1. By this reference under Section 256(1) of the I.T. Act, 1961, the Income-tax Appellate Tribunal, Bombay Bench, has referred the following question of law to this court for its opinion:
' Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment was not barred by limitation '
2. The material facts giving rise to this reference briefly are as follows I For the assessment year 1966-67, the assessee-company filed a return on 31st December, 1966, for assessment of surtax under the provisions of the Companies (Profits) Surtax Act, 1964, hereinafter called 'the Act'. Notice under Section 6(1) of the Act was issued to the assessee on 25th May, 1971, and the order of assessment was passed on 1st June, 1971. Aggrieved by that order, the assessee preferred an appeal before the AAC. On behalf of the assessee, it was contended that since Section 8(b) of the Act prescribed the period of four years within which proceedings for assessment could be initiated in case of profit escaping assessment, and that notice was issued under Section 6(1) of the Act after a period of four years from the end of the assessment year1966-67, the assessment made thereafter deserved to be set aside. This contention was rejected by the AAC as well as by the Tribunal. Hence, at the instance of the assessee, the Tribunal has referred the aforesaid question of law to this court for its opinion.
3. Shri Chitale, learned counsel for the assessee, contended that the provisions of Section 8(b) of the Act were attracted. Relying upon the decision of the Supreme Court in CIT v. Narsee Nagsee & Co. : 40ITR307(SC) , it was contended that as the notice issued by the ITO under Section 6 of the Act was beyond the expiry of the period of four years of the end of the assessment year 1966-67, the assessment was barred by limitation. It was further contended that even if the provisions of Section 8(b) of the Act were held to be inapplicable as the notice under Section 6 of the Act was not issued and assessment made in the instant case within a reasonable time, the Tribunal was not right in holding that the assessment was not barred by limitation. Reliance was placed on the decisions of the Supreme Court in State of Gujarat v. Patel Raghav Natha : 1SCR335 , and S.B. Gurbaksh Singh v. Union of India : 3SCR247 .
4. To appreciate the contentions advanced on behalf of the assessee, it would be useful to refer to the relevant provisions of the Act. Section 5 of the Act provides for the filing of a return by every company whose chargeable profits assessable under the Act exceed during the previous year the amount of statutory deduction. The return is required to be filed before the 30th day of September of the assessment year. Section 5(2) of the Act empowers the ITO to serve a notice before the end of the relevant assessment year upon the principal officer of a company which, in the ITO's opinion, is assessable under the Act, requiring the company to furnish within thirty days from the date of service of the notice a return in the prescribed form. Section 6 of the Act provides that for the purpose of making an assessment under the Act the ITO may serve on any person, who has furnished a return under Section 5(1) of the Act or upon whom a notice has been served under Sub-section (2) of Section 5, a notice requiring him to produce accounts, documents or evidence as may be required by the ITO. Section 8 of the Act deals with profits escaping assessment. That section reads as under:
' 8. Profits escaping assessment.--If-
(a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of the assessee to make a return under Section 5 for any assessment year or to disclose fully and truly all material facts necessary for his assessment for any assessment year chargeable profits for that year have escaped assessment or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under this Act, or
(b) notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that chargeable profits assessable for any assessment year have escaped assessment or have been under-assessed or assessed at too low a rate or have been the subject of excessive relief under this Act,
he may, in cases falling under Clause (a) at any time, and in cases falling under Clause (b) at any time within four years of the end of that assessment year, serve on the assessee a notice containing all or any of the requirements which may be included in a notice under Section 5, and may proceed to assess or reassess the amount chargeable to surtax, and the provisions of this Act shall, so far as may be, apply as if the notice were a notice issued under that section. '
5. It is in the light of the aforesaid provisions that we have to consider whether the provisions of Section 8(b) of the Act are attracted in the instant case.
6. Now, it was not disputed before us that the provisions of the Act do not prescribe any period of limitation for completion of assessment. The Act does not also prescribe any period for issuing a notice under Section 6 of the Act. Thus, there is no provision in the Act on the basis of which it can be said that either the notice dated 25th May, 1971, issued under Section 6 of the Act, or the assessment made thereafter, was beyond the period of limitation. Reliance is, however, placed on the provisions of Section 8(b) of the Act, but those provisions are in terms not attracted because when a return has been filed but assessment has not been made, it cannot be said that chargeable profits have escaped assessment. The decision in CIT v. Narsee Nagsee & Co. : 40ITR307(SC) is distinguishable on facts. In that case, a return was not filed by the assessee and the ITO had issued notice under Section 11(1) of the Business Profits Tax Act, 1947, corresponding to Section 5(2) of the Act, more than four years after the close of the chargeable accounting period and the assessee contended that the provisions of Section 14 of that Act, which provided for the assessment of business profits which has escaped assessment and prescribed that notice for such assessment should be issued within four years of the end of the chargeable accounting period, was applicable. This contention was upheld by the Supreme Court and it was held that the expression 'profits escaping assessment' in Section 14 of that Act applied to cases where notice under Section 11 of that Act had been given but had resulted in no assessment and to cases where due to inadvertence, oversight or any other reason, no notice was given and, therefore, no assessment was made. In the instant case, a notice underSection 5(2) of the Act, corresponding to Section 11(1) of the Business Profits Tax Act, 1947, was not given as the assessee had filed a return and the matter was pending before the ITO for making an assessment. No period of limitation is provided by the Act for making an assessment. How can it be said in these circumstances that the chargeable profits of the assessee had escaped assessment The Tribunal, in our opinion, was right in holding that the provisions of Section 8(b) of the Act were not attracted.
7. It was then contended that the assessment should have been made within a reasonable time and as it was not so made, it was barred by limitation. The contention cannot be upheld. In the first place, this contention was not urged before the Tribunal and, hence, it could not be held to arise out of the order of the Tribunal. That apart, when the Act does not provide a period of limitation for making an assessment, it would not be permissible for a court to introduce any period of limitation in the Act for making an assessment. The decisions of the Supreme Court in State of Gujarat v. Patel Raghav Natha : 1SCR335 and S. B. Gurbaksh Singh v. Union of India : 3SCR247 are not attracted in the instant case. In State of Gujarat v. Patel Raghav Natha : 1SCR335 , the question for consideration before the Supreme Court was whether there was any period of limitation provided by Section 211 of the Bombay Land Revenue Code empowering the Commissioner to revise an order made under Section 65 of the Code. The Supreme Court held that under the scheme of the Code the power of revision had to be exercised within a reasonable time. In S. B. Gurbaksh Singh v. Union of India : 3SCR247 , the Supreme Court observed that for the exercise of the suo motu power of revision, the revisional authority had to initiate proceedings within a reasonable time. We fail to appreciate as to how these decisions could be pressed into service for holding that in the absence of any provision prescribing a period of limitation for making an assessment, it should be held that the assessment must be made within a reasonable time. In our opinion, therefore, the Tribunal was right in holding that the assessment was not barred by limitation.
8. For all these reasons, our answer to the question referred to this court is in the affirmative and against the assessee. In the circumstances of the case, the parties shall bear their own costs of this reference.