Law: Income Tax Act, 1961

Section: 256,263

(a) Income-tax---Reference---Revision---Limitation---Law applicable---Effect of amendment of 5.263 w.e.f. 1-10-1984---Revision proceedings whether barred by limitation was a question of law---Indian Income Tax Act, 1961, Ss.256 & 263. (b) Interpretation of statutes--- ---- Effect of changes in procedural law. The law prescribing the period of limitation is to be considered as procedural rather than substantive. This proposition of law would have only one exception, i.e., if under the existing law of limitation the right to initiate a proceeding has already become time-barred then a subsequent enlargement of time by an amendment of law cannot be availed of. In such a case, the matter having attained finality would vest a party with substantive right which has already accrued. This accrued right cannot be taken away by a subsequent amendment. Substantive laws determine the rights and liabilities of the parties concerned, whereas procedural laws govern the manner in which such rights or obligations are to be enforced or realised. The assessees assessment for the year 1983-84 was completed under section 143(3) of the Income Tax Act, 1961, on June 27, 1984. Subsequently, the Commissioner of Income-tax by order, dated March 24, 1987, set aside the assessment order passed under section 143(3) for the assessment year 1983-84. The assessee filed an appeal before the Income-tax Appellate Tribunal and challenged the order of the Commissioner of Income-tax on the ground that the show-cause notice under section 263 was issued on November 17, 1986, whereas the assessment was completed in her case on June 27, 1984, under section 143(3). The assessee, therefore, pleaded that the order of the Commissioner of Income-tax was passed after the expiry of two years from the date of assessment which was completed on June 27, 1984, and according to the provisions of section 263 (as it stood before the substitution of subsection (2), by the Taxation Laws (Amendment) Act, 1984, with effect from October 1, 1984), the Commissioner of Income -tax had powers to revise the assessment under section 263 on or before June 27, 1986, which was not done in her case. The Tribunal accepted the…

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