TCA.No.795 of 2019 In High Court of Judicature at Madras Dated : 14.9.2020 Coram : Honourable Mr.Justice T.S.SIVAGNANAM and Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.795 of 2019 Smt.N.Illamathy Appellant Vs Income Tax Officer, Ward II(2), Erode. Respondent APPEAL under Section 260A of Income Tax Act, 1961 against order dated 06.1.2009 made in ITA.No.2442/Mds/2007 on file of Income Tax Appellate Tribunal, Chennai 'A' Bench for assessment year 1997-98. For Appellant: Mr.D.G.Hariprasath for M/s.G.R.Associates For Respondent: Mr.T.R.Senthilkumar, SSC assisted by Ms.K.G.Usharani, JSC Judgment was delivered by T.S.Sivagnanam,J We have heard Mr.D.G.Hariprasath, learned counsel appearing 1/31 http://www.judis.nic.in TCA.No.795 of 2019 on behalf of M/s.G.R.Associates, learned counsel on record for appellant assessee and Mr.T.R.Senthilkumar, learned Senior Standing Counsel assisted by Ms.K.G.Usharani, learned Junior Standing Counsel appearing for respondent Revenue. 2. This appeal, filed by Revenue under Section 260A of Income Tax Act, 1961 (for brevity, Act), is directed against order dated 06.1.2009 made in ITA.No.2442/Mds/2007 file of Income Tax Appellate Tribunal, Chennai 'A' Bench (for short, Tribunal) for assessment year 1997-98. 3. Revenue filed this appeal by raising following substantial questions of law : i. Whether, on facts and circumstances of case and in law, Tribunal was justified in confirming direction of Commissioner (Appeal) to issue notice for reassessment under Section 149 of Income Tax Act for assessment year 1997-98 while deciding merit of appeal in respect of assessment year 2002-03 of Income Tax Act, 1961 ? 2/31 http://www.judis.nic.in TCA.No.795 of 2019 ii. Whether, on facts and circumstances of case and in law, Tribunal was justified in ignoring contention that Assessing Authority had simply followed and carried out direction of Commissioner (Appeal) ignoring provision contained in Section 150(2), which makes it clear that embargo on period of limitation lifted under Sub-Section (1) for purpose of reassessment would not apply to assessments, which have attained finality due to bar of limitation applicable at relevant period of time ? iii. Whether, on facts and circumstances of case and in law, Tribunal was justified in ignoring contention that finding/direction by Commissioner (Appeal) can be given only to extent it is necessary for disposal of appeal in respect of assessment of particular year and thus direction given in matter for assessment year 2002-03 cannot effect assessment for assessment year 1997-98? and iv. Whether, on facts and circumstances of case and in law, Tribunal was justified in ignoring 3/31 http://www.judis.nic.in TCA.No.795 of 2019 contention that reassessment is barred by limitation and void ab initio because reopening of assessment is after expiry of limitation by relevant provisions of Statute? 4. short issue, which falls for consideration in this appeal, is as to validity of reopening of assessment for assessment year 1997-98. 5. assessee individual filed her return of income for assessment year under consideration namely 1997-98 on 31.3.1999 admitting income of Rs.86,270/-. return was processed under Section 143(1) of Act. In respect of assessment year 2002-03, assessee filed appeal before Commissioner of Income Tax (Appeals)-I, Coimbatore [for short, CIT(A)]. In that appeal, CIT(A) noted that sum of Rs.10 lakhs was received by assessee from firm in year 1996 and out of said sum of Rs.10 lakhs, assessee accounted for sum of Rs.4,41,551/- in previous year ending 31.3.1997 towards commission received and balance of Rs.5,58,449/- was shown as payable to firm. CIT(A) came to conclusion that assessee was liable to admit difference of Rs.5,58,449/- as commission received for assessment year 1997-98. Accordingly, by order dated 20.10.2005, CIT(A) directed Assessing Officer to assess turnover of Rs.5,58,449/- for 4/31 http://www.judis.nic.in TCA.No.795 of 2019 assessment year 1997-98. 6. Pursuant to such direction issued by CIT(A), Assessing Officer issued notice dated 22.12.2005 under Section 148 of Act proposing to reopen assessment solely for reason assigned in order passed by CIT(A) dated 20.10.2005. assessee objected to reopening on ground that same was barred by limitation and in support of her contention, she relied upon decision of Hon'ble Supreme Court in case of K.M.Sharma Vs. ITO [repored in (2002) 254 ITR 772]. However, vide order dated 04.12.2006, Assessing Officer rejected contention advanced by assessee and determined income at Rs.6,44,720/- by including said sum of Rs.5,58,449/- as directed by CIT(A). 7. As against order dated 04.12.2006 passed by Assessing Officer, assessee filed appeal before CIT(A), who dismissed appeal vide order dated 05.10.2007 holding that assessment for year 1997-98 was completed as per direction issued by CIT(A) while deciding appeal for assessment year 2002-03. 5/31 http://www.judis.nic.in TCA.No.795 of 2019 8. Challenging order passed by CIT(A), assessee filed further appeal before Tribunal, which also dismissed appeal by impugned order on ground that assessee should have challenged direction issued by CIT(A) dated 20.10.2005 and in absence of any challenge to direction issued by CIT(A) dated 20.10.2005, same had become final and assessee could not challenge validity of notice issued under Section 148 of Act dated 22.12.2005. Challenging impugned order, assessee is before us by way of this appeal. 9. first issue, which needs to be considered, is as to whether assessee could challenge validity of notice under Section 148 of Act. 10. CIT(A) as well as Tribunal fell in error in holding that assessee was estopped from challenging validity of notice under Section 148 of Act dated 22.12.2005 on wrong understanding of legal position. CIT(A) issued direction in order dated 20.10.2005 to Assessing Officer to assess turnover of Rs.5,58,449/- as commission received. There were two options open to assessee. One was to prefer appeal against order passed by CIT(A) dated 20.10.2005, which, in fact, was order in appeal filed for assessment year 2002-03. other 6/31 http://www.judis.nic.in TCA.No.795 of 2019 option open to her was to contest matter before Assessing Officer upon issuance of notice under Section 148 of Act. 11. assessee, in case on hand, chose second option, which, in law, was permissible to be done by assessee. Therefore, both CIT(A) as well as Tribunal fell in error in holding that assessee was estopped from challenging validity of notice under Section 148 of Act dated 22.12.2005. 12. next issue is as to whether Assessing Officer, CIT(A) and Tribunal were right in holding that period of limitation exceeded on date of issuance of notice under Section 148 of Act dated 22.12.2005 for assessment year 1997-98. 13. Once again, Authorities below as well as Tribunal committed error of law in not extending law of limitation in manner it has to be interpreted. 14. identical issue was considered by Delhi High Court in case of C.B.Richards Ellis Mauritius Ltd. Vs. Assistant Director of Income-tax [reported in (2012) 21 Taxmann.com 535] wherein also, assessment was sought to be reopened for assessment year 1998-99. Court, after taking note of various decisions of Hon'ble Supreme Court, held as follows : 7/31 http://www.judis.nic.in TCA.No.795 of 2019 7. Having considered contentions of parties and legal issues raised therein, we feel that petitioner is entitled to succeed. Section 6 of General Clauses Act deals with effect of repeal of enactment and stipulates that unless different intention appears, repeal will not affect previous operation of any enactment so repealed or any right, privilege, obligation or liability acquired, accrued or affect any penalty, investigation, legal proceeding or remedy. said Section deals with substantive rights and liabilities. It is also subject to intention to contrary. Intention can be implied. procedural law when it is repealed should be applied from date new provision or procedure comes into force. reason is that no person has vested right or accrued right in procedure. No obligation or liability is normally imposed by procedure. Sometime distinction is drawn between right acquired or accrued and legal proceedings to acquire right. In latter case, there is only hope which is destroyed by repeal. What is protected is preserved right and privileges acquired and accrued and corresponding obligation and liability incurred on other party. legal 8/31 http://www.judis.nic.in TCA.No.795 of 2019 process or procedure for enjoyment of said right is not protected. Section 6, normally does not apply to procedural law. procedural law when amended or substituted is generally retroactive and applies from day of its enforcement and to this extent it can be retrospective. question raised is whether amendment/substitution of period with effect from 1.6.2001 in Section 149 of Act, is procedural or substantive. ...... 12. Law of limitation does not create any right in favour of person or define or create any cause of action, but simply prescribes that remedy can be exercised or availed of by or within period stated and not thereafter. Subsequently, right continues to exist but cannot be enforced. liability to tax under Act is created by charging Section read with computation provisions. assessment proceedings crystallize said liability so that it can be enforced and tax if short paid or unpaid can be collected. If this difference between liability to tax and procedure prescribed under Act for computation of liability (i.e. procedure of assessment), is kept in mind, there would 9/31 http://www.judis.nic.in TCA.No.795 of 2019 be no difficulty in understanding and appreciating fallacy and error in primary argument raised by Revenue. It is settled position that liability to tax as levy is normally determined as per statute as it exists on first day of assessment year, but this is not issue or question in present case. issue or question in present case relates to assessment i.e. initiation of re-assessment proceedings and whether time/limitation for initiation of re-assessment proceedings specified by Finance Act, 2001 is applicable. We are not determining/deciding liability to tax but have to adjudicate and decide whether re- assessment notice is beyond time period stipulated. This is matter/issue of procedure i.e. time period in which assessment or re-assessment proceedings can be initiated. Thus time period/limitation period prescribed on date of issue of notice will apply. In our opinion, answer is clear and has to be in affirmative, i.e. in favour of assessee. 13. This question is not debatable or res integra and was examined and answered with lucid and clear reasoning in opinion 10/31 http://www.judis.nic.in TCA.No.795 of 2019 expressed by Hidayatullah, J. on behalf of himself and Raghubar Dayal, J. in S.C. Prashar v. Vasantsen Dwarkadas Hungerfor Investment Trust Ltd. [1963] 49 ITR 1 (SC). relevant portion reads:- 9/11/2020 www.taxmann.com 6/7 "93. ....If 1948 Amendment could be treated as enabling Income Tax Officer to take action at any point of time in respect of back assessment years within eight years of March 30, 1948 then such cases were within his power to tax. We have such case here in CA No. 509 of 1958 where notice was issued in 1949 to lady whose husband had remitted Rs 9180 to her from Bangkok in year relative to Assessment Year 1942-43. That lady was assessable in respect of this sum under Section 4(2) of Income Tax Act. She did not file return. If case stood governed by 1939 Amendment period applicable would have been four years if she had not concealed particulars of income. She had of course not deliberately furnished inaccurate particulars thereof. If case was governed by 1948 Amendment she would come within eight-year rule because she had failed to furnish return. Now, we do not think that we can treat 11/31 http://www.judis.nic.in TCA.No.795 of 2019 different periods indicated under Section 34 as periods of limitation, expiry of which grant prescriptive title to defaulting tax-payers It may be said that assessment once made is final and conclusive except for provisions of Sections 34 and 35 but it is quite different matter to say that "vested right" arises in assessee. On expiry of period assessments, if any, may also become final and conclusive but only so long as law is not altered retrospectively. Under scheme of Income Tax Act liability to pay tax is incurred when according to Finance Act in force amount of income, profits or gains is above exempted. That liability to State is independent of any consideration of time and, in absence of any provision restricting action by time limit, it can be enforced at any time. What law does is to prevent harassment of assessees to end of time by prescribing limit of time for its own officers to take action. This limit of time is binding upon officers, but liability under charging section can only be said to be unenforceable after expiry of period under law as it stands. In other words, though liability to pay tax remains it 12/31 http://www.judis.nic.in TCA.No.795 of 2019 cannot be enforced by officers administering tax laws. If disability is removed or according to new law new time limit is created retrospectively, there is no reason why liability should not be treated as still enforceable. law does not deal with concluded claims or their revival but with enforcement of liability to State which though existing remained to be enforced ** ** ** 95. .....It says that limit of time mentioned in Section 34 is removed in certain cases that is to say, action can be taken at any time in these cases. In our judgment, each case of notice must be judged according to law existing on date notice was issued or served, as law may require. So long as notice where notice is in question, and assessment, where assessment is in question, are within time limited by law, as it exists when respective actions are taken, actions cannot be questioned provided law is clearly retrospective. only case in which no further action can be taken is one in which action was not taken under old law within period prescribed by that law and which is not also within period mentioned in 13/31 http://www.judis.nic.in TCA.No.795 of 2019 new law if its operation is retrospective. All other cases are covered by law in force at time action is taken. It is from these viewpoints that these appeals, in our opinion, should be judged." 14. In said case, question of validity of notice had arisen because of repeated/ frequent changes made in period in which re-assessment proceedings could be initiated under Section 34 of income Tax Act, 1922 during years 1939-59. Revalidation Act had also been enacted. This ratio was followed and applied in CIT v. Sardar Lakhmir Singh [1963] 49 ITR 70 (SC), CIT v. Janabha Muhammad Hussain Nachiar Ammal AIR 1963 SC 1401 and in ITO v . Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC). 15. Referring to this decision in Hussain Bhai v. CIT [1971] 80 ITR 477 Supreme Court examined whether Section 4 of Income Tax (Amending) Act of 1959 saves fresh notice under Section 34 from bar of limitation. It was held that Section 4 of Income Tax (Amending) Act, 1959 does not save fresh notice. It was observed as under:- 'We are supported in view we have 14/31 http://www.judis.nic.in TCA.No.795 of 2019 taken by certain observations of Sarkar J., as he then was, in S.C. Prashar v. Vasantsen Dwarkadas (1). court in that case was not concerned with assessment years in respect of which notice could be issued under section 34(1)(a) of Act, as amended by Finance Act of 1956, but present case was visualised by Sarkar J. in that case. He observed : "So, though section 4 of 1959 Act freed notice from bar of limitation in respect of it imposed by 1948 amendment, it did not altogether do away with all prescriptions of time. In spite of section 4, notice contemplated by it would be subject to prescription of time as to its issue under 1939 Act and may be, under section 34 as it stood before 1939 amendment. If notice was issued after 9/11/2020 www. Taxmann.com 7/7 1956 amendment, it would also be subject to prescription as to time provided by that amendment. [Emphasis supplied] Then it was said that if section 4 applied to notice issued more than eight years after year in which income escaped assessment but before 1956 amendment came into force in case where escaped income of year was less than 15/31 http://www.judis.nic.in TCA.No.795 of 2019 Rs. 1,00,000, position would be curious. notice issued in similar case after 1956 amendment would be bad under section 34 as it then stood and section 4 could not save it for it saved notices only from effect of 1948 amendment. position then would be that in case involving same amount of escaped income for same year, notice issued before 1956 amendment and invalid under 1948 amendment would be validated and more recent notice equally invalid under both earlier and present laws would remain invalid. Assume that position is somewhat curious or incongruous. But that seems to me to be result of words used. For all we know that might have been intended. However strange, if at all, result may be, I do not think courts can alter plain meaning of language of statute only on ground of incongruity if there is nothing in words which would justify alteration. As I have said earlier, in this case there is nothing to justify alteration of plain meaning.' 16. Going back little in point of time in J.P. Jani, ITO v. Induprasad Devshaner Bhatt [1969] 72 ITR 595 (SC), it was held that 16/31 http://www.judis.nic.in TCA.No.795 of 2019 Income Tax Officer cannot issue notice under Section 148 of Act, where right to re- open assessment was barred under Income Tax Act, 1922 on date when 1961 Act came into force. This is separate issue and aspect which need not be examined and dealt with in this case. issue/question in Induprasad Devshanker Bhatt's case (supra) was what would be legal position in case period prescribed for initiation of re- assessment proceedings is enhanced or extended under new statute. We are not required to and do not examine or consider this aspect/question. 15. above decision was relied upon and followed in decision of Delhi High Court in case of Brahm Datt Vs. Assistant Commissioner of Income-tax [reported in (2018) 100 Taxmann.com 324] wherein Court followed decision of Hon'ble Supreme Court in case of K.M.Sharma. relevant portions in decision in case of Brahm Datt read as follows : 13. In KM Sharma's case (supra) assessee's land was acquired under Land Acquisition Act, 1894 and award was passed in 1967 granting compensation in favour of assessee. Thereafter, 17/31 http://www.judis.nic.in TCA.No.795 of 2019 Additional District Judge by judgment dated 20.05.1980 held assessee to be entitled to 1/32th share of compensation and assessee was granted total compensation of Rs. 1,18,810 in year 1981. Subsequently, by another judgment dated 31.07.1991, assessee was awarded sum of Rs. 1,10,20,624, which was received by it between 15.10.1992 and 25.05.1993. said amount comprised of principal compensation as well as interest up to 18.05.1992. As land acquired was agricultural land, principal amount was not chargeable to tax; however, interest amounting to Rs. 76,84,829 was chargeable on year to year basis. assessee claimed that proceedings till assessment year 1982-83 had already attained finality and therefore, filed letter requesting assessing officer to initiate proceedings for subsequent assessment years for bringing to tax interest component relatable to said assessment years. assessee was, however, issued notices under section148 of Act for fifteen assessment years, viz., assessment years 1968-69 to 1971-72 and assessment years 1981-82 to 1992-93 which were challenged on ground of limitation. This court declined to exercise 18/31 http://www.judis.nic.in TCA.No.795 of 2019 jurisdiction; on appeal, Supreme Court held that provision regulating period of limitation ought to receive strict construction. Supreme Court held that law of limitation was intended to give certainty and finality to legal proceedings and therefore, proceedings, which had attained finality under existing law due to bar of limitation, could not be held to be open for revival unless amended provision was clearly given retrospective operation so as to allow upsetting of proceedings, which had already been completed and attained finality. observations of Supreme Court are reproduced hereunder: '10. main question that has been raised on behalf of learned counsels appearing for parties is whether provisions of sub-section (1) of section 150 as amended can be availed for reopening assessments, which have attained finality and could not be reopened due to bar of limitation, that was attracted at relevant time to proposed reassessment proceedings under provisions of section149. 11. submission made on behalf of appellant is that neither provisions of 19/31 http://www.judis.nic.in TCA.No.795 of 2019 sub-section (1) nor sub-section (2) can be read as giving more than intended operation to said provision. provisions, it is argued, do not permit authorities to reopen assessments, which have become final and reassessment of which had become barred by time before 1.4.1989 when section 150(1) was amended Reliance is placed on decision in S.S. Gadgil v. Lal & Co. [1964] 53 ITR 231. 12. learned counsel appearing on behalf of department has made effort to persuade this Court to accept his construction of provisions of section 150(1)and (2). It is argued that it is for specific purpose of assessing income, which might accrue on basis of any decision of any Court in any proceeding in any other law, that provision has been amended to lift bar of limitation for reassessment. 13. Fiscal statute, more particularly provision such as present one regulating period of limitation must receive strict construction. law of limitation is intended to give certainty and finality to legal proceedings and to avoid exposure to risk of litigation to litigant for indefinite period on future unforeseen events. Proceedings, which 20/31 http://www.judis.nic.in TCA.No.795 of 2019 have attained finality under existing law due to bar of limitation cannot be held to be open for revival unless amended provision is clearly given retrospective operation so as to allow upsetting of proceedings, which had already been concluded and attained finality. amendment to subsection (1) of section 150 is not expressed to be retrospective and, therefore, has to be held as only prospective. amendment made to sub-section (1) of section 150 which intends to lift embargo of period of limitation under section 149 to enable authorities to reopen assessments not only on basis of orders passed in proceedings under Act but also on order of Court in any proceedings under any law, has to be applied prospectively on or after 1.4.1989 when said amendment was introduced to sub-section (1). provision in subsection (1), therefore, can have only prospective operation to assessments, which have not become final due to expiry of period of limitation prescribed for assessment under section 149. 14. To hold that amendment to sub- section (1) would enable authorities to reopen assessments, which had already 21/31 http://www.judis.nic.in TCA.No.795 of 2019 attained finality due to bar of limitation prescribed under section 149 as applicable prior to 1.4. 1989, would amount to give sub section (1) retrospective operation which is neither expressly nor impliedly intended by amended sub-section. 15. On behalf of assessee before High Court and in this Court reliance has been placed on provisions contained in sub- section (2) of section 150. It is submitted that provision contained in sub-section (2) of section150 is in nature of clarification or Explanation to sub section(1). Subsection (2) makes it clear that embargo of period of limitation lifted under sub section (1) for proposed reassessments based on order in proceedings under appeal, reference or revision, as case may be, would not apply to assessments which have attained finality due to bar of limitation applicable at relevant time. 16. High Court rejected above contention of assessee on ground that on amendment introduced with effect from 1.4.1989 in sub-section (1), which enables reopening of assessment based on any Order of 'Court in any proceedings in any law', there 22/31 http://www.judis.nic.in TCA.No.795 of 2019 is no corresponding amendment made in sub- section (2) of Section 150 to bar reassessment based on Order of Court passed in any proceedings in any law in cases where prescribed period of litigation for reassessment had already expired. 17. We do not find above reasoning of High Court is sound. plain language of sub-section (2) of Section 150 clearly restricts application of sub-section (1) to enable Authority to reopen assessments which have not already become final on expiry of prescribed period of limitation under Section 149. As is sought to be done by High Court, sub-section (2) of Section 150 cannot be held applicable only to reassessments based on Orders 'in proceedings under Act' and not to Orders of Court 'in proceedings under any other law'. Such interpretation would make whole provision under Section 150 discriminatory in its application to assessments sought to be reopened on basis of Orders under IT Act and other assessments proposed to be reopened on basis of Orders under any other law. Interpretation, which creates such unjust and discriminatory situation, has to be 23/31 http://www.judis.nic.in TCA.No.795 of 2019 avoided. We do not find that sub-section (2) of section 150 has that result. Subsection (2) intends to insulate all proceedings of assessments, which have attained finality due to then existing bar of limitation. To achieve desired result it was not necessary to make any amendment in sub-section (2) corresponding to sub-section (1), as is reasoning adopted by High Court. 18. Sub-section (2) aims at putting embargo on reopening assessments, which have attained finality on expiry of prescribed period of limitation. Sub-section (2) in putting such embargo refers to whole of sub-section (1) meaning thereby to insulate all assessments, which have become final and may have been found liable to reassessments or re-computation either on basis of Orders in proceedings under Act or Orders of Courts passed under any other law. High Court, therefore, was in error in not reading whole of amended sub-section (1) into sub- section (2) and coming to conclusion that reassessment proposed on basis of order of Court in proceedings under Land Acquisition Act could be commenced even though original assessments for relevant years in 24/31 http://www.judis.nic.in TCA.No.795 of 2019 question have attained finality on expiry of period of limitation under Section 149 of Act. On combined reading of sub-section (1) as amended with effect from 1.4.1989 and subsection (2) of Section 150 as it stands, in our view, fair and just interpretation would be that Authority under Act has been empowered only to reopen assessments, which have not already been closed and attained finality due to operation of bar of limitation under Section 149. 19. This Court took similar view in case of S.S. Gadgil (supra) in somewhat comparable situation arising from retrospective operation given to Section 34(I) of Income Tax Act, 1922 as amended with retrospective effect from 1.4.1956 by Finance Act of 1956. In case of S.S. Gadgil (supra) admittedly under clause (iii) of proviso to Section 34(I) of Indian Income Tax Act, 1922, as it then stood, notice of assessment or reassessment could not be issued against person deemed to be agent of non-resident under Section 43, after expiry of one year from end of year of assessment. Section was amended by Section 18 of Finance Act, 1956, extending 25/31 http://www.judis.nic.in TCA.No.795 of 2019 this period of limitation to two years from end of assessment year. amended was given retrospective effect from April 1, 1956. On March 12, 1957, Income Tax Officer issued notice calling upon assessee to show cause why, in respect of assessment year 1954-55, assessee should not be treated as agent under Section 43 in respect of certain non-residents. case of assessee, inter alia, was that proposed action was barred by limitation as right to commence proceedings of assessment against assessee as agent of non-resident for assessment year 1954-55 ended on 31.3.1956, under Act before it was amended in 1956. This Court in case of S.S. Gadgil (supra) accepted contention of assessee and held as under: " 'The legislature has given to section 18 of Finance Act, 1956, only limited retrospective operation, i.e., up to April 1, 1956, only. That provision must be read subject to rule that in absence of express provision or clear implication, legislature does not intend to attribute to amending provision greater retrospectivity than is expressly mentioned, nor to authorise 26/31 http://www.judis.nic.in TCA.No.795 of 2019 Income-tax Officer to commence proceedings which before new Act came into force had by expiry of period provided become barred.' 20. On proper construction of provisions of Section 150 (1) and effect of its operation from 1.4.1989, we are clearly of opinion that provisions cannot be given retrospective effect prior to 1.4.1989 for assessments which have already become final due to bar of limitation prior to 1.4.1989. Taxing provision imposing liability is governed by normal presumption that it is not retrospective and settled principle of law is that law to be applied is that which is in force in assessment year unless otherwise provided expressly or by necessary implication. Even procedural provision cannot in absence of clear contrary intendment expressed therein be given greater retrospectivity than is expressly mentioned so as to enable Authorities to affect finality of tax assessments or to open up liabilities, which have become barred by lapse of time. Our conclusion, therefore, is that sub-section (1) of Section 150, as amended with effect from 1.4.1989, does not enable Authorities to 27/31 http://www.judis.nic.in TCA.No.795 of 2019 reopen assessments, which have become final due to bar of limitation prior to 1.4.1989 and this position is applicable equally to reassessments proposed on basis of Orders passed under Act or under any other law.' 14. ratio of KM Sharma and S.S. Gadgil, in opinion of this court covers facts of this case. Reassessment for 1998-99 could not be reopened beyond 31.03.2005 in terms of provisions of Section 149 of Act as applicable at relevant time. petitioner's return for assessment year 1998- 99 became barred by limitation on 31.03.2005. question of revival of period of limitation for reopening assessment for AY 1998-99 by taking recourse to subsequent amendment made in Section 149 of Act in year 2012, i.e., more than 8 years after expiration of limitation on 31.03.2005, has been dealt with by Supreme Court in KM. Sharma (supra). 16. Apart from above decisions, there are several other decisions on point and it may not be necessary for this Court to refer to all those decisions, as issue is no longer res integra. Thus, Tribunal fell in error in dismissing appeal filed by assessee. 28/31 http://www.judis.nic.in TCA.No.795 of 2019 Tribunal also fell in error in not taking note of settled legal position that law applicable as on date of issuance of notice alone should be taken into consideration. 17. As per Section 149 of Act as it stood prior to amendment by Finance Act 2001 with effect from 01.6.2001, limitation provided under Section 149(b)(iii) of Act was seven years, but not more than 10 years from end of relevant assessment year unless income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to Rs.50,000/- or more for that year. After amendment, in terms of Section 149(1)(b) of Act, no notice under Section 148 shall be issued for relevant assessment year if four years, but not more than six years have lapsed from end of relevant assessment year unless income chargeable to tax, which has escaped assessment, amounts to or is likely to amount to one lakh rupees or more for that year. 18. Admittedly, notice under Section 148 of Act was issued by Assessing Officer on 22.12.2005 and law applicable as on date prescribed limitation of four years, but not more than six years. Thus, notice issued on or after 31.3.2004 would suffer from lack of jurisdiction as it is clearly hit by limitation prescribed under Statute. Unfortunately, Tribunal failed to take note of 29/31 http://www.judis.nic.in TCA.No.795 of 2019 this very important legal issue, which has been settled by Hon'ble Supreme Court. In fact, assessee, at earliest point of time, referred to decision of Hon'ble Supreme Court in case of K.M.Sharma, which was erroneously distinguished by Assessing Officer, CIT(A) and Tribunal and they committed error in gross violation of Statute. 19. For above reasons, above tax case appeal is allowed, orders passed by (i) Assessing Officer dated 04.12.2006, (ii) CIT(A) dated 05.10.2007 and (iii) Tribunal dated 06.1.2009 are set aside and substantial questions of law raised are answered in favour of assessee. No costs. 14.9.2020 To 1.The Income Tax Appellate Tribunal, Chennai 'A' Bench. 2.The Income Tax Officer, Ward II(2), Erode. RS 30/31 http://www.judis.nic.in TCA.No.795 of 2019 T.S.SIVAGNANAM,J AND V.BHAVANI SUBBAROYAN,J RS TCA.No.795 of 2019 14.9.2020 31/31 http://www.judis.nic.in N. Illamathy v. Income-tax Officer, Ward II(2), Erode