An amended provision of a statute cannot be applied retrospectively to revive a right that had already lapsed due to the expiry of the period of limitation prescribed under the earlier provision.

Judgment

SHAH, J. :

Messrs. Lal and Company hereinafter called the assessee carry on business in Bombay as commission agents. In the course of assessment proceedings for the year 1954-55 the assessee s books of account were examined by the Incometax Officer and it was noticed that the assessee had business connections with certain non-resident parties. On March 12, 1957, the Income-tax Officer issued a notice calling upon the assessee to show cause why in respect of the assessment year 1954-55 the assessee should not be treated under S. 43 of the Indian Income-tax Act, 1922, as an agent in respect of twenty-five non-resident parties named in the notice. The assessee denied that he had "direct dealings" with any non-resident party and that in any event the proposed action was barred because the period prescribed for initiation of proceeding had expired, and requested the Income-tax Officer to drop the proceeding. The Inoome-tax Officer B-III Ward, Bombay issued on March 27, 1957, a notice under S. 34 of the Indian Income-tax Act for assessment of the assessee as an agent of the twenty-five named non-resident parties. The assessee submitted a return showing his income as "nil". The Income-tax Officer held that the transactions disclosed from the books of account of the assessee clearly showed that the assessee "had regular business connection with," non-resident parties, that through the assessee those non-resident parties were receiving income, profits and gains and S. 43 was clearly applicable to the assessee there being definite business connection between the assessee and the named nonresidents. He therefore treated the assessee as agent of the non-resident parties, under S. 43 of the Act.

2. The Income-tax Officer also rejected the contention of the assesse that action under S. 34 was barred at the date of the notice issued to the assessee. Relying upon the first proviso to S. 34(1) (b) (iii) (sic) inserted by the Finance Act, 1956, the Income-tax Officer held that the Legislature had by amendment extended the "time-limit in clear and express terms so as to cover" action under S. 34 against a person on whom the assessment or reassessment is to be made as an agent of a non-resident person under S. 43 of the Act for the assessment year 1954-55, and accordingly assessessed the income, of the assessee at Rs. 64,684/-, estimating the income of the parties residing outside the taxable territories, in the absence of accounts to be Rs. 50,000/ -

3. The assessee then filed a petition under Art. 226 of the Constitution in the High Court of Judicature at Bombay praying that a writ in the nature of mandamus or prohibition do issue restraining and prohibiting the Income-tax Officer from giving effect to or taking any steps or proceedings by way of recovery or otherwise in pursuance of the orders of assessment. The assessee pleaded, inter alia, that the proceedings for assessment under S. 34 of the Act commenced by the Income-tax Officer after the expiry of one year from the end of the assessment year 1954-55 were without the authority of law. The High Court of Bombay, following its earlier judgment in S.C. Prashar v. Vasantsen Dwarkadas, 1956-29 ITR 857 held that at the date when the notice was issued, by reason of the proviso which was in operation under S. 34 (1) in respect of the assessment year 1954-55 the notice was out of time and that the period provided thereby could not be extended by the Finance Act of 1956 so as to authorise the Income-tax Officer to issue a notice far assessment or reassessment of the assessee as statutory agent of a party, residing outside the taxable territory. In the view of the High Court the notice dated March 27, 1957, was invalid, and a valid notice being a condition precedent to the exercise of jurisdiction under S. 34 was not maintainable. Against the order of the High Court issuing writs prayed for by the assessee, with certificate of fitness this appeal is preferred by the Income-tax Officer Bombay.

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