J.B. Roy vs. DCIT (Allahabad High Court)

A Retrospective Amendment does not affect completed matters

The assessee filed a belated appeal to the High Court u/s 260A. The High Court dismissed the appeal following CIT vs. Farooqui 317 ITR 305 (All) (FB) where it was held that the High Court had no power to condone delay in filing a s. 260A appeal. S. 260-A (2A) was inserted by the Finance Act, 2010 w.r.e.f. 01.10.1998 to give the High Court the power to condone delay. Pursuant to the said retrospective amendment, the assessee filed a review petition and requested that its appeal mat be restored. HELD dismissing the review petition:

Though s. 260A (2A) has been inserted retrospectively w.e.f. 01.10.1998 by the Finance Act, 2010, the fact remains that cases already settled before the said amendment cannot be re-opened as per the ratio laid down in Babu Ram v. C. C. Jacob AIR (1999) SC 1845, where it was observed that the prospective declaration of law is a devise innovated by the apex court to avoid reopening of settled issues and to prevent multiplicity of proceedings. It is also a devise adopted to avoid uncertainty and avoidable litigation. By the very object of prospective declaration of law, it is deemed that all actions taken contrary to the declaration of law prior to its date of declaration are validated. This is done in the larger public interest. In matters, where decisions opposed to the said principle have been taken prior to such declaration of law cannot be interfered with on the basis of such declaration of law. The amendment is applicable to future cases to avoid uncertainty as per the ratio laid down in M. A. Murthy v. State of Karnatka 264 ITR 1 SC, where it was observed that prospective over-ruling is a part of the principles of constitutional canon of interpretation and can be resorted to by the Court while superseding the law declared by it earlier. It is not possible to anticipate the decision of the highest court or an amendment and pass a correct order in anticipation as per the ratio laid down in CIT v. Schlumberger Sea Company 264 ITR 331 (Cal). Therefore, the amendment introduced in s. 260-A(2A) has the effect only on pending and future cases. On the date when the appeal was dismissed on the ground of limitation, there was no discretion with the court to condone the delay. A discretion has come to the court by virtue of the amendment by inserting s. 260-A (2A). The appeal was (rightly) dismissed as per the then law and the subsequent amendment is not applicable as the matter has already attained finality.