Commissioner Of Income-Tax v. Uttam Chand Nahar

JUDGMENT

1. The Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, had submitted the statement of case along with the following questions of law to be answered by this court on a reference application moved by the assessee as well as the Revenue in relation to the order passed by the Income-tax Appellate Tribunal in I.T.A No. 2250.Jp/1995 relating to the assessment year 1984-85:

“1. Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the Assessing Officer had not misread the explanatory note and, therefore, had a reason to believe that income had escaped assessment?

2. Whether, on the facts and circumstances of the case, the Tribunal was right in holding the proceedings to be valid despite the fact that the approval of the Deputy Commissioner of Income-tax was not obtained by the Assessing Officer?

3. Whether, on the facts and circumstances of the case, the Tribunal was right in holding the proceedings to be valid by holding that the service on the adult member of the family was a sufficient notice?

4. Whether, on the facts and circumstances of the case, the Tribunal was justified in holding the proceedings to be invalid on the ground that the period of less than 30 days was given to furnish the return of income despite the provisions of section 292B of the Act?”

2. The facts as appear from the statement of the case are that for the assessment year 1990-91, the assessee has disclosed the sale of his residential house and claimed exemption from inclusion of the capital gains in its taxable income under section 54 of the Income-tax Act, 1961. At the foot of computation of total income for the assessment year 1990-91, an explanatory note was appended by the assessee. On the basis of the aforesaid information disclosed by the assessee himself that he has made certain investments in construction of his residential house on the land which he acquired in 1961 and the investment in the construction of house continued up to the year 1983-84 that the total investment shown by the assessee in his house was to the tune of Rs. 3,00,000, the Assessing Officer issued a notice under section 148 read with section 147 of the Income-tax Act, 1961, in relation to the assessment year 1984-85 for assessment/reassessment of the income of the respondent-assessee for the said assessment year.

3. As per the notice issued for reassessment under section 148 for initiating proceedings under section 147, the assessee was required to submit his return of income for the assessment year 1984-85 within 30 days of receipt of the notice. The notice was served on the son of the assessee who was an adult member of the family of the assessee. Before initiating proceedings under section 148, the Assessing Officer has sought approval of the Commissioner through the Deputy Commissioner.

4. In the assessment order passed by the Assessing Officer for the assess ment year 1984-85 in pursuance of proceedings initiated under section 148, the Assessing Officer quoted the explanation appended to the return of the assessee for the assessment year 1990-91. In the reproduction of the said explanatory note some line was missed, which conveyed that the house was completed in 1979. The assessee has contended that this exclusion was deliberate to assume jurisdiction under section 148 because after noticing the excluded part of the explanation appended to the return of 1990-91, no belief could be formed about the escapement of income from assessment for the assessment year 1984-85.

5. The present proceedings are about the objections raised by the assessee about the validity of the initiation and continuance of the reassessment proceedings in pursuance of notice under section 148 issued on January 15, 1993, and served on the adult son of the assessee on January 19, 1993, in pursuance of which the assessee had appeared. All the four questions raised relate to these aspects.

“Question No. 1: Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the Assessing Officer had not misread the explanatory note and, therefore, had a reason to believe that income had escaped assessment?”

6. Question No. 1 concerns the objection of the assessee that by misreading the explanatory note submitted by the assessee due to exclusion of the vital part of the explanatory note, the Assessing Officer had wrongly assumed the jurisdiction under section 147 because had he taken notice of the aforesaid facts, there would have been no material on the basis of which the Assessing Officer could have entertained a belief that income of the assessee of the previous assessment year relating to the assessment year 1984-85 had escaped assessment. Entertaining such a belief, is according to the assessee, the condition precedent before assuming jurisdiction by the Assessing Officer.

7. The explanation appended to the return in its fullness reads as under:

“The assessee has during the previous year relevant to the assessment year sold his residential house situated, at 129, Ajeet Colony, Jodhpur, for a total consideration of Rs. 4,95,000 (which include Rs. 70,000 exclusively relating to sale of furniture and fittings like sofa set, fans, beds, electric fittings of appliances, etc.) to three parties. The cost of residential house was around Rs. 3 lakhs. The plot was acquired in 1961 for Rs. 2,000 and a very small construction was immediately raised and given on rent. Thereafter, time to time construction was carried out and by 1979 a full and complete house was built. Thereafter also, time to time investment was made up to 1983-84 for addition and alteration. Thus, around Rs. 3 lakhs was invested towards cost of the residential house. The capital gain is not taxable as has been shown in the computation of income, even without considering the deduction of sections 54 and 48 of the Act being long-term capital gain. Further, the assessee has again started construction of other residential house on the land acquired on lease in July, 1989.”

8. However, the Income-tax Officer in the assessment order, has quoted the aforesaid explanation. The emphasised portion of two reproductions highlights that the following underlined part of the explanation did not find place in reproduction by the Income-tax Officer:

“The assessee has during the previous year relevant to the assessment year sold his residential house situated at 129, Ajeet Colony, Jodhpur for a total consideration of Rs. 4,95,000 (which include Rs. 70,000 exclusively relating to sale of furniture and fittings like sofa set, fans, beds, electric fittings of appliances, etc.) to three parties. The cost of residential house was around Rs. 3 lakhs. The plot was acquired in 1961 for Rs. 2,000 and a very small construction was immediately raised and given on rent. Thereafter, time to time construction was made up to 1983-84 for addition and alteration. Thus, around Rs. 3 lakhs was invested towards cost of the residential house. The capital gain is not taxable as has been shown in the computation of income, even without considering the deduction of sections 54 and 48 of the Act being long-term capital gain. Further, the assessee has again started construction of other residential house on the land acquired on lease in July, 1989,”

“thereafter time to time construction was carried out and by 1979 a full and complete house was built. Thereafter also” time to time investment was made up to 1983-84 for additions and alterations.

9. It is true that entertaining a belief that income of the assessee had escaped assessment or has been subjected to tax at a low rate on account of failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment is a condition precedent before the Assessing Officer assumes jurisdiction to issue notice under section 148 after the expiry of four years from the end of the relevant assessment year. Notice in the present case was issued on January 15, 1993, which was beyond four years from the end of the assessment year 1984-85 and the extended period of limitation for initiating proceedings under section 147 applied and could have been initiated only on the satisfaction of the Income-tax Officer about the failure on the part of the assessee to disclose truly and fully all material facts relevant for the assessment of the assessee.

10. However, such satisfaction is a subjective one. So long as there is some material having nexus with formation of reason to believe, the satisfaction is not liable to be reviewed. Adequacy or sufficiency of material are not the grounds on which existence of belief can be questioned and examined. The Assessing Officer, the Commissioner of Income-tax (Appeals) and the Tribunal have found that omission of the aforesaid part of the explanatory note from the reproduction of the explanatory note, does not affect the holding of belief by the Income-tax Officer about the escapement of income of the assessment year 1984-85 from assessment. As a matter of fact they were of the opinion that it is apparent that even as per the note of the assessee, read in its entirety, the investment in the construction of the house have continued up to the previous year 1983-84 relevant to the assessment year 1984-85, even after completion of house in 1979. How much investment has been made during the previous year relevant to the assessment year 1984-85 may be a matter of enquiry, and the extent of income which may be ultimately assessed or found to be taxable is not relevant for the purpose of examining the question whether in the absence of excluded portion, there was material before the Income-tax Officer, on the basis of which he could entertain belief about the escapement of income from assessment relating to the assessment year 1984-85.

11. The belief about the actual amount of investment referable to the previous assessment year 1983-84 is not necessarily to be entertained so as to provide a foundation of holding a belief that income of the previous year relevant to the assessment year 1984-85 has escaped assessment. Even if it could be said that certain investments have been made during the previous year relating to the assessment year 1984-85 and which have been disclosed by the assessee during the relevant assessment year will justify the Income-tax Officer to hold a belief bona fide that income for the assessment year 1984-85 has escaped assessment. The explanatory note of the assessee did contain the fact that investments were made in the house until 1983-84 relevant to the assessment year 1984-85. It was not even the case of the assessee that these investments were disclosed by him earlier and were already part of the record and considered by the Income-tax Officer during the assessments of earlier years when such disclosure was made. In the absence of any such material, the assessment year 1984-85 being within 8 years from the date of issue of notice in February, 1993, the proceedings were validly initiated. There cannot be any doubt about it.

12. It is well-settled and need no elaboration that adequacy and sufficiency of material on the basis of which the Assessing Officer could hold a belief about the escapement of income from assessment before assuming jurisdiction to initiate proceedings under section 147 cannot be the subject-matter of review by any superior authority.

13. We, therefore, answer question No. 1 in the affirmative, that is to say in favour of the Revenue and against the assessee.

“Question No. 2: Whether, on the facts and circumstances of the case, the Tribunal was right in holding the proceedings to be valid despite the fact that the approval of the Deputy Commissioner of Income-tax was not obtained by the Assessing Officer?”

14. About question No. 2 as we have noticed above that the notice under section 148 had been issued after the expiry of four years from the end of the relevant assessment year in respect of which, proceedings were to be initiated. As per the provisions of section 151 as they stood during the period notice under section 148 was issued, the Assessing Officer could not have initiated proceedings under section 148 unless the Deputy Commissioner (subsequently substituted as Joint Commissioner) was satisfied on the basis of the reasons recorded by the Assessing Officer that it is a fit case for initiating proceedings. The assessee has contended that since the action of the Assessing Officer was not approved by the Deputy Commissioner (Joint Commissioner), the initiation of proceedings was invalid and for that reason also, the assessment founded on such ultra vires assumption of jurisdiction cannot be sustained.

15. Section 151 which existed as on the date the notices were issued which has been substituted with effect from April 1, 1989, reads as under:

“151.(1) In case where an assessment under sub-section (3) of section 143 or section 147 has been made for the relevant assessment year, no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Assistant Commissioner, unless the Deputy Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice:

Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice.

1(2)(1) In an assessment, reassessment or recomputation made under section 147, the tax shall be chargeable at the rate or rates at which it would have been charged had the income not escaped assessment.

(2) Where an assessment is reopened under section 147, the assessee may, if he has not impugned any part of the original assessment order for that year either under sections 246 to 248 or under section 264, claim that the proceedings under section 147 shall be dropped on his showing that he had been assessed on an amount or to a sum not lower than what he would be rightly liable for even if the income alleged to have escaped assessment had been taken into account, or the assessment or computation had been properly made:

Provided that in so doing he shall not be entitled to reopen matters concluded by an order under sections 154, 155, 260, 262, or 263.”

16. A perusal of the aforesaid provision goes to show that in a case where an assessment order already existed for the relevant assessment year framed under section 143(3) or section 147, the Assessing Officer below the rank of Assistant Commissioner has no jurisdiction to commence the proceedings unless the Deputy Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for issue of such notice. However, it also envisages where such initiation of proceedings takes place after the expiry of four years from the end of the relevant assessment year, the satisfaction of the Chief Commissioner or the Commissioner is required to be there on the basis of the reasons recorded by the Assessing Officer before such initiation can take place by an officer. However, this condition is applicable only in case where the earlier assessment already exists.

17. On the other hand, sub-section (2) operates in the field, where there is no earlier assessment under section 143(3) or section 147. In such cases, the assessment proceedings are either to be initiated by the Deputy Commissioner in terms of section 147 read with sections 148 and 149 or if such proceedings are to be initiated by an officer who is below the rank of the Deputy Commissioner after the expiry of four years, then the satisfaction of the Deputy Commissioner that it is a fit case for issue of such notice, on the basis of the reasons recorded by the Assessing Officer before proceedings can be initiated.

18. This makes it clear that where no earlier assessment exists within four years, the Assessing Officer himself can initiate proceedings. If the assessment proceedings are to be initiated after four years, it has to follow the satisfaction of the Deputy Commissioner about the fulfilment of the conditions for initiating proceedings under section 147 unless the Deputy Commissioner himself initiates the proceedings. However, if there is an earlier assessment whether under section 143(3) or under section 147 and it does not include assessment under section 143(1)(a), if the assessment proceedings are initiated by the Assessing Officer who is below the rank of Assistant Commissioner, satisfaction of the Deputy Commissioner that it is a fit case for issue of such notice is necessary before he can exercise authority within four years of the end of the assessment year in relation to which the proceedings are to be initiated. Beyond the expiry of 4 years in case governed by section 151(1), such satisfaction ought to be of the Commissioner or the Chief Commissioner. However, if within four years of the end of the relevant assessment year, the proceedings are to be initiated by the Assistant Commissioner or by an Assessing Officer who is not below the rank of the Deputy Commissioner where earlier assessment does not exist, the principal sub-clause of section 151(1) or 151(2) does not apply. No satisfaction is required to be recorded by the Deputy Commissioner where no earlier order exists and proceedings are to be initiated after the expiry of four years from the end of the relevant assessment year, then if the Assessing Officer is below the rank of the Deputy Commissioner, the Deputy Commissioner must be satisfied that it is a fit case for issue of such notice before the Assessing Officer could issue notice. However, in all cases where the earlier assessment has taken place under section 143(3) or section 147, the initiation of proceedings after 4 years, has to be whether by the Assessing Officer below the rank of the Assistant Commissioner or above the rank of the Assistant Commissioner, it has to be subsequent to recording of satisfaction of the Commissioner or the Chief Commissioner on the basis of the reasons recorded by the Assessing Officer that it is a fit case for issue of such notice.

19. The common thread in all such cases is that the initial satisfaction about the escapement of income, which requires initiation of proceedings under section 147, must be of the Assessing Officer himself. If the conditions under section 151(1) or (2) require the satisfaction of the Deputy Commissioner or the Chief Commissioner or the Commissioner, as the case may be, before issuance of such notice, such satisfaction must also be only on the basis of the reasons recorded by the Assessing Officer and not de hors it. That is to say the satisfaction recorded by the Assessing Officer must be endorsed by the Deputy Commissioner, the Chief Commissioner or the Commissioner, as the case may be, before the Assessing Officer assumes jurisdiction. Satisfaction independent of the reasons recorded by the Assessing Officer is not envisaged. This clearly indicates that foundation of initiating the proceedings is the reason to belief held by the Assessing Officer. Reasons for holding such belief are to be recorded in writing by the Assessing Officer. The satisfaction of the Deputy Commissioner or the Commissioner, as the case may be, has to be only about the fitness of the case to be subject to proceeding by reassessment under section 148 only on the basis of the reasons recorded by the Assessing Officer.

20. Apparently, the assessee had raised the objection in relation to sub-section (2) of section 151. However, the Tribunal has reached this initial conclusion assuming that the case is governed by the proviso to sub-section (1) of section 151 which requires the satisfaction of the Commissioner or the Chief Commissioner to be obtained before initiating proceedings after four years of the expiry of the period from the end of the assessment year in relation to which the proceedings are to be initiated.

21. The Tribunal has not differentiated between sub-sections (1) and (2).

22. We are of the opinion that to the extent the Tribunal, without noticing the distinction between the cases where the earlier assessment under section 143(3) or section 147 existed, and where it did not, has made its observation, it was not justified. If that were so, sub-section (2) would be rendered redundant which permits the Assessing Officer who is below the rank of the Deputy Commissioner to initiate proceedings within four years of the relevant assessment year where no proceedings under sub-section (3) of section 143 or section 147 exists, even on that satisfaction of the Deputy Commissioner about the fitness of the case for issuing notice. It is only where no earlier assessment exists and proceedings are to be initiated after 4 years from the end of the relevant assessment year that proceedings by an Assessing Officer below the rank of the Deputy Commissioner can be initiated only on the basis of the satisfaction recorded by the Deputy Commissioner on the basis of the reasons recorded by such Assessing Officer that it is a fit case for issue of such notice. There is no such inhibition if the Deputy Commissioner himself is the Assessing Officer who is initiating the proceedings under section 151(2).

23. But the Tribunal has found firstly that such satisfaction by the Commissioner on the basis of the reasons recorded by the Assessing Officer is existing and about which there is no dispute. It has also referred to the fact on the basis of the record which has been placed before the Tribunal that the satisfaction or approval of the Commissioner was sought by the Assessing Officer through the Deputy Commissioner and the Deputy Commissioner has also recorded his satisfaction that it is a fit case for issue of notice before obtaining satisfaction of the Commissioner about the necessity of initiating proceedings under section 147. Thus, from the findings of the Tribunal and about which there is no dispute, the satisfaction of the Deputy Commissioner as well as the Commissioner was recorded that it is a fit case in which proceedings under section 147 can be initiated. It was so recorded on the basis of the reasons recorded by the Assessing Officer for which he has sought approval. That being the position, whether the case falls under sub-section (1) or sub-section (2) of section 151 conditions for initiating proceedings by the Assessing Officer below the rank of the Deputy Commissioner, have been shown to exist. If it is to be taken to be a case where no previous assessment under section 143 or section 147 exists, the satisfaction of the Deputy Commissioner on the basis of the reasons recorded by the Assessing Officer was sufficient for the purpose of initiating proceedings under section 147. The fact that it has also received the approval of the Commissioner would not invalidate the proceedings. In case the case of the assessee fell within the purview of sub-section (1) of section 151, there is no dispute about the fact that the Commissioner's approval for initiating proceedings under section 147 was obtained before initiating proceedings in terms of the proviso to sub-section (1) of section 151 also.

24. In view thereof, the conclusion of the Tribunal that there is no violation of section 151 to vitiate the proceedings was correct. Accordingly, question No. 2 is answered in the affirmative, i.e, against the assessee and in favour of the Revenue.

“Question No. 3: Whether, on the facts and circumstances of the case, the Tribunal was right in holding the proceedings to be valid by holding that the service on the adult member of the family was a sufficient notice?”

25. The third question relates to the propriety of service effected on the adult member of the family. It was contended by learned counsel for the assessee before the Tribunal that there was no proper service of notice under section 148. The notice under section 148 was served on an adult son of the assessee. The Tribunal has found that the notices issued under the Act of 1961 are required to be served in the manner prescribed under the Code of Civil Procedure. By referring to the provisions of section 27 and Order 5 of the Code of Civil Procedure, the Tribunal concluded that the service effected on the son of the assessee, who received the notice on his behalf as an adult member of his family and was residing with him, accords with the procedure prescribed for effecting service.

26. The contention raised by the assessee would have some merit if the assessee had not appeared and participated in the proceedings and had raised the issue about not receiving notice. In such event, it would have been required to consider in detail the consequence of not serving the notice directly on the assessee, and whether the condition of service on an adult member was shown to exist, if the notices were required not only to be issued but also to be served before the expiry of the period of limitation. In such case improper service or no service on the assessee would have invalidated the proceedings. This is so because there was some controversy about the scope and ambit of the expression “issue” used under section 149 of the Act of 1961 in juxtaposition with section 148. Whereas under section 149, the expression has been used that “no notice under section 148 shall be issued for the relevant assessment year” while prescribing limitation before which the proceedings under section 147 are to be initiated, in section 148 the expression has been used that notice shall be served on the assessee before making assessment/reassessment. Some of the courts by reading sections 148 and 149 together had come to the conclusion that the expression “issue” under section 149 has been used in comprehensive sense to include the process of service also to be completed before the expiry of the period of limitation prescribed under section 149. However, this controversy was settled by the Supreme Court in R.K Upadhyaya v. Shanabhai P. Patel. reported in [1987] 166 ITR 163 noticing the distinction between the requirement of sections 148 and 149. Section 148 requires the service of notice before making assessment/reassessment/recomputation under section 147, whereas section 149 requires issuance of notice before the expiry of the period of limitation for initiating proceedings. Noticing this distinction, the court held that what is needed under section 149 is that notice must be issued by the Assessing Officer before the expiry of the period of limitation provided under section 149. However, it may be served on the assessee even after the expiry of the period under section 149 but before the assessment/reassessment/recomputation under section 147. Thus, the service of notice now becomes part of the mere procedure and not a condition precedent for initiating proceedings. The service of notice before the expiry of the period of limitation does not become part of assuming jurisdiction and any defect in service, if remains, it is a mere irregularity and does not affect the assessment proceedings, if otherwise no prejudice is caused to the assessee. The court in the case of R.K Upadhyaya v. Shanabhai P. Patel. reported in [1987] 166 ITR 163 has held that (headnote):

“The scheme of the Income-tax Act, 1961 so far as notice for reassessment is concerned, is quite different from that of the 1922 Act. A clear distinction has been made out between ‘issue of notice’ and ‘service of notice’ under the 1961 Act. Section 149 of the 1961 Act, which provides the period of limitation, categorically prescribes that no notice under section 148 shall be issued after the period prescribed has lapsed. Once a notice is issued within the period of limitation, jurisdiction becomes vested in the Income-tax Officer to proceed to reassess. Section 148(1) provides for service of notice as a condition precedent to making the order of assessment. Service, under the new Act, is not a condition precedent to conferment of jurisdiction on the Income-tax Officer; it is a condition precedent only to the making of the order of assessment.”

27. Moreover, in our opinion, the Tribunal was justified in coming to the conclusion by referring to the provisions of the Code of Civil Procedure read with section 282 of the Income-tax Act, that notice was properly served. Section 282 postulates that a notice or requisition under this Act may be sent on a person named therein either by post or under the procedure prescribed under the Code of Civil Procedure. Under a given circumstance, under the provisions of Order 5, a notice can be served on any adult member of the family of the individual, who is residing with him. Therefore, a service on an adult member of the family of the person named in the notice is not invalid per se. The object of notice being to inform the assessee to respond to the notice for participating in proceedings and availing of the opportunity can assume importance. If the assessee fails to appear and participate in the proceedings and as a result he is precluded from doing so as a result of insufficiency or improper service, which has not reached him, it is not proper service at all, the question may assume importance. But if-in response to the notice served on an adult member of his family, the assessee appears or participates in the proceedings in compliance with the notice, the manner of service of notice becomes irrelevant.

28. In the present case, the assessee has filed the return in response to the notice served on his adult son calling upon him to file return and participated in the proceedings throughout, the service of notice on the individual himself being not a condition precedent for assuming jurisdiction nor a proper service before the expiry of the period of limitation before initiating proceedings being a condition precedent for initiating a valid proceeding under section 147 and the assessee having responded to notice betray that he has duly received summons served on his adult son. The service on the adult son of the assessee, who was residing with him has been rightly held to be proper by the Tribunal.

29. That being so, we answer question No. 3 also in the affirmative, in favour of the Revenue and against the assessee.

“Question No. 4: Whether, on the facts and circumstances of the case, the Tribunal was justified in holding the proceedings to be invalid on the ground that the period of less than 30 days was given to furnish the return of income despite the provisions of section 292B of the Act?”

30. The last question may have some substance, but for the amendment in section 148 with retrospective effect from April 1, 1989, vide the Finance Act, 1996.

31. The assessee has contended that the provisions of section 148 as it existed on January 15, 1993, the date when the notices were issued by the Assessing Officer required that the assessee must be given a notice requiring him to furnish the return of his income within a specified period being not less than a period of 30 days thus clearly indicating that there cannot be any notice of less than clear 30 days for the purpose of filing return in response to the notice. However, the impugned notice under section 148 required the assessee to file the return “within 30 days” instead of within any specified period expiring after 30 days. This was in clear violation of section 148. The Tribunal has overcome this difficulty by resorting to section 292B which was inserted on the statute book with effect from October 1, 1975, which saves the return of income, assessment, notice, summons or other proceedings from being invalidated merely by reason of any mistake, effect or omission, if in substance and effect the same is in conformity or in regard with the purpose of the Act.

32. The High Courts of Bombay, Assam, Kerala, Allahabad have held that the requirement of giving notice of not less than 30 days is a mandatory requirement for valid proceedings to follow and the notice which gave less than clear 30 days' time for submission of return by using the word “within 30 days”, further proceedings cannot be validly founded.

33. However, we need not dilate into the controversy in view of the retrospective amendment by which the words “not being less than 30 days” have been omitted from section 148 with effect from April 1, 1989. As a result of this amendment, it must be held that as on the date the notices were issued, i.e, on January 15, 1993, the amended provisions were in force and it did not require a notice specifying the period of filing return to be “not less than 30 days”. It only requires that the assessee may be required to file a return within the period specified in the notice. Thus, the notice requiring the assessee to file the return within 30 days was in accordance with section 148 as it must be deemed to be in force with effect from April 1, 1989, and in force as on the date notice was issued. There was no violation of section 148 in respect of specified period within which the return is to be submitted.

34. The principle is well-settled that where the proceedings are pending at any stage and law which is to be applied to the facts of the case is amended retrospectively, the same has to be noticed and given effect to which matter operates against the ordinary principle as the validity of a transaction has to be examined as on the date the transaction has taken place.

35. In Commissioner Of Income-Tax v. Straw Products Ltd., [1966] 60 ITR 156 (SC), the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949, came to be amended with retrospective effect amended by the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1962. A reference was pending before the Supreme Court requiring reference to Order, 1949. The court held that it was the duty of the Supreme Court to answer the reference in accordance with the amendment unless the question referred by the Appellate Tribunal was not couched in terms of sufficient amplitude to cover an inquiry into the question in the light of the amendment.

36. In view of the aforesaid, we do not consider it necessary to go into the question whether specifying a period in the notice requiring the assessee to file return as within 30 days and not giving him the clear margin of 30 days for filing the return when the law required it to be not less than 30 days, was in breach of condition precedent which was not curable under section 292B.

37. Question No. 4 is thus answered in the negative, that is to say, against the assessee and in favour of the Revenue. Accordingly, all the four questions are answered against the assessee and in favour of the Revenue. In the facts and circumstances of the case, there shall be no order as to costs.