TMI Blog2018 (12) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... bout the applicability of the then existing provision- Section 149 (b), which stated that the normal time limit for reopening assessment was four years, “but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year.” 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was non-resident . It is submitted that in the said statement recorded during the course of search as well as during the course of proceedings under section 153A read with Section 143(3)of the Act, the Petitioner repeatedly clarified that he did not maintain any account with foreign bank in his personal capacity, but had contributed an amount of approximately US$ 2-3 million at the time of settling of the Second Techna Trust, when he was a non-resident, out of his income earned from sources outside India. 4. The petitioner complains that despite such explanation, the revenue primarily relying upon his statement, issued the impugned notice dated 24.03.2015 under section 148 seeking to initiate reassessment proceedings for AY 1998-99, the year under consideration, on the suspicion that the income of the Petitioner had escaped assessment. It is, at the outset, submitted that reopening of concluded assessment for AY 1998-99 by notice dated 24.03.2015 is barred by limitation prescribed under Section 149 of the Act. In this regard, Mr. Ajay Vohra, learned senior counsel urges that Section 147 of the Act empowers the AO to initiate reassessment proceedings, if he has reason to beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said section, as amended are reproduced hereunder: 149.Time limit for notice. (1) No notice under section 148 shall be issued for the relevant assessment year, - (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. Explanation .-In determining income chargeable to tax which has escaped assessment for the purposes of this sub section, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section... 6. The learned senior counsel submits that reassessment proceedings under section 147 of the Act could have been initiated within six years from the end of the relevant assessment year viz. for the AY 1998-99, the year under consideration, limitation for reopening assessment under Section 147 of the Act expired on 31.03.2005. It is submitted that consequently, when the petitioner received the reassessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive and cannot be used to re-open those matters that attain finality. It was also contended that the petitioner s status as a person not residing in India has not been disputed and rather, is accepted by the revenue. 9. The revenue resists the petition and refers to its arguments in the counter affidavit. Its counsel, Mr. Ashok Manchanda, submits that in this case, the AO issued notice under Section 148 after recording the reasons to believe, in writing, as the amount of ₹ 12,54,60,000/- used for settling a trust had escaped assessment for AY 1998-99 and in line with the provisions of Income Tax Act 1961, the AO had the valid reasons to believe in support of the decision to reopen the assessment under Section 148. It is stated that the assessee petitioner made a general and vague statement that during the period from AY 1984-85 to AY 2003-04 he was either Non-resident or Not Ordinarily Resident in India. No specific statement, averment or evidence was given as regards the status of the assessee for the AY 1998-99 having filed a return of income for the AY 1998-99 which is the subject matter of this petition. The Petitioner s claim is not only wrong, but false as well. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ₹ 1,18,810 in the year 1981. Subsequently, by another judgment dated 31.07.1991, the assessee was awarded sum of ₹ 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 ₹ 76,84,829 was chargeable on year to year basis. The assessee claimed that proceedings till assessment year 1982-83 had already attained finality and therefore, filed letter requesting the assessing officer to initiate proceedings for subsequent assessment years for bringing to tax interest component relatable to the said assessment years. The assessee was, however, issued notices under section148 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs 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 prospectively on or after 1.4.1989 when the said amendment was introduced to sub-section (1). The provision in sub-section (1), therefore, can have only prospective operation to assessments, which have not become final due to expiry of period of limitation prescribed for assessment under section 149. 14. To hold that the amendment to sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Courts passed under any other law. The High Court, therefore, was in error in not reading whole of amended sub-section (1) into sub-section (2) and coming to the conclusion that reassessment proposed on the basis of order of Court in proceedings under Land Acquisition Act could be commenced even though the original assessments for the relevant years in question have attained finality on e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 expressly mentioned so as to enable the Authorities to affect finality of tax assessments or to open up liabilities, which have become barred by lapse of time. Our conclusion, therefore, is that sub-section (1) of Section 150, as amended with effect from 1.4.1989, does not enable the Authorities to reopen assessments, which have become final due to bar of limitation prior to 1.4.1989 and this posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt 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, and the decree and extent of any unforeseen or unforeseeable financial burden imposed for the past period etc. 18. In Govinddas v Income Tax Officer AIR 1977 SC 552 the Supreme Court held that Section 171 (6) of the Income Tax Act was prospective and inapplicable for any assessment year prior to 1st April, 1962, the date on which the Act came into force and observed that: 11. Now it is a well settled rule of interp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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