Act, 1961, for reassessing the income for the assessment year 1947-48. The main contention was that the notice was invalid as the right to reopen the assessment was already barred under the old Act before the new Act came into force. The court held that the notice was beyond jurisdiction and must be set aside.

2. Applicability of Section 297(2)(d)(ii) of the Income-tax Act, 1961:
The court examined whether Section 297(2)(d)(ii) authorized the Income-tax Officer to issue the impugned notice under Section 148. The court concluded that Section 297(2)(d)(ii) could not be invoked to reopen an assessment that was already barred under the old Act. The court emphasized that the right to reopen the assessment must exist under the old Act at the commencement of the new Act for Section 297(2)(d)(ii) to apply.

3. Interpretation of the Terms "Issued" and "Served" in the Context of Section 34 of the Income-tax Act, 1922:
The court addressed the distinction between the terms "issued" and "served" as used in Section 34 of the old Act. It referred to the Supreme Court's decision in Banarsi Debi v. Income-tax Officer, which clarified that the words "issued" and "served" are used interchangeably in the context of notices under Section 34. The court held that proceedings under Section 34 commence only when the notice is served on the assessee, not merely when it is issued.

4. Retrospective Operation of Section 297(2)(d)(ii):
The court discussed the principle that a statute should not be construed as retrospective in operation unless expressly stated or necessarily implied. It referred to the Supreme Court's decision in S.S. Gadgil v. Lal & Co., which held that a subsequent enlargement of the time for reopening assessments does not revive the right to reopen assessments already barred under the old Act. The court found no express provision or necessary implication in Section 297(2)(d)(ii) indicating that it was intended to have retrospective operation.

5. Continuation of Proceedings under the Old Act after the Repeal by the New Act:
The court examined whether proceedings initiated under the old Act could continue after the repeal by the new Act. It held that Section 297(2)(d)(ii) was a saving provision intended to save the right of the Income-tax Officer to reopen assessments that were not already barred under the old Act. Since the right to reopen the assessment in the present case was barred under the old Act, the Income-tax Officer could not rely on Section 297(2)(d)(ii) to issue the notice under Section 148.

Conclusion:
The court allowed the petition and issued a writ of mandamus quashing and setting aside the notices dated 13th November 1963 and 9th January 1964. The respondent was ordered to pay the costs of the petition to the petitioner. The judgment emphasized that the right to reopen an assessment must exist under the old Act at the commencement of the new Act for the provisions of the new Act to apply.

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