Supreme Court in S S Gadgil 53 ITR 231 has held that if limitation period is extended under the provisions of Income Tax law, the extended period of limitation shall not apply to assessments years, for which limitation period has expired before amending the law on limitation.
The Court held that If the right to act under the earlier statute has come to an end, it could not be revived by the subsequent amendment which extended the period of limitation.
In this case, the period of treating a person as agent of non resident was extended from one year to two years from the assessment year under Income Tax Act, 1922 by Finance Act 1956.
Hence the Court held that notice for assessment year 1954-55 could be issued up to 31-03-1956 only. Issue of Notice in March 1957, in compliance with new law on limitation, does not validate the action of AO.
Comments: As per ratio laid by supreme Court, even if the government extends the period for reopening the assessment in consonance with section 197(c) of the Income Declaration Scheme, assessment can not be reopened for the years for which the period of six years from the end of relevant assessment year has expired