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Amolak Singh JaIn Vs. the Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtDelhi High Court
Decided On
Case NumberIncome Tax Reference Appeal No. 6 of 1969
Judge
Reported inILR1971Delhi562
ActsGeneral Clauses Act, 1897 - Sections 6; Income Tax Act, 1922 - Sections 22; Income Tax Act, 1961 - Sections 297(2)
AppellantAmolak Singh Jain
RespondentThe Commissioner of Income-tax
Advocates: D.N. Manchanda,; S.B. Gupta,; A.N. Kirpal and;
Cases ReferredT. S. Baliah v. T. S. Rangachari
Excerpt:
.....tax act (1922), section 22 & income tax act (1961), section 297(2). ; section 6 of the general clauses act, inter alia, enables the institution and continuation of legal proceedings in respect of any matter pending under the repealed act as if that act was in force subsequent to the repeal, unless a different intention appears in the repealing act. ; where the repeal is followed by fresh legislation on the same subject, the court would undoubtedly have to look to the provisions of the new act, but only for the purpose of determining whether they indicate a different intention. the question is not whether the new act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them. section 6 of the general clauses act, thereforee, will be..........circumstances of the case the tribunal is right in holding that the operation of section 6 of the general clauses act is not excluded and assessment could be made under section 23(4) of the indian income-tax act, 1922, though no return of income had been filed prior to 1-4-1962, though notices under section 22(2) of the said act had been issued prior to the said date.'(2) the matter relates to the assessment years 1959-60 and 1960-61, the accounting periods for which were the preceding financial years. (3) for the assessment year 1959-60 the income-tax officer issued notice under section 22(2) of the act of 1922 and the same was received by the assessed on july 5, 1959. the assessed, however, filed no return. notice dated july 23, 1960, under section 22(4) of the above- mentioned act.....
Judgment:

H.R. Khanna, C.J.

(1) The following question has been referred to this Court at the instance of the assessed under Section 66(1) of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act of 1922) :-

'WHETHERon the facts and in the circumstances of the case the Tribunal is right in holding that the operation of section 6 of the General Clauses Act is not excluded and assessment could be made under section 23(4) of the Indian Income-tax Act, 1922, though no return of income had been filed prior to 1-4-1962, though notices under section 22(2) of the said Act had been issued prior to the said date.'

(2) The matter relates to the assessment years 1959-60 and 1960-61, the accounting periods for which were the preceding financial years.

(3) For the assessment year 1959-60 the Income-tax Officer issued notice under section 22(2) of the Act of 1922 and the same was received by the assessed on July 5, 1959. The assessed, however, filed no return. Notice dated July 23, 1960, under section 22(4) of the above- mentioned Act was then issued by the Income-tax Officer for August 2, 1960. The assessed filed an application for adjournment on the ground that he was busy in connection with the release of a picture. The case was then adjourned to August 23, 1960. Another notice dated January 30, 1962, under section 22(4) of the Act of 1922 was issued by the Income-tax Officer for February 15, 1962. The assessed again applied for adjournment on the ground that he was busy in elections. For the assessment year 1960-61 notice under section 22(2) was issued by the Income-tax Officer on May 12, 1960, and it was served on the assessed on July 19, 1960. Notice was thereafter issued fixing the hearing on March 6, 1962. The assessed applied for time on the ground of ill health. Notice dated September 29, 1962 was thereafter issued to the assessed for October 17, 1962. This notice was received by the assessed on October 15, 1962. The assessed sent telegram from Hansi asking for adjournment. No adjournment was, however, granted by the Income-tax Officer and the assessments for both the years were completed under section 23(4) of the Act of 1922 on October 18, 1962, on incomes of Rs. 35,360 and Rs. 33,360. Appeals filed by the assessed were dismissed by the Appellate Assistant Commissioner, 'The assessed then went up in appeal before the Income-tax Appellate Tribunal and it was argued on his behalf that as the Act of 1922 had been repealed before the date of the assessment orders, the assessments could not be made under the Act. It was also urged that there was no provision in section 297(2) of the Income-tax Act of 1961 (herein after referred to as the Act of 1961) which permitted the assessment in question to be made under the Act of 1922. The Tribunal repelled the above contention and held that the assessments under the Act of 1922 could be made in view of the provisions of section 297(2)(c) of the Act of 1961. The Tribunal then referred to the provisions of section 6 of the General Clauses Act and held that in view of those provisions also the assessments in question made under the Act of 1922 were valid and sustainable in law. The question reproduced above was thereafter referred to this Court.

(4) Mr. Manchanda on behalf of the assessed has at the outset assailed the view taken by the Tribunal that the assessments in question are covered by the provisions of section 297(2)(c) of the Act of 1961. After hearing Mr. Manchanda on behalf of the Tribunal and Mr. Kirpal on behalf of the Revenue, we are of the opinion that there is force in this contention. The Act of 1961 came into force on April 1, 1962. According to sub-section (1) of section 297 of the Act of 1961, (the Indian Income-tax Act of 1922 'is hereby repealed'. Clauses (a), (b) and (c) of sub-section (2) of section 297 read as under :

''297(1) X X X X X (2) Notwithstanding the repeal of the Indian Income-tax Act, 1922 (XI of 1922) (hereinafter referred to as the repealed Act),- (a) where a return of income has been filed before the commencement of this Act by any person for any assessment year, proceedings for the assessment of that person for that year may be taken and continued as if this Act had not been passed; (b) where a return of income is filed after the commencement of this Act otherwise than in pursuance of a notice under section 34 of the repealed Act by any person for the assessment year ending on the 31st day of March, 1962, or any earlier year, the assessment of that person for that year shall be made in accordance with the procedure specified in this Act; (c) any proceeding pending on the commencement of this Act before any Income-tax authority, the Appellate Tribunal or any court, by way of appeal, reference or revision, shall be continued and disposed of as if this Act had not been passed.'

(5) Plain perusal of clause (c) of sub-section (2), upon which reliance has been placed by the Revenue, makes it manifest that it deals with proceedings pending at the time of the commencement of the Act of 1961 before an Income-tax authority. Appellate Tribunal or court by way of appeal, reference or revision. It is provided by that clause that such proceedings shall be continued and disposed of under the Act of 1922. It is, however, not every proceeding pending on the commencement of the Act of 1961 before an Income-tax authority, Appellate Tribunal or court which is covered by clause (c). It has to be shown that such a proceeding is by way of appeal, reference or revision. The words 'by way of appeal, reference or revision' qualify the proceedings referred to in clause (c) and if those proceedings are not by way of appeal, reference or revision, clause (c) would not be attracted. As the assessment proceedings before the Income-tax Officer in the present case were' not by way of appeal, reference or revision, clause (c) reproduced above could not be of any avail to the Revenue.

(6) We are not, however, impressed by the argument of Mr. Manchanda that section 6 of the General Clauses Act cannot be invoked by the Revenue to sustain the validity of the assessmernts in question. The section reads as under :-

'6.Effect of repeal.-Where this Act or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall (a) revive anything not in force or existing at the time at which the repeal-takes effect; or (b) affect the previous operation of any enactment so repealed or anything duly done or suffered there under; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.'

(7) The above section inter-alia enables the institution and continuation of legal proceedings in respect of any matter pending under the repealed Act as if that Act was in force subsequent to the repeal unless a different intention appears in the repealing Act. Dealing with the above section, Ramaswami, J. speaking for the Court observed in the case of T. S. Baliah v. T. S. Rangachari, Income-tax OffiCer, Central Circle Vi, Madras : [1969]72ITR787(SC) :

'THEprinciple of this section is that unless a different intention appears in the repealing Act, any legal proceeding can be instituted and continued in respect of any matter pending under the repealed Act as if that Act was in force at the time of repeal. In other words, whenever there is a repeal of an enactment the consequences laid down in section 6 of the General Clauses Act will follow unless as the section itself says, a different intention appears in the repealing statute. In the case of a simple repeal there is scarcely any room for expression of a contrary opinion. But when the repeal is followed by fresh legislation on the same subject the court would undoubtedly have to look to the provisions of the new Act, but only for the purpose of determining whether they indicate a different intention. The question is not whether the new Act expressly keeps alive old rights and liabilites but whether it manifests an intention to destroy them. Section 6 of the General Clauses Act thereforee will be applicable unless the new legislation manifests an intention incompatible with or contrary to the provisions of the section. Such incompatibility would have to be ascertained from a consideration of all the relevant provisions of the new statute and the mere absence of a saving clause is by itself not material. In other words, the provisions of section 6 of the General Clauses Act will apply to a case of repeal 'even if there is a simultaneous re-enactment unless a contrary intention can be gathered from the new statute'.

(8) As the notices under section 22(2) of the Act of 1922 as well as the notices under section 22(4) of the Act of 1922 in the present case had been issued by the Income-tax Officer to the assessed, thereforee, the coming into force of the Act of 1961 the said Officer in view of the provisions of Section 6 of the General Clauses Act, in our opinion, could continue and (complete the proceedings of assessment under the Act of 1922.

(9) Mr. Manchanda, however, contends that section 6 of the General Clauses Act will not apply because section 297(2) evidences an intention to the contrary. It is submitted that section 297(2) was meant to provide as far as possible for all contingencies which may arise out of the repeal of the Act of 1922. Reliance in this connection is placed upon the observations which were made to that effect in the case of Kalawati Devi Harlalku v. Commissioner of Income-tax, West Bengal and others : [1967]66ITR680(SC) . Their Lordships in that case were dealing with a notice under section 33B of the Act of 1922 issued by the Commissioner of Income-tax to revise assessments of some earlier years, which had been made on February 7, 1961. It was held that the word 'assessment' had a comprehensive meaning and the case was covered by section 297(2)(a) of the Act of 1961. Their Lordships also observed that section 297 was meant to provide as far as possible for all contingencies which might arise out of the repeal of the 1922 Act. The above observations were explained by their .Lordships of the Supreme Court in the subsequent case of Third Income-tax Officer, Mangalore v. M. Damodar Bhat : [1969]71ITR806(SC) . It was observed that 'section 6 of the General Clauses Act will not apply in respect of those matters where Parliament had clearly expressed is intention to the contrary by making detailed provisions for similar matters mentioned in that section.'

(10) The matter again came up before the Supreme Court in the case of T. S. Baliah v. T. S. Rangachari, Income-tax Officer, Central Circle Vi, Madras, : [1969]72ITR787(SC) In that case their Lordships were dealing with a prosecution under section 52 of the Act of 1922 in respect of false statement and declaration. It was held that section 6(e) of the General Clauses Act applied for the continuation of such proceedings after the repeal of the Act of 1922, and a legal proceeding in respect of an offence committed under the 1922 Act might be instituted after the repeal of the 1922 Act, and punishment might be imposed as if the repealing Act of 1961 had not been passed. Ramaswami, J. in this context, speaking for the Court, observed:

'ASwe have already pointed out. Parliament had not made any detailed provision for the institution of prosecutions in respect of proceedings which were pending at the commencement of the 1961 Act. It follows, thereforee, that the provisions of section 6 of the General Clauses Act are applicable in the present case and the prosecution of the appellant under section 52 of the 1922 Act is legally valid.'

(11) It would follow from the above that in those cases where no provision is made in section 297(2) of the Act of 1961 the matter would still be governed by section 6 of the General Clauses Act. We have pursued the different clauses of section 297(2) of the Act of 1961 and find that none of them deals with a case where the assessed fails to tile a return in pursuance of a notice served upon him under section 22(2) of the Act. Clause (a) deals with cases where the return income was filed before the commencement of Act of 1961, while clause (b) deals with cases where return is filed after the commence- ment of the said Act otherwise in pursuance of a notice under section 34 of the repealed Act. As none of the clauses of sub-section (2) of section 297 covers the case of an assessed who makes a default to file a return in pursuance of notice issued to him under section 22(2) of the Act of 1922 before the coming into force of the Act of 1961. the matter, in our opinion, would be governed by section 6 of the General Clauses Act and as such the assessment would have to be made under the Act of 1922. We are unable to accede to the sub- mission made by Mr. Manchanda that as clause (a) deals with return of income filed before the commencement of the Act of 1961 the said clause by necessary implications makes the Act of 1961 applicable if no return is filed before that date. Clauses (a) and (b) of sub- section (2) of section 297, as stated earlier, deal with the two contin- gencies, namely, where the return of income is filed belore the date of the commencement of the Act of 1961 or after that date, and it is, in our opinion, not permissible to stretch the wording of clause (a) so as to cover the cases where the assessed fails to file the return in pursuance of the notice under section 22(2) of the Act of 1922.

(12) We, thereforee, answer the question referred to this court in the affirmative and in favor of the Revenue. In the circumstances, we make no order as to costs.


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