TMI Blog1976 (12) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... te regarding the period of limitation and the period of limitation has been extended as compared to the previous period of limitation and such amendment has come into force at a date when, under the law as it stood prior to the amendment, the particular action on the part of the authorities concerned was not barred by the pre-existing law, the period of limitation to be applied is according to the pre-amendment law or the post- amendment law. Since this was an important question which often arises, and in view of the conflicting principles invoked by the Full Bench on the one hand and by the Division Bench on the other, it was felt desirable that the conflict, which apparently existed between the two decisions, should be resolved one way or the other. The facts leading to this reference, so far as they are necessary for the purpose of this judgment, are as follows: The assessment years under consideration are assessment years 1965-66 to 1968-69. The assessee is a registered firm. The assessment for all the years under reference was completed on February 25, 1972. On that very date, the Income-tax Officer issued a show-cause notice for levying penalty under section 271 (1)(a) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to refer to section 275 of the Act, as it stood prior to its amendment by the Taxation Laws (amendment) Act, 1970. The original section, in so far as' it is relevant for the purpose of this judgment, reads : " No order imposing a penalty under this Chapter shall be passed after the expiration of two years from the date of the completion of the proceedings in the course of which the proceedings for the imposition of penalty have been commenced ". Section 271 is one of the sections in Chapter XXI in which section 275 is included. Under clause (b) of section 275, after its amendment by the Tax- ation Laws (Amendment) Act, 1970, which was brought into effect on April 1, 1971, no order imposing a penalty under this Chapter shall be passed in any other case, after the expiration of two years from the end of the finan- cial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed. It is common ground that the case of the assessee would fall within clause (b) and not within clause (a) of section 275 as it stands after its amendment. It is clear, therefore, that if the pre-amendment law is to be applied, the order of penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er case there is an inter- ference with existing rights contrary to the well-known general principles that statutes are not to be held to act retrospectively unless a clear intention to that effect is manifested." This decision of the Privy Council has been followed in numerous subsequent cases both in India and in England and the Supreme Court has also accepted the same principle. The sole question that has to be considered in cases like the present one is whether the amendment is as regards procedural or substantive law. As is often said, nobody has a vested right or a substantive right in procedure and limitation has to be considered as a part of the procedural law as distinct from substantive law. In S. C. Prashar v. Vasantsen Dwarkadas [1963] 49 ITR 1 (SC), the question of limitation came up before the Supreme Court. At page 55, Hidayatullah J. (as he then was) has pointed out : " On the expiry of the period the assessments, if any, may also become final and conclusive but only so long as the law is not altered retrospectively. Under the scheme of the Income-tax Act a liability to pay tax is incurred when according to the Finance Act in force the amount of income, prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and assessed the petitioner on an additional turnover as escaped turnover by its order dated 31st March, 1963. During the assessment year 1956-57, it was the Madras General Sales Tax Act, 1939, that was in force and under rule 17 of the Madras General Sales Tax Rules, 1939, the assessing authority could have reopened the assessment only within three years next succeeding the assessment year. On June 15, 1957, the Andhra Pradesh General Sales Tax Act, 1957, came into force and it repealed the Madras Act. According to section 14(4) of the new Act, a period of four years was specified for reopening the assessment. Section 14(4) was also amended with retrospective effect from 15th June, 1957, and the amended provision provided a period of six years for reassessment in the case of default on the part of the dealer. The petitioner contended that section 14(4A) of the Andhra Pradesh General Sales Tax Act did not apply to the case and that, as the assessment year 1956-57 ended before the Andhra Pradesh Act, 1957, came into force, it was the Madras Act of 1939 which was applicable and, consequently, the notice of reassessment issued on 24th February, 1961, and the order of reassessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... availing himself of those remedial rights. The latter belong to the law of procedure. While the former can be taken away or affected by an express provision of law or by a law which has that necessary implication, the latter relating to the procedure can be altered without detriment to the substantive rights or remedies. In cases where rights substantive or remedial are touched, the presumption is that the legislature does not intend to take away or affect such rights retrospectively unless, as stated earlier, the intention of the legislature is made explicit in that behalf. However, in regard to the procedural law, the general presumption is that the alteration in the procedure is retrospective in the sense that it not only applies to pending cases but also applies to causes of action which had arisen before the change in the procedure was effected. But there is an exception to this general rule. In cases where the alteration in procedure would have the effect of destroying the right of action, the procedural law also is presumed to be prospective and not retrospective." At page 184 of the report [1971] 28 STC 175 (AP) [FB] Gopal Rao Ekbote J. (as he then was) cited the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of limitation which confer not only immunity but also give titles by the passage of time." In the light of these observations and the principles culled out from the various other decisions considered by the Full Bench it was ultimately held that, since the period prescribed for the exercise of the power to reassess under rule 17 of the Rules made under the repealed Act had not expired on the date when the repealing Act came into force, and since the right to tax and liability to pay were subsisting and were saved, and as sec- tion 14(4-A) enlarged the period of limitation, it was the new Act, i.e., section 14(4-A), that would apply to the case. It is clear, in view of the exhaustive consideration on this aspect of the case, that the decision of the Full Bench of this court in Allied Exports Imports v. State of Andhra Pradesh [1971] 28 STC 175 (AP) [FB], with which we are in respectful agreement, clearly lays down the principles to govern all such cases. However, when the Division Bench consisting of Sambasiva Rao, Acting Chief justice, and Muktadar J. decided R. C. No. 36 of 74 by their judgment of Decem- ber 26, 1975 [ Addl. Commissioner of Income-tax v. Rajkamal Hotel and Bar [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would not apply to the assessment of that year, even if the assessment is actually made after the amendments come into force." It is true that this principle regarding the law to be applicable to the assessments has been laid down. With great respect to the learned judges of the Division Bench, the principles which are applicable to the period of limitation prescribed for imposition of penalties or for reopening assessments would be governed by the observations of Hidayatullah J. (as he then was) in Prashar v. Vasantsen Dwarkadas [1963] 49 ITR 1 (SC). Under these circumstances, with great respect, we differ from the view taken by the learned judges of the Division Bench. It may be pointed out that the same view as the one which we are taking was taken by the Division Bench of the Gujarat High Court in Income-tax Reference No. 28 of 1974 decided on September 1, 1975 (Commissioner of Income-tax v. Royal Motor Car Co.) [1977] 107 ITR 753, 755 (Guj). The Division Bench, of which one of us (Chief justice) was a member, observed : " It is well-settled law that as regards matters of procedure the legisla- ture can make changes and those changes would apply so far as limitation is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... introduced a new scheme of limitation, no right had accrued to the assessee. Therefore, the law as in force on the date when the order was made must be applicable. With respect, we are in agreement with the observations of the learned judges of the Division Bench of the Orissa High Court. Under these circumstances, it must be held that the view taken by the Division Bench in R.C. No. 36 of 1974 [Addl. Commissioner of Income-tax v. Rajkamal Hotel and Bar [1977] 107 ITR 737 (AP)] was not correct and that view must be held to be overruled by this decision of ours. In the light of the above discussion, we answer the question referred to this court for its opinion, in the affirmative, i.e., in favour of the revenue and against the assessee. It is clear from the order of the Tribunal in the instant case that the Tribunal dealt only with the question of limitation and has not dealt with the merits of the order levying penalty. The matter will now go back to the Tribunal, so that the Tribunal will deal with the merits of the case and we are not expressing any opinion whatsoever on the merits of the order levying penalty, viz., whether there was reasonable cause for the delay in filing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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