P L D 1960 Dacca 506 (PLP)

AMIN AHMED, C. J.‑The Commissioner of Income‑tax, East Pakistan, has come upon Reference to this Court for our opinion on the following question of law, namely, "Whether under the Business Profits Tax Act of 1947 initiation of proceedings of assessment on the 16th January 1952, in the facts of the present case could be considered valid in law for assessing the business profits tax for the chargeable accounting periods commencing on 1st April 1946, and ending on.14th July 1956, and commencing on 15th July 1946, and ending on 13th July 1947" and the Reference has been made under section 19 of the Business Profits Tax Act (Act XXI of 1947) (which we shall hereinafter call the Act), read with subsection (1) of section 66 of the Income‑tax Act; in other words, the Reference, as formulated by the Commissioner of Income‑tax, is "whether section 11 of the Act in the absence of any provisions in respect of limitation is governed by the limitation of four years imposed by section 14 of the Business Profits Tax Act."

2. The facts which are material for the disposal of this Reference are as follows : The chargeable accounting periods are from the 1st of April 1946, to the 14th of July 1946, and from the 15th of July 1946, to the 13th of July 1947. For the first time on 16‑I‑52 the Business Profits Tax Officer issued notices under subsection (1) of section 11 of the Act in respect of the assessments of the business profits of the above two periods. The assessments were completed on the 30th of January 1952.

3. Against those orders of assessment, appeals were taken to the Appellate Assistant Commissioner who, on the 26th of January 1953, set aside those orders of assessment on the ground that no prior approval was taken from the Inspecting Assistant Commissioner regarding aggregation of profits and remanded the cases. Thereafter re‑assessments were made on th: 31st of May 1955.

4. Against those fresh assessments, appeals were again preferred to the Appellate Assistant Commissioner who, on the 8th of February 1958, dismissed the appeals.

5. Against that decision, an appeal was taken to the Appellate Tribunal and the Appellate Tribunal, following the decision in the case of Commissioner of Income‑tax, Bombay City v. Narsee Nagsee & Co. (decision of Chagla, C. J.) ((1957) 31 I T R 164), set aside the orders of assessment holding that section 11 of the Act is controlled by section 14 of the Act and, therefore, the present assessments are hit by the provisions of limitation contained in section 14 of the Act. As this is a point of law, the Commissioner of Income‑tax prayed for a Reference and this was granted.

6. Mr. Mesbahuddin, who appears for the Commissioner of income‑tax, has argued on the same lines as was done by the learned Advocate who appeared for the Commissioner of Income‑tax in Narsee Nagsee Co's. case. His first branch of argument is that inasmuch as section 11 of the Act does not provide for any period of limitation it was open to the officer concerned to issue notice of assessment at any time and there is no reason why we should read into the section something which is not there and import the provisions of section 14 of the Act and provide limitation in respect of the issue of notice. His second branch of argument is that section 14 of the Act relates only to profits which have escaped assessment and the present case is not one where profits or income have escaped assessment but only the assessments were omitted to be made for th‑‑ accounting periods and the officer issued notices more than 4 years after the two accounting periods were over.

7. Subsection (1) of section 11 and section 14 of the Act are as follows: 11(1). The Income‑tax officer may, for the purpose of this Act, require any person whom he believes to be engaged in any business to which this Act applies, or to have been so engaged during any chargeable accounting period, or to be otherwise liable to pay business profits tax, to furnish within such period, not being less than forty‑five days front the date of the service of the notice, as may be specified it; the notice, a return in the prescribed form and verified is the prescribed manner setting forth along with such other particulars as may be provided for in the notice with respect to any chargeable accounting period specified .in the notice profits and taxable profits of the business or the amount of deficiency, if any, available for relief under section 6: Provided that the Income‑tax Officer may, in his discretion, extend the date for the delivery of the return." "

14. If, for any reason, profits of any chargeable account ing period chargeable to business profits tax have escaped assessment or have been under‑assessed, or have been the subject of excessive relief, the Income‑tax Officer may at any time within four years of the end of the chargeable accounting period in question serve on the person liable to such tax a notice containing all or any of the requirements which may be included in a notice under section 11, and may proceed to assess or reassess the amount of such profits liable to business profits tax, and the provisions of this Act shall, so far as may be, apply as if the notice were a notice issued under that section. Provided that unless definite information has come to his possession the Income‑tax Officer shall not initiate proceedings under this section without obtaining the previous approval of the Inspecting Assistant Commissioner of Income‑tax.

8. Mr. Mesbahuddin has made much of the words "any chargeable accounting period" in subsection (1) of section 11 of the Act and has claimed that the word any connotes that the officer is empowered to issue notice in respect of any chargeable accounting period at any time i.e., even if it is more than four years or any number of years after the end of chargeable accounting period.

9. Mr. Hussain, the learned counsel for the assessee respondent, contends that section 1 I is controlled by the prescribed limitation in section 14 and has relied not only on the case of Narsee Nagsee & Co. but he has also referred to the case of Messrs Bissessar House v. State of Bombay (A I R`1959 Bom. 130 (F B)), to the decision of which also Chagla, C. J., was a party. The latter case, of course, is not a case under the Business Profits Tax Act but under the Sales Tax Act, though in that case Narsee Nagsee Co's. case and the case of Commissioner of Inc(me‑tax, Bombay v. Pirojbai N. Contractor (A I R 1937 Bom. 14) were referred to. The learned counsel has also brought to our notice, and it is also not denied by the learned Advocate for the appellant, that section 14 of the Act has been omitted from the Act by subsection (5) of section 12 of the Finance Act, 1957, and, by subsection (7) of the said section of the Finance Act, section 19 of the Act has since been incorporated in the Act and, in section 19 of the Act, section 34 of the Income‑tax Act with certain modifications has been included and this is very significant. The point that is sought to be made on this omission of section 14 and inclusion of section 19 of the Act, inserted by the Finance Act of 1957, is that as prior to the above amendment there was a short period of limitation of four years under the old section 14 of the Act, the Legislature has now thought fit to extend the same period of assessment to eight years in case of concealed business profits as in the case of income under the Income‑tax Act which has been concealed or incorrect particulars thereof are given by the assessees and has retained in other cases the period of four years from the end of the financial year in which the income or profits were first assessable, i.e., four years from the end of the chargeable accounting period the profits of which are chargeable to business profits tax.

10. Admittedly, the notices for assessment were issued beyond four years of the chargeable accounting periods ending in one case on the 14th of July 1946, and in the other on the 13th of July 1947, the notices having been issued only on the 16th of January 1952. It is true that if we go only by the provisions of section 11 and independently of any other section i.e., if we do not look to any other section, it would seem that section 11 gives authority to the taxing officer to issue notice in respect of any accounting period which may spread over any number of years, provided they are accounting periods. But it cannot be said that one section in the statute must contain all the provisions relating to assessment of business profits tax. We cannot go by the provisions of only one section of the statute; we have to read the statute as a whole, i.e., all the sections of the statute and then determine for ourselves whether the Legis lature intended that section 11 of the Act should be governed by section, 14 of the Act, i.e., we have to see whether the provisions of section 11 and section 14 or any other section of the Act can be reconciled.

11. If we go by the scheme and relevant sections of the Act, in our opinion, there is no doubt that the Legislature intended to prescribe a period of limitation for assessing business profits which have escaped assessment. This will appear not only from section 11 of the Act but also from section 12 and section 13 which precedes section 14 and also section 15 which comes after section 14 of the Act. It will be noticed that section 11 of the Act provides for issue of notice for assessment and furnishing of return of business profits within certain period and also for notice requiring the production of accounts and documents or other evidence ; section 13 provides, before regular assessment, summary provisional assessment after the expiry of the period given in the notice under section 14, whether the return mentioned in section 14 is furnished or not, and section 14 provides for assessment of business profits which have for any reason escaped assessment and expressly mentions that within f our years of the end of the chargeable accounting period a notice "containing all or any of the requirements which may be included in a notice under section 11, and may proceed to assess or reassess the' amount of such profits liable to business profits tax, and the provisions of this Act shall, so far as may be, apply as if the notice were a notice issued under that section."

12. Apart from this, there can be no doubt that the present case is a case of business profits which have escaped assessment. It is well‑settled now that income or profits escape assessments when the process of assessment has not been initiated with regard to the taxing of that income or profits Section 4 of the Act is the charging section, and, as soon as the income or profits are chargeable for any accounting period, the authorities are entitled to assess that income or profits to tax which that income or profits are liable to bear, and if, for any reason, it has At been assessed or taxed, then that income or profits must be taken to have escaped assessment; in other words, after the liability for assessment has arisen and it is not assessed, the Legislature has provided under section 14 of the Act that such income or profits are not to be taxed after four years of the end of the chargeable accounting period. So, in our opinion, there is no doubt that the profits which are sought to be assessed in this case are those that have escaped assessment and as the notices for assessment thereof were issued long after the expiry of four years prescribed in section 14, the assessments are bit by section 14 of the Act.

13. Although we do not wish to refer to the provisions of other Acts like those of the Income‑tax Act, we may mention incidentally that some of the wordings of section 14 of the Act are very much similar to those of section 34 of the Income -tax Act relating to income escaping assessment, and, as the learned counsel points out; it is significant that though section 14 of the Act has been removed from the statute, section 34 of the Income‑tax Act with slight modifications has now been incor porated in the Act. Of course, we may mention that irrespective of this we have already stated that even before the amendment or deletion of sections 14 from the Act the provisions of sections 11 and 14 were reconcilable.

14. There is another aspect of this case. It is difficult to hold that the Legislature provided a period of four years in case of profits escaping assessment but, at the same time, in section 11 of the Act, gave power to the taxing officer to initiate proceed ings in respect of the assessment of any number of years, i.e., any indefinite and unlimited period, for, if that were allowed, it would mean that the Legislature said one thing in section 14 of the Act and a different thing in respect of the assessment in section 11 of the Act. In interpreting the statute, one is to see whether a reasonable meaning can be given after reconciling the various provisions contained in the different sections and not to read one section independently of all other sections and give any unreasonable interpretation. As I have said already, the scheme of the Act indicates, particularly in the case of the business profits tax, that the officers should be very prompt in the matter of assessment, and, therefore, it has provided even for provisional assessment and has only prescribed a period of four years in case of profits escaping assessment. Where the Legislature does not mean to prescribe any period of limitation, it says so, e.g., section 13 and section 15 of the Excess Profits Tax Act which correspond to section 11 and section 14 res pectively of the Act and, in the same year i.e., 1947, when the Act was passed, Excess Profits Tax Act was amended and the period of five years was deleted from section 15 of that Act. We may refer to the following extracts from the judgment of Chagla, C. J., in Narsee Nagsee Co's. case: "Therefore, it is clear from section 14 that the Legislature did not intend to put an assessee to the peril of an indefinite apprehension with regard to the payment of tax in respect of profits made under the Business Profits Tax Act. The intention of the Legislature was clear that after four years of the end of the chargeable accounting period the assessee should not be proceeded against even if profits had escaped assessment or his profits bad been under‑assessed or he had obtained a relief to which be was not entitled. Inasmuch as section 11 does not indicate any period of time with regard to the issuing of a notice, would it or would it not be right for us to import into section 11 the consideration which led the Legislature to fix a limitation of time for the purpose of issuing a notice under section 14 ? If we were not to do that, we would arrive at the rather extraordinary conclusion that the Legislature, while saving the subject from harassment of proceedings with regard to escaped assessment or under‑assessment, permitted that harassment with regard to the very initiation of proceedings after the lapse of four years." We need not refer to the case of Messrs Bissessar House, as that relates only to sales tax.

15. In our opinion, the Appellate Tribunal was right into holding that section 11 of the Act is controlled by the prescribed period of limitation contained in section 14 of the Act.

16. We, therefore, answer the Reference in the negative, i.e., under the Business Profits Tax Act of 1947 initiation of proceedings of assessment of 16th January 1952, in the facts of the present case, could not be considered valid in law for assessing the business profits tax for the chargeable accounting periods commencing on 1st April 1946, and ending on the 14th July 1946, and commencing on 15th July 1946, and ending on 13th July 1947. The applicant, the Commissioner of Income‑tax, will pay five gold mohurs by way of costs of hearing to the assessee‑respondent. KHAN, J.‑I agree with my lord the Chief Justice. K. B. A. Reference answered in negative.