Bombay High Court
Commissioner Of Income Tax vs Sudhir S. Mehta on 23 April, 2003
Equivalent citations: (2003)183CTR(BOM)592, [2004]265ITR548(BOM)
Author: S.H. Kapadia
Bench: S.H. Kapadia, J.P. Devadhar
JUDGMENT
S.H. Kapadia, J.:
1. The above two appeals raise common question of law and fact and, therefore, they are taken up for final hearing together. IT Appeal No. 107 of 2001 is in relation to asst. yr. 1987-88, whereas IT Appeal No. 108 of 2001 concerns asst. yr. 1988-89. However, for the sake of convenience, we refer to the facts in IT Appeal No. 107 of 2001.
Facts
2. On 7th Nov., 1990, notice under Section 148(1), as it stood at the material time, was given by the AO, calling upon the assessee to file a return of his income within thirty days. Hence, before the Tribunal, an additional ground of appeal was raised by the assessee to the effect that initiation of reassessment proceedings was bad in law and void as the notice dt. 7th Nov., 1990, was contrary to Section 148(1), as it stood at the relevant time. This argument was accepted by the Tribunal on 26th June, 1996. However, the law was amended by Tax Laws (Amendment) Act, 1996, retrospectively, w.e.f. 1st April, 1989, by which the expression "not less than thirty days" in Section 148(1) stood deleted. This amending Act was assented to by the President on 28th Sept., 1996. Pursuant to the said amendment, the Department moved a miscellaneous application before the Tribunal under Section 254(2) of the IT Act for rectification of the order passed by the Tribunal on 26th June, 1996, on the ground that with the change in law retrospectively from 1st April, 1989, the judgment dt, 26th June, 1996, needed rectification under Section 254(2). In all, three miscellaneous applications were preferred bearing Nos. 9/Mum/1997, 11/Mum/1997 and 12/Mum/1997. All the three miscellaneous applications were dismissed by the Tribunal on the ground that there was no apparent error on record as the Amending Act received the assent of the President on 28th Sept., 1996, i.e., after three months, from 26th June, 1996, when the appeals were disposed of by the Tribunal. Hence, the three miscellaneous applications were dismissed. Hence, the Department has come by way of appeals against the order of the Tribunal dt. 11th Feb., 2000, in the above three miscellaneous applications.
Issue Whether the Tax Laws (Amendment) Act, 1996, applied only to pending proceedings or whether it applied even to proceedings which stood completed three months prior to the law being enacted ?
Arguments
3. Mr. R.V. Desai, learned senior counsel appearing on behalf of the Department, vehemently urged that in this case, the law has been amended w.e.f. 1st April, 1989, in order to validate notices given under Section 148(1) as it stood at the relevant time. He contended that, in this case, on 7th Nov., 1990, notice under Section 148(1) was given, That, such notice was contrary to Section 148(1) as it then stood. However, on the Parliament enacting the Tax Laws (Amendment) Act which received the President's assent on 28th Sept., 1996, with retrospective effect, the invalid notice was deemed to be validated and, therefore, the Tribunal erred in dismissing the miscellaneous application. He contended that the object of the Tax Laws (Amendment) Act was to. validate notices which were contrary to the existing provisions of Section 148(1) on the date when they were issued. That, in this case, on 7th Nov., 1990, the notice was invalid, but it stood validated under Tax Laws (Amendment) Act, 1996.
Findings
4. In the present case, the short point which arises for consideration is whether miscellaneous application filed by the Department was maintainable under Section 254(2) of the IT Act which states that mistake apparent from the record can be rectified by the Tribunal within four years from the date of its order. In this case, the reassessment proceedings were initiated vide notice dt. 7th Nov., 1990. Under the provisions which existed on that date, it was provided under Section 148(1) that in cases where the AO had reason to believe that income had escaped assessment a notice had to be issued to an assessee for filing return of income within a specified period, not being less than thirty days. The underlined portion (italicised in print) became subject-matter of dispute in proceedings pending before various High Courts. In certain cases these notices were held to be invalid on the ground that where the Act allows the assessee time to file revised returns within a stipulated period under the Act, it was not open to the AO to call upon the assessee to file the returns within thirty days [see CIT v. Ekbal & Co. (1945) 13 ITR 154 (Bom)]. In view of these conflicting decisions, the legislature by virtue of Tax Laws (Amendment) Act, 1996, deleted the above, expression "not being less than thirty days". However, the Tax Law (Amendment) Act of 1996 got the Presidential assent on 28th Sept., 1996. No doubt, the amending Act operated w.e.f. 1st April, 1989. However, the amending Act got the Presidential assent only on 28th Sept., 1996, by which time the entire, gamut of reassessment proceedings, in this case, got concluded before the Tribunal when it allowed the appeal of the assessee striking down initiation of reassessment proceedings under the then existing law. That decision of the Tribunal was delivered on 26th June, 1996, i.e., three months prior to the amending law receiving the Presidential assent, In the circumstances, the miscellaneous application filed by the Department was rightly rejected by the Tribunal as there was no mistake apparent from the record in the order of the Tribunal dt. 26th June, 1996.
Conclusion
5. In the circumstances, we do not see any reason to interfere with the order passed by the Tribunal in miscellaneous application filed by the Department bearing Nos. 11/Mum/1997 and 12/Mum/1997 for the asst. yrs. 1987-88 and 1988-89, respectively. Consequently, both the appeals stand dismissed with no order as to costs.