[C. B. Richards Ellis Mauritius Ltd. v. ADIT, 21 Taxman. com 535 (Del.)]
For the A.Y. 1998-99 the assessment was completed u/s.143(3) on 28-2-2001. Subsequently, on 30-3-2009, a notice u/s.148 was issued for reopening the assessment. The assessee’s objections were rejected by the Assessing Officer. The Delhi High Court allowed the writ petition filed by the assessee and held as under: “
(i) The issue in dispute gained importance because the time limit for issuance of notice u/s.148 as stipulated and stated in section 149 underwent substitution by the Finance Act, 2001 with effect from 1-6-2001. By the Finance Act, 2001, the period was restricted to six years from the end of the relevant assessment year. Before the said substitution, till 31-5-2001 reassessment proceedings could be initiated for up to 10 years from the end of the relevant assessment year.
(ii) It is an accepted and admitted position that the re-assessment notice dated 30-3-2009 would be barred and beyond time, in case, the period stipulated in substituted section 149 with effect from 1-6-2001 is applied.
However, the contention of the Revenue is that the substituted section is not applicable and section 149 before its substitution by the Finance Act, 2001 would apply. It is stated that the return in question was filed on 20-11-1998 and the law/limitation period prescribed/applicable on the first day of the assessment year determines and decides the time period for issue of notice u/s.147/148. The question raised is whether the amendment substitution of the period with effect from 1-6-2001 in section 149, is procedural or substantive.
(iii) Law of limitation is a procedural law and the provision or the limitation period stipulated on the date when the suit is filed applies. Law of limitation, therefore, being procedural law has to be applied to the proceedings on the date of institution/ filing. No person can have a vested right in the procedure. Therefore, the procedural law on the date when it was enforced is applied.
(iv) Law of limitation does not create any right in favour of a person or define or create any cause of action, but simply prescribes that the remedy can be exercised or availed of by or within the period stated and not thereafter. Subsequently, the right continues to exist but cannot be enforced. The liability to tax under the Act is created by the charging section read with the computation provisions. The assessment proceedings crystallise the said liability so that it can be enforced and the tax if short-paid or unpaid can be collected. If this difference between liability to tax and the procedure prescribed under the Act for computation of the liability (i.e., the procedure of assessment), is kept in mind, there would be no difficulty in understanding and appreciating the fallacy and the error in the primary argument raised by the Revenue.
(v) It is a settled position that liability to tax as a levy is normally determined as per statute as it exists on the first day of the assessment year, but this is not the issue or question in the present case. The issue or question in the present case relates to assessment, i.e., initiation of re-assessment proceedings and whether the time/limitation for initiation of the re-assessment proceedings specified by the Finance Act, 2001 is applicable. The Court is not determining/deciding the liability to tax but has to adjudicate and decide whether the re-assessment notice is beyond the time period stipulated. This is a matter/issue of procedure, i.e., the time period in which the assessment or re-assessment proceedings can be initiated. Thus, the time period/limitation period prescribed on the date of issue of notice will apply.
(vi) In view of the aforesaid reasoning, writ petition is allowed and the re-assessment notice dated 30-3-2009 and the order passed by the Assessing Officer and Assistant Commissioner dismissing the objections of the assessee are quashed.”
