COMMISSIONER OF INCOME TAX Vs. ROYAL MOTOR CAR CO

JUDGEMENT

(1.) IN this case, at the instance of the Revenue, the following questions have been referred to us for our opinion :

(2.) THE facts giving rise to this reference are as follows : The relevant assessment year is 1968-69. At the time of passing the assessment order, the ITO had held that a cash credit of Rs. 3,100 was not established by the assessee and hence it was added to the income of the assessee. The assessee had claimed deduction for two items of interest, namely, Rs. 2,680 paid to Harsukhlal Vadilal Chokshi and Rs. 880 paid to Gorakh Bachubhai & Company. The ITO held that these amounts of interest were also not in fact paid. These two items of interest were, therefore, disallowed. Thus, the total amount disallowed was Rs. 6,660. At the time of passing the assessment order on 3rd Oct., 1969, the ITO had also directed that penalty notice under S. 274 r/w s. 271 for not furnishing correct particulars of income should be issued. As the law then stood, the minimum penalty leviable being in excess of Rs. 1,000, it was only the IAC who was competent to impose the penalty in this case. Under S. 275 as it stood before the Amendment Act of 1970 which came into force w.e.f. 1st April, 1971, the period of limitation was two years from the date of the initiation of penalty proceedings. Hence, if the law had stood unamended, the IAC was required to pass the order of penalty before 3rd Oct., 1971. However, the new amendment Act, namely, the Taxation Laws (Amendment) Act, 1970, was brought into force w.e.f. 1st April, 1971, and as a result the period of limitation was enlarged from two years from the date of the initiation of penalty proceedings to two years from the end of the financial year in which the penalty proceedings were initiated. The IAC passed the order of penalty on 12th Oct., 1971, levying a penalty of Rs. 6,810. Against the order of the IAC the assessee, which is a registered firm, went in appeal to the Tribunal and the Tribunal held that if the Amendment Act of 1970 were to apply, then the IAC had no jurisdiction to hear the case and if the Amendment Act were not to apply, then the order of penalty was barred by limitation. Under these circumstances the, appeal filed by the assessee-firm was allowed and thereafter, at the instance of the Revenue, the above-mentioned three questions have been referred to us.

(3.) AS regards the jurisdiction of the IAC to pass the order of assessment in view of the amendment in S. 274 by the Amendment Act, it is well-settled law that every litigant has a vested right in the procedural law so far as substance is concerned and if the substantive question of jurisdiction is to be affected by a new amendment the legislature must say so either in express terms or by necessary implication. Since the decision of the Privy Council in Colonial Sugar Refining Company Ltd. vs. Irving (1905) AC 369 (PC) the principle has been well recognised that though the right of appeal is a procedural right, it is a vested right. It becomes vested at the time when the proceedings are initiated in the Tribunal or the Court of first instance and unless the legislature has by express words or by necessary implication clearly so indicated, that vested right will continue to him in spite of the change in the jurisdiction of the different Tribunals of forums. At p. 372 of the report it has been stated :