TMI Blog1978 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 1, 1966, and the assessment was completed by order dated the 20th March, 1971. Penalty was imposed by order dated March 31, 1973. Section 275 of the I.T. Act, 1961, which provided the time-limit within which proceedings for imposition of penalty had to be completed was amended by the Taxation Laws (Amendment) Act (42 of 1970) with effect from April 1, 1971. The section, after its amendment, permitted penalty proceedings to be completed within two years of the completion of the assessment order. It is beyond dispute that, but for this amendment, under the section as it stood previously, the penalty proceedings would be beyond the time-limit indicated by the earlier section. On these facts the Tribunal held that s. 275 was a procedural se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y with procedure, and thereby to apply it even to pending proceedings. The principle of the decision of a Division Bench of this court in Hajee K. Assainar v. CIT [1971] 81 ITR 423 was stressed. There it was observed by this court : " But, where rights and procedure are dealt with together, the intention of the legislature may well be that the old rights are to be determine by the old procedure and that only the new rights under the substitute section are to be dealt with by the new procedure. If the procedural alteration is closely and inextricably linked with the changes simultaneously introduced in another part of the statute dealing with substantive right and liabilities, it is not possible to give retrospective operation to the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e argument. The income-tax authorities who have power to assess and recover tax are not acting as judges deciding a litigation between the citizen and the State : they are administrative authorities whose proceedings are regulated by statute, but whose function is to estimate the income of the taxpayer and to assess him to tax on the basis of that estimate. Tax legislation necessitates the setting up of machinery to ascertain the taxable income, and to assess tax on the income, but that does not impress the proceeding with the character of an action between the citizen and the State : Commissioners of Inland Revenue v. Sneath [1932] 17 TC 149, 164 (CA) and Shell Company of Australia Ltd. v. Federal Commissioner of Taxation [1931] AC 275 (PC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from April 1, 1952, though the Income-tax (Amendment) Act came into effect from May 24, 1953. Where it is intended that the retrospective effect should be without any limit it is usual and proper to provide that the amendment would have effect and would be deemed always to have had effect as if it had been part of the Act from its inception. That that was not done shows that the intention was only to give limited retrospective effect, that is to say, there would be no bar of limitation if it had not expired before April 1, 1952. We will now refer to some of the decisions which were relied upon. In S. C. Prashar v. Vasantsen Dwarkadas [1956] 29 ITR 857 the effect of the amendment made to section 34 were considered by the Bombay High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose cases where the right of the Income-tax Officer to reopen an assessment was not barred under the repealed Act. This decision is broadly in line with the opinion of Das and Kapur JJ. in Prashar's case [1963] 49 ITR 1 (SC). The decision of this court relied upon by the appellant, in Income-tax Officer v. T. S. Devinatha Nadar [1968] 68 ITR 252, 260, which was a case under section 35(5), which was introduced into the Income-tax Act by the 1953 amendment at the same time as the amendment to section 34 does not really affect this position. This court observed : ' As we have already said, sub-section (5) becomes operative as soon as it is found on the assessment or reassessment of the firm or on any reduction or enhancement made in the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndram Seksaria v. CIT [1964] 54 ITR 653 at pages 659, 660, 661 and 663. We are not examining these decisions in detail. They only give expression to the well-known principle that even a procedural section cannot be given retrospective operation so as to revive a cause of action that had already become barred. That principle has no application here. In addition to the decisions noticed above, our attention was drawn to the passage in Kanga and Palkhivala on Income-tax, Vol. 1, 7th edition, at pages 83, 84, 1206 and 1207. In foot-note 6 at p. 1207 the learned author submits that the decision of the Madras High Court in Continental Commercial Corporation v. ITO [1975] 100 ITR 170 (one of the decisions relied on for the assessee) was wrong. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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