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Reference Case No. 17 of 1966, decided on 1st December 1967.

Ss. 31 & 34(2), second proviso --Original assessment for year ending on 30‑6‑1951 completed on 30‑8‑1954 --‑ Case, as result of appeals before Appellate Assistant Commissioner and Tribunal, coming back to Income tax Officer for reassessment‑Re‑assessment made on 22‑9-1960 in pursuance of orders of appellate authorities ‑ Held, not barred by law of limitation but clearly saved by second proviso to S. 34(2).

Abdul Azim with Chowdhury Ramzan Ali for Applicant.

Afzalul Haque for Respondent.

Dates of hearing : 20th, 30th November and 1st December 1967.

.‑The Income‑tax Appellate Tribunal, Dacca Bench, Dacca has referred to us for our opinion the following question in compliance with a direction given by this Court under section 66 (2) of the Income‑tax Act (hereinafter called the Act) :‑

"Whether in the facts and circumstances of the case the assessment was barred by law of limitation "

It appears from the statement of the case that a notice under section 22 (2)/34 was issued on the assessee on the 26^th July 1951 by the Income‑tax Officer, Dacca Circle B for the assessment year 1951‑52, that is, for the period commencing on the 1st April 1950, and ending on the 31st March 1951. After the said notice was issued, the Central Board of Revenue by its Notification dated the 24th August 1951, created a special Circle for jute business and accordingly on the 31st of August 1951, another notice was issued by the Income‑tax Officer of that Special Circle directing the assessee to file return by the 30th October 1951. The notice was issued under section 24 (2) of the Act and return was filed accordingly on the 29th October 1951, on the basis of the accounting year ending on the 31st March 1951.

The assessee had started its jute business in 1950, while he had other business from before. The Central Board of Revenue by Notification dated 24th August 1951 prescribed a special accounting year under section 2 (11) (b), of the Income‑tax Act laying down that persons who had not carried on jute business in East Pakistan before 1st October 1949, were to be assessed in accordance with the Special year which was 12 months ending on 30th June 1951.

The assessee was, therefore, again asked to submit his return on the basis of the accounting year ending on June 30, 1951, for his jute business. The propriety of this direction was challenged by the assessee, for, he maintained that his normal accounting year ended on the 31st March 1951. Under protest, however, he submitted a revised return and ultimately the assessment was completed on the 30th August 1954, taking the year ending on 30th June 1951, as the previous year for jute business and the 31st March 1951, of the other business. Thereafter the assessee preferred an appeal and the Assistant Commissioner set aside the said assessment on various grounds. The Tribunal maintained the order of the Assistant Commissioner. The matter then went back to the Income‑tax Officer who asked the assessee to produce his books of accounts relating to his dealing in jute. The assessee, however by, his letter dated 10th October 1958, claimed that the entire proceedings were ultra vires. The Income tax Officer, however, proceeded with the assessment which is second in point of time on the 18th October 1958, and completed the assessment of jute business for the period ending on the 30th June 1951, and for other business on the 31st March 1951. The assessee, however, again went to the Appellate Assistant Commissioner who for the second time set aside the order of assessment and remanded the case to the Income‑tax Officer. The Income‑tax Officer asked the assessee to comply with the notice under sections 22 (4) and 23(2) on the 6th August 1960. But the assessee took up the position that there could not be any assessment in respect of the jute business. Its contention was that so far as the assessment of the jute business was concerned it was time‑barred. This contention, however, was not accepted by the Income‑tax Officer who took the view that the assessment for 1950‑51 was kept alive by the orders of the appellate authority, namely, the Appellate Assistant Commissioner. The assessee, however, did not comply‑with the direction for production of the books of account and the Income‑tax Officer held the contention of the assessee with regard to the accounting period to be valid in the case of jute business in accordance with the law laid down by the Supreme Court in the case of Radhe Shyam Agarwala v. Commissioner of Income‑tax, East Pakistan (12 D L R S C 25). He thereafter made the assessment on the 22nd September 1960, and this is the assessment which is challenged before us on the ground that it is barred by law of limitation.

The Appellate Assistant Commissioner as well as the Tribunal rejected the plea of limitation. There was a direct appeal to the Tribunal against this assessment order made on the 22nd September 1960 and the Tribunal, inter alia, rejected the plea of the law of limitation and it also rejected the prayer for referring the question to this Court, for, in its opinion on the facts found by the Tribunal no question of law arose out of the order of Tribunal. This Court, however, directed the Tribunal to refer the question set out at the outset.

The learned Advocate for the assessee, submits that the, assessment in respect of the year in question was barred on the 1st April 1956: His contention is that the assessment was made 4 years after it was barred, that is in 1960. He, therefore; claims that the assessment should be set aside for in his submission section 34(2) of the Act does not save the limi tation in this case. His argument is founded on the ground that the subject‑matter of the present assessment is different from that of the original assessment.

Mr. Afzalul Haque, learned Advocate appearing for the Commissioner of Income-tax, on the other hand strenuously argues that the impugned assessment has been kept alive by virtue of the last proviso of subsection (2) of section 34 of the Act in view of the different. orders passed by the appellate authorities under, sections 31 and .33 of the. Act. On a reference to the impugned assessment order made oil the 22nd September 1960; we find that the year of assessment is 1951‑52 and the accounting period is the year ending on the 31st March 1951.

The impugned assessment was therefore made under sec tion 23 (3) read with section 31. Section 31 deals with the power of the Appellate Assistant Commissioner to hear the appeal and makes various' provisions relating to the appeals preferred before it. In its order dated 29th August 1961, dismissing the appeal, the Tribunal observed:

"The effect of the decisions of the Appellate Authorities was that the assessment proceedings were kept alive. The Income‑tax Officer was right in making the final assessment for the tax year 1951‑52 on the basis of the accounts as maintained by the assessee."

Referring to the accounting year on the basis of which the present assessment was made the Tribunal observed in the said judgment:

"The Income‑tax Officer drew the attention of the assessee to the fact that the assessment for 1951‑52 was still open by virtue of the direction of the Appellate Assistant Commissi oner. The authorised agent appeared and stated that the books of accounts for the year ended 31st March 1951, were not traceable: The Income‑tax Officer accordingly made the assessment for the third time for the tax year 1951‑52 practically on the basis of the audited Profit and, Loss account in respect of the jute business, the accounting year being the year ended 31st March 1951 This was the accounting year which the assessee himself claimed was his normal accounting year at that time."

It will, therefore, appear from the facts noticed above that the present assessment was made as a result of the insistence of the assessee that the accounting year followed by it should be considered for the assessment of the relevant year and on this, amongst other, grounds, the appeals were preferred before the Appellate Authorities and this is how the Income‑tax had to make the assessment for the third time in this case. Keeping these facts in view, we are to refer to the proviso to subsection (2) of section 34.

Subsection (2) of section 34 is as follows :‑

"No order of assessment under section 23 or the assessment or reassessment under subsection (1) of this section shall be made after the expiry, in any case in which the assessee has concealed the particulars of his income or deliberately furnished incorrect particulars of such income, of four years from the end of the year in which the income, profits or gains were first assessable."

The proviso to the said subsection (2) as it stood during the relevant period was as follows:

"Provided that nothing contained in this subsection shall apply to a re‑assessment made in pursuance of an order under section 31, 33, '66 or section 66‑A."

The impugned assessment made on the 22nd September 1960, was done in pursuance of the order of the Appellate Assistant Commissioner and the Tribunal. That being so, section 31 is attracted to the facts of this case. The assessment was made in' pursuance of the said order and therefore it was a re‑assessment and as such the impugned order is clearly saved by the proviso to subsection (2) of section 34 of the Act.

We are, therefore, clearly of opinion that the impugned assessment is not barred by law of limitation and the question is answered in the negative.

The assessee will pay costs to respondent, Commissioner of Income‑tax.

‑I agree.

S. Q. Question answered in the negative.

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