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Civil Reference No. 11 of 1956, decided on 8th February 1968.

Ss. 11(1), 12(1) & 14‑Return of profits‑Notice calling for return of profits‑To be issued within a reasonable period after termination of charge able accounting period ‑ Such reasonable period should not extend beyond period specified in S. 14.

Commissioner of Income‑tax, East Pakistan v. Hossen Kasam Dada, Karachi P L D 1961 S C ref. 375

Sh. Abdul Haque for Respondent.

In this Civil Reference, the following question of law has been referred by the Income tax Appellate Tribunal, Pakistan, under section 66 (1) of the Income‑tax Act :‑

"Whether, in the facts and circumstances of the case, the profits of the C. A. P. 1st September 1946, to 31st August 1947, could be legally charged to Business Profits Tax on 21st March 1953, by virtue of the assessment proceedings initiated under section 11 of the Business Profits Tax Act on 3rd Decem ber 1952 "

2. The dispute between the parties relates to Business Profits Tax assessment for the chargeable accounting period ending 31st of August 1947. A notice under section 11 (1) of the Business Profits Tax Act for the relevant accounting period in this case was issued on the 3rd of December 1952, almost four years after the chargeable accounting period had ended. It is not disputed that no notice under section 14 of the Act was ever issued. In spite of this, an assessment under section 12 (1) of the Act was finalized. It was contended on behalf of the assessee before the Appellate Assistant Commissioner that since the relevant chargeable accounting period had ended on the 31st of August 1947 and the assessment was completed on the 21st of March 1953, on the basis of a notice issued as late as the 3rd of December 1952, the assessment was invalid. This plea was not accepted and the appeal was dismissed. Thereupon, the assessee filed an appeal before the Income‑tax Appellate Tribunal and raised the same contention which, again, did not find favour with the Tribunal. Consequent upon the failure of the assessee's appeal before the Tribunal, on the application of the assessee on the above question of law has been referred to us for opinion.

3. The question of law, as formulated in this reference was recently considered by the Supreme Court of Pakistan in Commissioner of Income‑tax, East Pakistan v. Hossen Kasam Dada, Karachi (P L D 1961 S C 375). It was held by their Lordships that under section 11 of the Business Profits Tax Act the return has necessarily to be in respect of the profits made during a chargeable accounting period and, therefore, the notice calling for such a return should ordinarily be issued within a reasonable period after the termination thereof and this reasonable period should not extend beyond the period specified in section 14 of the Act. In these circumstances, the learned counsel for the Department has very rightly conceded that the above, question referred to this Court, may be answered in favour of the assessee. We answer the question accordingly.

4. In the result, we allow the reference, with no order as to costs.

S. Q. Question answered accordingly.

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