The Judgment of the Court was delivered by

Sabyasachi Mukharji, J.:— This reference arises out of the proceedings for the assessment years 1962–63 and 1963–64, the corresponding previous years having ended on 31st December, 1961, and 28th February, 1962, respectively. The income-tax assessments were completed under s. 143(3) of the I.T Act, 1961, on a total income of Rs. 58,47,380 and Rs. 31,13,458 on 22nd February, 1964, and 23rd March, 1964, for the two assessment years respectively. The assessee had discontinued its business in India on 28th February, 1962, and had filed a claim under s. 25(3) of the Indian I.T Act, 1922, on 27th March, 1962. In the said claim, it was stated by the assessee as under:

“With reference to our letter dated 12th March, 1962, and in accordance with the provisions of the above section whereby no income-tax and super-tax shall be payable by us in respect of the income, profits or gains for the period between the end of the previous year and 28th February, 1962, by virtue of our business having been charged under the provisions of the Indian Income-tax Act, 1918 (VII of 1918), we hereby claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period, and accordingly request that an assessment shall be made on this basis.”

2. It was submitted by the assessee that the claim had been filed under the provisions of the 1922 Act and, therefore, it was filed before the enforcement of the 1961 Act which came into effect from 1st April, 1962. The ITO rejected the assessee's claim under s. 25(3) of the Indian I.T Act, 1922, on the ground that the relevant date of discontinuance of business fell in the previous year for the assessment year 1963–64 which was governed by the provisions of the I.T Act, 1961. According to him, the provisions of s. 25(3) of the Indian I.T Act, 1922, were not attracted under the new Act. The assessee filed appeals before the AAC against the order of the ITO and submitted that once the option was exercised by the assessee, the exemption was also applicable for the immediately preceding year, that is, 1961, for substituting that calendar year's income by the income of the broken period, that is to say, 31st December, 1961, to 28th February, 1962. It was, further, contended that the exemption was attracted on the happening of certain events, namely, the discontinuance of business which, in the instant case, took place on 28th February, 1962, and at that point of time the Act of 1922 was in force. Therefore, the assessee submitted that the exemption being substantive in nature, a right had already accrued to the assessee and that right could not be taken away without any specific provision in the repealing Act. The AAC, however, did not accept the submission and affirmed the order of the ITO rejecting the assessee's claim for relief under s. 25(3) of the Indian I.T Act, 1922.

3. The assessee preferred an appeal before the Tribunal. The Tribunal, after referring to the rival contentions of the parties, observed, inter alia, as follows:

“It is no doubt true that there is no provision in the Income-tax Act, 1961, similar to the provisions of section 25(3) of the Indian Income-tax Act, 1922, but the position after the old Act was repealed has to be seen both in relation to the provisions of the new Act as also that of section 6 of the General Clauses Act. In the instant case, on the basis of the dates mentioned above, it would be seen that the assessee had put the claim before coming into force of the new Act. The accounting period also relates to a period prior to the coming into force of the new Act. The mere fact that the return has to be filed after the coming into force of the new Act or that the assessment made under the provisions of the new Act, would not, in our opinion, take away substantive right or privilege which had otherwise accrued already to the assessee under the provisions of the old Act, unless it could clearly be shown from the provisions of the new Act that the legislature did not intend to keep the same alive or intended specifically to take it away. In our opinion, in the instant case, it could not be said to be so. The Tribunal then discussed the cases cited before it and, inter alia, further observed:

“We also do not agree with the submission of the departmental representative that the date of receiving the President's assent to the new Act would, in any way, be material. The material date would only be the date of coming into force of the new Act, i.e, April 1, 1961. We do not find any different intention of the legislature expressly mentioned in any of the provisions of the new Act. We, accordingly, hold that section 6 of the General Clauses Act, in the instant case, saved the position and kept the assessee's claim alive. The position would have been different if the assessee had not made the claim before 31st March, 1962, which in the instant case was not so, the claim having been made on 27th March, 1962. We, however, find that the authorities below have considered only the legal aspect of the matter and have not given any findings on fact, such as, whether the assessee was assessed to income-tax in the earlier year on the basis of the Income-tax Act, 1918, or on the basis of the previous year under the Indian Income-tax Act, 1922, and also whether all other requisite conditions enabling the assessee to get the requisite relief were, in the instant case, complete or not. As such, we accept the assessee's contention that he was entitled to relief claimed by him under section 25(3) of the Indian Income-tax Act, 1922, and would set aside the order of the Appellate Assistant Commissioner and restore the case to his file and direct him to find out the facts in the light of the observations mentioned above, either by himself or by sending the case back to the Income-tax Officer or after calling for a remand report from him on facts. In case he is satisfied that on facts the requisite conditions are fulfilled according to law, necessary relief should be granted to the assessee. The parties will be at liberty to lead such evidence in support of their respective contentions as they think necessary to substantiate the case on facts that the relief claimed under section 25(3) is legally justified.”

4. Thereupon, under s. 256(1) of the Income-tax Act, the Tribunal has referred the following question to this court:

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the relief claimed by the assessee under section 25(3) of the Indian Income-tax Act, 1922, was legally justified?”

5. In order to appreciate the contentions urged in this case it would be necessary to refer to the provisions of s. 25(3), (4) and (5) of the Indian I.T Act, 1922, as it stood at the relevant time. S. 25 dealt with the cases of assessments in case of discontinued business. Sub-ss. (3), (4) and (5) provided as follows:

“(3) Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income-tax Act, 1918 (VII of 1918), is discontinued, then, unless there has been a succession by virtue of which the provisions of sub-section (4) have been rendered applicable no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference.

(4) Where the person who was at the commencement of the Indian Income-tax (Amendment) Act, 1939 (VII of 1939), carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income-tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. Where any such claim is made, an assessment shall be made, on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference:

Provided that sub-sections (3) and (4) shall not apply—

(a) to super-tax except where the income, profits and gains of the business, profession or vocation were assessed to super-tax for the first time either for the year beginning on the 1st day of April, 1920, or for the year beginning on the 1st day of April, 1921;

(b) to a business, profession or vocation on which income-tax was at any time charged in the hands of a company under the Indian Income-tax Act, 1886 (II of 1886), or on which income-tax would have been charged in the hands of a company for the assessment year ending on the 31st day of March, 1918, if the company having been in existence in that year, had also been in existence in the year ending on the 31st day of March, 1917.

(5) No claim to the relief afforded under sub-section (3) or sub-section (4) shall be entertained unless it is made before the expiry of one year from the date on which the business, profession or vocation was discontinued or the succession took place, as the case may be.”

6. As is evident sub-s. (3), with which we are mainly concerned in this reference, dealt with two reliefs. The scope of these provisions was explained by the Madras High Court in the case of O.R.M.M.S.P.S.V Meyyappa Chettiar… v. The Commissioner Of Income-Tax, Madras….*, [1943] 11 ITR 247. There the Division Bench observed that s. 25(3) of the Indian I.T Act, 1922, as amended by the Indian I.T (Amend.) Act, 1939, which provided for relief where a business charged to tax under the I.T Act, 1918, was discontinued did not apply when a HUF carrying on business which was taxed under the Act of 1918 became disrupted and the members continued the business thereafter as partners. The word “discontinuance” in s. 25(3) meant, according to the Division Bench of the Madras High Court, “cessation” and did not cover cases of succession. The words “claim to the relief afforded under sub-section (3)” in s. 25(5) referred only to relief by way of adjustment of the tax levied on the income of the previous year and the consequential refund, if any, for which the assessee had to make a claim and did not refer to the exemption from tax of the income of the period between the end of the previous year and the date of the discontinuance for which the assessee need not make a claim. At page 258 of the report, Mr. Justice Patanjali Sastri, who delivered the judgment, observed as follows:

“It will be seen that sub-sections (3) and (4) of section 25 provide for two concessions in respect of a business, etc., charged under the Act of 1918, namely, (1) an exemption from tax of the income of the period between the end of the previous year and the date of the discontinuance or succession, and (2) an adjustment, at the option of the assessee, of the tax levied on the income of the previous year with reference to the profits of the said period and a refund of the excess tax, if any, already collected. In the present case the petitioner sought only concession (1). To obtain that concession the assessee does not have to call upon the ITO to do anything. The Act exempts the income of the period in question and the officer has merely to take note of the exemption and abstain from assessing such income; while for concession (2) the assessee has to make a claim before the Officer, as it involves the officer doing something, namely, an assessment of the income of the said period and adjustment of the tax paid on the income of the previous year with reference to the income so assessed and a refund of the excess tax, if any, already paid. If the ITO has to take action in this manner for granting this relief, it stands to reason that a time limit should be imposed for a claim to be made in that behalf, as the task of making a proper assessment for the relevant period might become increasingly difficult with the lapse of time. But what reason could there be for imposing a time limit for asking the income-tax authorities to abstain from doing a thing which the Act directs them not to do? A time limit for this purpose would, indeed, mean that the income-tax authorities would be free to disregard the plain duty imposed on them by the Act, leaving the assessee without a remedy, if only they assess and levy the tax on the exempted profits, either under section 23 or section 34, after the expiry of the time limited. It seems to me that a construction of section 25(5) which leads to such anomalous results ought not to be readily accepted. It is said that the word relief is wide enough to cover both the benefits afforded under sub-sections (3) and (4). It may be so in ordinary usage uncontrolled by context, though the assessee may well retort that not much relief is afforded to him when the Crown, having already taxed him for as many years as he carried on the business, merely abstains from taxing once more. But in the context of section 25, I am of opinion that it would be a reasonable construction of the words claim to the relief afforded under sub-section (3) or sub-section (4) to hold that they refer only to the relief by way of adjustment of the tax levied on the income of previous year and the consequential refund, if any, for which the assessee has to make a claim under sub-sections (3) and (4). The plea of limitation cannot, therefore, prevail.”

7. The purpose of sub-ss. (3), (4) and (5) were again explained by the Judicial Committee in the case of CIT v. P.E Poison, [1945] 13 ITR 384 (PC). There the Judicial Committee held that the word “discontinued” in s. 25(3) of the Indian I.T Act, 1922, as amended by the Indian I.T (Amend.) Act, 1939, meant only complete cessation and did not include the case of discontinuance of the business by the person formerly carrying it on as a result of the transfer or assignment of that business to another person who thereafter carried it on. There the assessee who was carrying on a business assigned it to a limited company on 1st January, 1918. In respect of the assessment year 1939–40, he claimed that in view of the provisions of s. 25(3) of the Act of 1922, as amended in 1939, his income from the business made during the year 1938 was not taxable. It was held that the assessee was not entitled to the benefit of s. 25(3) of the Act as amended as the business was not discontinued. There the Judicial Committee, explaining the scope of these sub-sections, observed, inter alia, at page 386 of the report as follows:

“It must in the first place be borne in mind that under section 3 of the Indian I.T Act, 1922 (which in this respect differs from the English Income-tax Acts), the subject of charge is not the income of the year of assessment but the income of the previous year. This was a change introduced by the 1922 Act. Previously under the 1918 Act the subject of charge was the actual income of the year of assessment. The result of this change was that, if a business was in existence and earning profits in the year 1921 when the 1918 Act was in force and continued in existence in the year 1922 when the 1922 Act was in force, the owner would pay income-tax twice over on his 1921 profits. It was accordingly necessary in the 1922 Act to differentiate for the purpose of discontinued businesses between those which had, and those which had not, been charged to tax under the 1918 Act.”

8. Section 25 of the 1922 Act deals with assessment in the case of discontinued businesses. By sub-section (1) it provides that, where any business on which income-tax was not at any time charged under the provisions of the 1918 Act is discontinued in any year, an assessment may be made in that year on the basis of the income, profits or gains of the period between the end of the previous year and the date of such discontinuance in addition to the assessment, if any, made on the basis of the income, profits or gains of the previous year. This sub-section does not apply to the present case, but reference may be made to it as illustrating the purpose of the Act to make the number of assessments agree with the number of years during which the business has been carried on.

9. Sub-s. (2) of s. 25 is an administrative provision. It is upon sub-s. (3) that this appeal turns. Before the Amending Act of 1939 came into force, it was in the following terms:

“(3) Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income-tax Act, 1918, is discontinued, no tax shall be payable in respect of the income, profits or gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference.”

10. The purpose and effect of this sub-section is clearly to give relief to a taxpayer who but for it would in the aggregate be charged with tax “once in respect of every year's income and twice in respect of one year's income”. Counsel for the revenue drew our attention to the observations of the Supreme Court in the case of CIT v. K. Srinivasan & K. Gopalan, [1953] 23 ITR 87. There the Supreme Court observed that the expression “end of the previous year” in sub-ss. (3) and (4) of s. 25 of the Indian I.T Act, 1922, in the context of those sub-sections, meant the end of an accounting year (a period of full 12 months) expiring immediately preceding the date of discontinuance or succession. The assessee in that case was carrying on in partnership a business, the profits of which had been charged to income-tax in its hands under the Indian I.T Act, 1918, and transferred the business as a going concern to a private limited company on 1st March, 1940. The firm's year of account was a period of 12 months ending with 30th June each year and the firm was charged to tax in the year 1939–40 in respect of the profits of the year of account ending on 30th June, 1938. For the assessment year 1940–41, the assessee claimed that the firm was not liable to pay any income-tax on the income of its business from the end of the accounting year ending 30th June, 1938, to 29th February, 1940, under s. 25(4) of the Act. The income-tax authorities held that the exemption claimed applied only to the income of the period 1st July, 1939, to 29th February, 1940. The Tribunal and the High Court (Satyanarayana Rao J., affirming the decision of the Tribunal—Viswanatha Sastri J. contra) allowed the claim of the assessee for the entire period of 20 months. It was held by the Supreme Court that the period, the profits of which were entitled to exemption from the payment of tax under s. 25(4), was the period commencing from the 1st July, 1939, and ending with 29th February, 1940. The scheme of the Indian I.T Act, according to the Supreme Court, was that by the charging section, namely, s. 3, income-tax was levied for a financial year at the rate prescribed by the annual Finance Act on the total income of the previous year. Each previous year's income was the subject of separate assessment in the relevant assessment year. Though the year of assessment was the financial year, the previous year of an assessee need not necessarily be the previous financial year, for this expression was to be understood as defined by s. 2(11)(a) of the Act. The Supreme Court held that on a plain reading of s. 25(4) and s. 26(2) together, the ITO was not empowered to make an accelerated assessment in the year in which succession occurred on the profits of that year, and prematurely assess the person succeeding to a business so that he might be able to give relief to the person succeeding. The exemption provided for succession in s. 25(4) and the apportionment mentioned in s. 26(2) had to be made in the assessment year in which the profits of the year of succession fell to be assessed under s. 3 of the Act.

11. Counsel for the revenue urged before us relying on the aforesaid decision of the Supreme Court that in this case the assessee was not entitled to have an accelerated assessment and, therefore, after the repeal of the 1922 Act as the assessment for the assessment years 1962–63 and 1963–64 had been made under the provisions of the 1961 Act properly there was no scope for granting any relief under sub-s. (3) of s. 25 of the Indian I.T Act, 1922. In this case, there was no question of accelerated assessment. We are also not concerned with the question of any premature assessment. In this case, the indisputable facts are, the I.T Act, 1961, came into effect on 1st April, 1962. The discontinuance took place on 28th February, 1962. The assessee gave notice of such discontinuance and filed a claim on 27th March, 1962. It cannot be also disputed that if the I.T Act, 1961, had not come into effect then the assessee would have been entitled to get the relief as claimed for by virtue of s. 25(3) of the Indian I.T Act, 1922. Has the assessee lost such right because of the coming into force of the I.T Act, 1961? The question may be looked at in the light of the provisions of s. 6 of the General Clauses Act. s. 6 of the General Clauses Act, 1897, provides as follows:

“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 not—

(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 thereunder; 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.”

12. Therefore, unless a contrary intention appears, repeal of an Act does not affect any right, privilege, obligation or liability. The question is whether there is any contrary intention which has appeared in the Act repealing the Indian Income-tax Act, 1922. On this aspect of the matter, the Supreme Court in the case of State Of Punjab v. Mohar Singh, Son Of Pratap Singh, AIR 1955 SC 84, at page 88, observed as follows:

“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 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 we 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.

13. The line of enquiry would be, not whether the new Act expressly keeps alive old rights and liabilities but whether it manifests an intention to destroy them. We cannot, therefore, subscribe to the broad proposition that section 6 of the General Clauses Act is ruled out when there is repeal of an enactment followed by a fresh legislation. Section 6 would be applicable in such cases also 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 law and the mere absence of a saving clause is by itself not material.”

14. It is, therefore, necessary for us, in this case, to find out from the provisions of s. 297 of the I.T Act, 1961, which repeals the Indian I.T Act, 1922, whether the old rights and liabilities have been intended to be destroyed. If we find such an intention of Parliament to destroy the old rights and liabilities by virtue of the different clauses of sub-s. (2) of s. 297 of the I.T Act, 1961, then undoubtedly the right to the relief, option in respect of which had become exercisable under the provisions of the Indian I.T Act, 1922, by the exercise before coming into operation of the new Act would not be available to the assessee. It is well settled that the law as to the substantive rights would be the law as is prevalent in the year of assessment. This right to get this relief, to be obtained by the procedure of assessment, is a substantial right. There cannot be, in our opinion, any doubt on this score.

15. S. 297 of the I.T Act, 1961, repeals the Indian I.T Act, 1922, and sub-s. (2) of s. 297 provides for what would happen in certain specified cases notwithstanding the repeal of the Indian I.T Act, 1922. It keeps alive certain provisions of the Indian I.T Act, 1922. Reliance was placed on cl. (h) of sub-s. (2) of s. 297. The said clause read as follows:

“(h) any election or declaration made or option exercised by an assessee under any provision of the repealed Act and in force immediately before the commencement of this Act shall be deemed to have been an election or declaration made or option exercised under the corresponding provision of this Act.”

16. There is, however, no doubt that there is no corresponding provision under the 1961 Act dealing with the type of claims mentioned in cl. (3) or (4) of the Indian I.T Act, 1922. Counsel for the revenue, therefore, submitted that what was not said was destroyed and such intention was apparent from cl. (h) of sub-s. (2) of s. 297 of the I.T Act, 1961. We have, therefore, to find out whether Parliament has expressed an intention to destroy any right or option which was exercisable by the assessee by virtue of the law in force in the relevant assessment year by cl. (h) of sub-s. (2) of s. 297 of the I.T Act, 1961. The Law Commission of India in its 12th Report (page 381) in respect of existing s. 25 observed as follows:

“Existing section 25, sub-sections (3) and (4), deal with two things:

(i) total exemption for income of the year in which a business is discontinued or succeeded to, and

(ii) substitution relief, whereunder the income of the year of discontinuance or succession can be substituted for the income of the immediately preceding year.

17. The first concession has been already dealt with in a previous Chapter; the second concession has been dealt with in the clause under discussion. A few drafting changes have been made in order to secure clarity.

18. As to the position concerning super-tax, see the Chapter on super-tax.

19. The provision embodied in the draft is applicable only to a business assessed under the 1918 Act. It is for consideration whether this concession is at all necessary after the lapse of such a long time. Similarly, the Commission in its notes to cl. 13, at page 337 of the Report, noted as follows:

“section 25, sub-sections (3) and (4), provide for two things. One is the exclusion from total income of income of certain businesses, and the other is the right to claim substitution of the income of the year of discontinuance, etc., in place of the last year's income.

20. The first part (exclusion from total income) has been embodied in the present clause, with the language simplified.”

21. It is clear, therefore, that as the relief contemplated by s. 25(3) of the Act was mainly there in the Act of 1922 to give relief to those assessees who had paid tax under the I.T Act, 1918, and had to really suffer double taxation for one year on the introduction of the Indian I.T Act, 1922, which changed the basis of the charging period, and as there would be few companies who would be so affected after the operation of the Indian I.T Act, 1922, for the last 40 years there was practically no necessity of continuing such a provision. There is, however, no such note or clause showing intention to take away any right of the assessee who had suffered such taxation under the Act of 1918 and had acquired such right during the operation of the 1922 Act.

22. Reliance was placed by counsel on behalf of the revenue in the case of Kalawati Devi Harlalka v. CIT, [1967] 66 ITR 680 (SC). There, the Supreme Court was dealing with the Commissioner's jurisdiction to issue notice under s. 33B of the Indian I.T Act, 1922, after coming into operation of the I.T Act, 1961, in respect of assessment years 1952–53 to 1960–61, completed under the Indian I.T Act, 1922. The Supreme Court held that s. 297(2)(a) of I.T Act, 1961, included within its scope a proceeding under s. 33B of the Indian I.T Act, 1922, as the Supreme Court was of the view that the word “assessment” would bear a very comprehensive meaning. The Supreme Court further observed that s. 297 was meant to provide as far as possible for all contingencies which might arise in view of the repeal of the Act of 1922 and s. 6 of the General Clauses Act would not apply because s. 297(2) evinced an intention to the contrary. Reliance was, therefore, placed heavily by counsel for the revenue on this aspect of the matter. The said decision of the Supreme Court was considered by the Supreme Court again in the case of T.S Baliah v. T.S Rangachari, ITO, [1969] 72 ITR 787 (SC). There, the Supreme Court observed that the provisions of s. 52 of the Indian I.T Act, 1922, did not alter the nature or quality of the offence enacted in s. 177 of the Indian Penal Code, 1860. They merely provided a new course of procedure for what was already an offence. There was no repugnancy or inconsistency. The two enactments could stand together and should be treated as cumulative in effect. It was further observed that in enacting s. 297(2) of the I.T Act, 1961, it was not the intention of Parliament to take away the right of instituting prosecution in respect of proceedings which were pending at the commencement of the Act. Parliament had not made any detailed provision for the institution of prosecutions in respect of the offences under the 1922 Act. Similarly, s. 6(e) of the General Clauses Act, 1897, applied for the continuance of such proceedings after the repeal of the Indian I.T Act, 1922, and legal proceedings in respect of offence committed under the 1922 Act might be instituted after the repeal of the 1922 Act by the 1961 Act, and punishment might be imposed as if the repealing Act had not been passed. It was further observed that before coming to the conclusion that there was repeal of an earlier enactment by a later enactment by implication, the court must be satisfied that the two enactments were so inconsistent or repugnant that they could not stand together and the repeal of the express prior enactment must flow from necessary implication of the language of the later enactment.

23. At page 793 of the said report, the court observed as follows:

“The principle 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 s. 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 liabilities but whether it manifests an intention to destroy them. s. 6 of the General Clauses Act, therefore, 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 s. 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. Having examined the provisions of cl. (2) of s. 297 of the 1961 Act we are of the opinion that it is not the intention of Parliament to take away the right of instituting prosecution in respect of proceedings which are pending at the commencement of the Act. It is true that there is no express sub-clause in s. 297(2) of the 1961 Act which provides for the continuation of such proceedings but our concluded opinion is that Parliament did not intend s. 297(2) of the 1961 Act to be completely exhaustive and in regard to such matters as are not expressly saved by s. 297(2) of the 1961 Act the provisions of s. 6(e) of the General Clauses Act will apply. It follows, therefore, in the present case that under s. 6 of the General Clauses Act a legal proceeding in respect of an offence committed under the 1922 Act may be instituted even after the repeal of the 1922 Act by the 1961 Act and punishment may be imposed as if the repealing Act had not been passed. On behalf of the appellant, reliance was placed on the decision of this court in Kalawati Devi Harlalka v. CIT, [1967] 66 ITR 680 (SC) in which there is an observation that s. 6 of the General Clauses Act will not apply because s. 297(2) ‘evidences an intention to the contrary and s. 297(2) was meant to provide as far as possible for all contingencies which may arise out of the repeal of the 1922 Act’. But this observation in Kalawati Devi Harlalka v. CIT, [1967] 66 ITR 680 (SC) has been explained and interpreted by this court in a subsequent case, Iii Income Tax Officer, Mangalore v. M. Damodar Bhat, [1969] 71 ITR 806 at page 813 (SC), wherein it was pointed out that the ratio of the decision in Kalawati Devi Harlalka v. CIT was that s. 6 of the General Clauses Act will not apply in respect of those matters where Parliament had clearly expressed its intention to the contrary by making detailed provisions for similar matters mentioned in that section. As we 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, therefore, that the provisions of s. 6 of the General Clauses Act are applicable in the present case and the prosecution of the appellant under s. 52 of the 1922 Act is legally valid.”

24. We are, therefore, unable to accept the submission on behalf of the revenue that whatever is not said is destroyed. We must find the manifest intention of Parliament to destroy a right or privilege under the old Act. The fact that the new Act does not make any specific provision for that type of relief mentioned in s. 25(3) or s. 25(4) of the Indian I.T Act, 1922, because the need for such relief had disappeared according to one view of the Law Commission, cannot be said to be evidence of intention to destroy the rights which had accrued.

25. This view we are taking is in consonance with the view of the Supreme Court in the case of Tiwari Kanhaiyalal v. CIT, [1975] 100 ITR 5. There, it was held that s. 28(4) of the Indian I.T Act, 1922, which provided that “no prosecution for an offence against this Act shall be instituted in respect of the same fact on which penalty has been imposed under this section” did not bar the institution of a prosecution for an offence against the 1922 Act or the 1961 Act when a penalty had been imposed not under s. 28(1) of the 1922 Act but under s. 271(1) of the 1961 Act. S. 28(4) did not obliterate the factum of the commission of the offence under s. 52 of the 1922 Act and did not transmute the offence into an innocent act because of the imposition of penalty under s. 28. Such imposition merely barred the prosecution for the trial and conviction of the commission of the offence. Where penalty was imposed under s. 271 of the 1961 Act the launching of the prosecution became permissible and was not hit by art. 20(1) of the Constitution of India. The accused would be entitled to rely upon art. 20(1) only to the extent of awarding of the lesser punishment under s. 52 of the 1922 Act. Where a false statement was made in a declaration in a return submitted under the 1922 Act prior to the coming into force of the 1961 Act, it was not correct to take recourse to s. 297(2)(h) of the 1961 Act to make the offence come under s. 277 of the 1961 Act. In the case of Raghubir Saran v. O.P Jain, Additional Munsif, [1969] 73 ITR 482, the learned single judge of the Allahabad High Court observed that the mere omission of a section did not necessarily lead to the conclusion that it was the intention of the legislature to do away with the rights and obligations created under that embodied section. It was observed that s. 138 was not incompatible and inconsistent with the effect of s. 137 being continued notwithstanding this omission. After the repeal of the Indian I.T Act, 1922, and also s. 33 of the I.T Act, 1961, by s. 32 of the Finance Act, there was no provision in the Act which provided security and protection of the documents filed or statements made during the assessment proceedings. In the case of Daulat Ram v. Sow Nath, [1968] 68 ITR 779, the Delhi High Court had to consider this aspect of the matter in a proceeding instituted under the Delhi Rent Control Act, 1958, by certain landlords for ejectment of the petitioners in that case from certain premises. The petitioners had applied in 1966 for summoning the clerk of the ITO to produce the balance-sheets and P & L A/cs for the years 1950 to 1954 filed by a firm of which one of the petitioners was a partner, to prove that that firm was carrying on business in the premises. The ITO claimed privilege in respect of the production of the documents under s. 54 of the Indian I.T Act, 1922, and the Rent Controller upheld the claim of privilege. On an application to the High Court for revision it was held by Mr. Justice Khanna, that though the application for summoning the clerk of the ITO was made in 1966, when the Indian I.T Act, 1922, was repealed by the I.T Act, 1961, and in 1966 there was no provision corresponding to s. 54 of the Act of 1922, since the balance-sheets for the years 1950 to 1954 were filed before the ITO when s. 54 of the Act of 1922 was in force, the privilege against production of the documents under s. 54 could not be affected by the repeal of the Act of 1922, in view of s. 6(c) of the General Clauses Act, 1897. The learned judge held that subsequent legislation did not reveal an intention to destroy the privilege which had accrued in respect of documents filed at a time when s. 54 was in force. The privilege under s. 54 of the Act of 1922 was allowed to continue by s. 137 of the Act of 1961 and even after s. 137 was repealed by the Finance Act of 1964, the CIT was made, under s. 138, the sole authority to decide whether it was in the public interest to furnish the information asked for. If the CIT decided under s. 138 of the I.T Act, 1961, not to furnish the information asked for, it could not be supplied. In the premises, therefore, in our opinion, the Tribunal was right in holding that the relief claimed by the assessee in the facts and circumstances of this case was legally justified. The question, therefore, is answered in the affirmative and in favour of the assessee. Parties will pay and bear their own costs.

Sudhindra Mohan Guha, J.:— I agree.