TMI Blog2006 (10) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... month in which return was filed and assessment was framed under section 143/148 of the Act on March 30, 1998. The same was set aside by the Commissioner of Income-tax (Appeals) on the ground that notice under section 143(2) of the Act was not within the period of limitation. Against the order passed by the Commissioner of Income-tax (Appeals), the Revenue went in appeal before the Tribunal, which is pending. Vide the Finance Act, 2006, section 148 has been amended with effect from October 1, 1991. The said provision before and after the amendment is as under: Before amendment "148. Issue of notice where income has escaped assessment.-(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the second proviso shall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so." It is submitted that the normal period specified under section 143(2) for issuing notice is 12 months but the same has been made inapplicable for the period during October 1, 1991, and September 30, 2005, to returns filed after October 1, 1991, for reassessment/recomputation of tax if such reassessment/recomputation was otherwise within limitation. It is submitted that apart from the vice of retrospectivity, the provision was discriminatory for selecting a special period of limitation for the specified period, thereby creating a special class arbitrarily without there being any nexus of such classification with the object of the statute. Learned counsel for the petitioner has relied upon following judgments in support of his submissions: (1) Kunnathat Thathunni Moopil Nair v. State of Kerala [1961] 3 SCR 77; (2) S. K. Dutta, ITO v. Lawrence Singh Ingty, Treasury Officer [1968] 68 ITR 272 (SC); AIR 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill control the limitation provided under sections 147, 149 and 153. One interpretation was that only procedure under section 143(2) was required to be followed for reassessment but the limitation having been separately provided for the said purpose, the period specified under section 143(2) was not to control the limitation for reassessment. A contrary view was expressed by certain judicial pronouncements by the Tribunal in some orders noticed above. The Legislature with a view to remedy the situation, carried out an amendment vide, the Finance Act, 2006, with effect from October 1, 1991, up to September 30, 2005, validating notice and assessment/reassessment/recomputation if the same were beyond the time specified under section 143(2) but within the time specified under section 153(2). In National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India, AIR 2003 SC 1329; [2003] 260 ITR 548 (SC), the hon'ble Supreme Court examined a similar issue and held: "A validating clause coupled with a substantive statutory change is therefore only one of the methods to leave actions unsustainable under the unamended statute, undisturbed. Consequently, the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 73 did not allow for an impost as provided under rule 350A. A Validation Act was passed subsequent to the decision in Patel Gordhandas Hargovindas redefining the word 'rate' in section 73 itself. The constitutionality of the Validation Act was challenged. In dismissing the challenge, this court in Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality [1971] 79 ITR 136 held that the Legislature could exercise its undoubted powers of redefining the word 'rate' in section 73 to validate the assessments earlier made under rule 350A. The court held that when a Legislature sets out to validate a tax declared by a court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively: 'It is not sufficient to declare merely that the decision of the court shall not bind, for that is tantamount to reversing the decision in exercise of judicial power which the Legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the judgment of the High Court but had removed the basis of the decision rendered by the High Court so that the decision could not have been given in the altered circumstances. This enunciation of the law has been noted with approval by the Constitution Bench in State of Tamil Nadu v. Arooran Sugars Ltd. [1997] 1 SCC 326; AIR 1997 SC 1815." In view of the above, the amendment in question is merely with a view to "cure" the statute so as to make it correctly represent the legislative intention that the period of limitation under section 143(2) of the Act did not control the period for reassessment which was specified in other provisions of the Act. As regards violation of article 14, it is well-settled that though discrimination is prohibited, article 14 does not prohibit classification for legitimate purposes, even if it may produce some inequality. The classification must be based upon real and substantial distinction having reasonable nexus with the object sought to be achieved by such classification. In State of Bombay v. F. N. Balsara, AIR 1951 SC 318, Fazl Ali J. summed up the meaning and scope of article 14 in the following words: "1. The presumption is alwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 1979 SC 478, Kerala Hotel and Restaurant Association v. State of Kerala [1990] 77 STC 253 (SC); AIR 1990 SC 913, Shashikant Laxman Kale v. Union of India [1990] 185 ITR 104 (SC); AIR 1990 SC 2114, Union of India v. No. 664950 1M Havildar/Clerk S. C. Bagari, AIR 1999 SC 1412, Satnam Overseas (Export) v. State of Haryana; AIR 2003 SC 66; [2003] 130 STC 107 (SC), John Vallamattom v. Union of India, AIR 2003 SC 2902, People's Union for Civil Liberties v. Union of India, AIR 2004 SC 1442, M. P. Rural Agriculture Extension Officers Association v. State of M. P., AIR 2004 SC 2020. In Ameerunnissa Begum v. Mahboob Begum, AIR 1953 SC 91, B. K. Mukherjea J., observed: "11. The nature and scope of the guarantee that is implied in the equal protection clause of the Constitution have been explained and discussed in more than one decision of this court and do not require repetition. It is well-settled that a Legislature which has to deal with diverse problems arising out of an infinite variety of human relations must, of necessity, have the power of making special laws to attain particular objects; and for that purpose it must have large powers of selection or classification of persons and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events self-limitation can be seen to be the path to judicial wisdom and institutional prestige and stability.' The court must always remember that 'legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex1 that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry' that exact wisdom and nice adaption of remedy are not always possible, and that 'judgment is largely a prophecy based on meagre and uninterpreted experience'. Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and, therefore, it cannot provide for all possible situations or anticipate all possible abuses. There may be crudities and inequities in complicated exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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