(1) The Indian Woollen Textile Mills, Chheharta, claimed to be a partnership firm, consisting of Lachhman Das, karta of Hindu undivided family, and his son Daulat Ram, a member of the same family, in his individual capacity. When the question of assessment under the Indian Income-tax Act of the year 1938-39 came up before the Income-tax authorities, they took the view that such a partnership consisting of a karta and a junior member of the family was invalid and assessment was, therefore, made on the footing that the income, profits etc. belonged to the Hindu undivided family. This matter was then taken up before the Income-tax Appellate Tribunal and that Tribunal held that the firm was validly constituted Assessment was, therefore, altered accordingly. Later on, however, in April 1944 the High Court took a contrary view on a reference made under S. 66 of the Income-tax Act, and subsequent assessments were consequently made in accordance with that opinion.
As it happened, however, the matter was taken to the Privy Council, and in July 1947 the Privy Council reversed the view adopted by the High Court and held the firm validly constituted. The Income-tax authorities then started proceedings under S. 34 of the Income-tax Act and notices were issued and reassessment was made. The assessee appealed and the Appellate Assistant Commissioner held that proceedings under S. 34 of the Income-tax Act were invalid as the prior approval of the Commissioner had been obtained on wrong grounds, and, in the result, he quashed the assessments.
(2) In the meantime the Income-tax Officer, who was also the Excess Profits Tax Officer, found on the information with him in connection with the Income-tax assessments that excess profits tax was due from the firm and in March 1948 he issued notices under S. 13 of the Excess Profits Tax Act in respect of four years, namely, 1939-40, 1940-41, 1941-42, and 1942-43. These proceedings were resisted by the assessee that the excess Profits tax was assessed on the basis of the Income-tax assessments, and those assessments having been quashed the Excess Profits Tax assessments also fell with them.
This contention did not find favour with the Tribunal, as, in the opinion of the Tribunal, the Excess Profits Tax Officer was entitled to rely on the information obtained in connection with the Income-tax assessments and it was not necessary for him to reappear what he had found in connection with the Income-tax assessments and the Excess Profits Tax assessments were not rendered invalid merely because the Income-tax assessments had been set aside. The second matter seriously raised before the Tribunal was that notices were issued by the Excess Profits Tax Officer more than five years after the end of the chargeable accounting periods as far as the excess profits for two years, namely 1939-40 and 1940-41, were concerned and the assessments for those two years were barred by time.
Again, the Appellate Tribunal did not agree and held that because of the amendment of S. 15 of the Excess Profits Tax Act by Act 22 of 1947 the limitation of five years had ceased to operate even in respect of the two years in dispute, that is, 1939-40 and 1940-41, the Excess Profits Tax assessments for those two years were therefore valid. The assessee's appeals were accordingly disposed of. The assessee thereupon made four applications under S. 21 of the Excess Profits Tax Act for referring certain questions of law arising in connection with these four assessments to the High Court, that is, the assessments relating to the chargeable accounting periods 1939-40, 1940-41, 1941-42 and 1942-43. It was claimed that five question of law arose in the case and should be referred to the High Court. These were mentioned as follows:
(1) When the Income-tax Assessment Order, in which the assessee's income had been computed, was vacated by the Appellate Assistant Commissioner by his order dated 16-11-1950, should not the Excess Profits Tax assessments be also quashed when the income determined in the former had been adopted in the latter for assessment?
(2)(a) Whether in view of the provisions of Ss. 13 and 15 of the Excess Profits Tax Act and the general scheme of Taxation, there is no normal year for Excess Profits Tax assessment of the income arising in any chargeable accounting period?
(b) If there is no normal year of assessment, viz., the year following any chargeable accounting period, is the present assessment bad in law?
(3) Whether there be or there may not be a normal year of assessment, the Excess Profits Tax Officer has not made a legal error in not starting proceedings under S. 15 of the Excess Profits Tax Act, and is not the assessment bad in law in view of his failure to issue and serve a notice under S. 15 of the Excess Profits Tax Act?
(4) Whether the assessment for the chargeable accounting period ending 6-6-1941 is not barred by time?
(5) Whether the Legislature was competent to enact Clause 16 in the Excess Profits Tax (Amendment) Act, 1947 so as to rope in retrospectively such assessment as had already become barred by time at the time of enactment?
(3) The Appellate Tribunal was convinced that two questions of law did arise in the case, those being in substance corresponding to questions (1) and (4) as mentioned by the assessee, but that the other questions did not arise and they had never been raised before the Tribunal. In the result, the Appellate Tribunal referred to this Court two questions of law common to the disputed assessments and these were stated as below:
(1) Whether, where the Excess Profits Tax Officer being the same person as the one who made the income-tax assessment for a previous year corresponding to the chargeable accounting period adopts the figures in the Income-tax assessment for the purpose of the Excess Profits Tax assessment, and the Income-tax assessment is cancelled, the Excess Profits Tax assessment should also be vacated?
(2) Whether in the circumstances of the case the Excess Profits Tax assessments for the chargeable accounting periods 1-9-1939 to 16-5-1940 and 17-5-1940 to 6-6-1941 are barred by time?
The Tribunal, of course, declined to refer the other questions mentioned by the assessee as they had not been raised the Tribunal. Against that refusal the assessee has submitted four applications (Income Tax Nos. 9 to 12 of 1953) under S. 21 of the Excess Profits Tax Act read with S. 66(2) of the Income-tax Act paying that those other questions mentioned should also be required to be referred to this Court. There is thus before us this reference (Civil Reference No. 10 of 1953) made by the Appellate Tribunal and also the four applications by the assessee, and since all of them concern the same matter they can all be disposed of together.
(4) To take up the reference first, the main contention is that under S. 15 of the Excess Profits Tax Act, as it stood prior to 18-4-1947, a notice in respect of escaped profit could not be issued more than five years of the end of the chargeable accounting period, and since that period of five years had elapsed before the amendment, by which this bar of five years' limitation was removed, the amendment itself cannot be allowed to affect the present case.
The contention rests on the assumption that the amendment is not retrospective as the Courts as a rule are not inclined to give retrospective effect to an amendment. Mr. Mittra did not, however, suggest that an amendment of a statute can in no case have retrospective effect nor did he suggest that Parliament could not have, had it so wished, give retrospective effect to this particular amendment. What, therefore, we have to ascertain is the meaning of the amendment in dispute. This was made by S. 16 of the amending Act 22 of 1947 and that section says:
'16. In S. 15 of the Excess Profits Tax Act (hereinafter in this Chapter referred to as the said Act), the words 'within five years of the end of the chargeable accounting period in question' shall be omitted, and shall be deemed always to have been omitted.'
The controversy is about the meaning of the words 'and shall be deemed always to have been omitted'. Mr. Mittra's submission is that these words have no peculiar significance and he refers in this connection to the first section of the Amending Act which says:
'1. (1) This Act may be called the Income-tax and Excess Profits Tax (Amendment), Act, 1947.
(2) It shall be deemed to have come into force on 31st day of March, 1947'.
and suggest that the Act was enacted on the 18th of April 1947 but was intended to have retrospective effect as from 31-3-1947, but that it was never intended to have retrospective effect beyond that date. This argument, however, wholly ignores the firm and clear language employed by the amending Act in S. 16, for there, while expressly omitting certain words occurring in S. 15 of the Excess Profits Tax Act, the amending Act says that this omission will be deemed to have been always in existence. There is no doubt, therefore, that as far as this particular amendment of S. 15 of the Excess Profits Tax Act is concerned, the intention of Parliament was that the words 'within five years of the end of the chargeable accounting period in question' should be taken to have been never in the Act.
I do not think it was possible for Parliament to have expressed its intention more clearly, the intention being that this particular amendment was to have retrospective effect as from the date of the Excess Profits Tax Act itself. Mr. Mittra referred to certain decided cases, but admittedly none of those was concerned with the interpretation of such language as has been used by Parliament in S. 16 of Act 22 of 1947. Those cases, on the other hand, like Muhamad Hussain Nachiar Ammal v. Commissioner of Income-tax, Madras : 29ITR848(Mad) and S. C. Prashar v. Vasantsen Dwarkadas : 29ITR857(Bom) were concerned with interpreting the meaning & effect of ordinary amendments containing no express indication of retrospective effect.
All those, of course, were decided on the ordinary principle that normal presumption is against giving retrospective effect to a statute. I am not referring to other cases mentioned by learned counsel because none of those really helps. As far as I can see, the language of S. 16 of the amending Act 22 of 1947 is emphatical and the Courts are bound to imagine that the words previously exiting in S. 15 of the Excess Profits Tax Act were never there. The Appellate Tribunal was, in the circumstances, right in holding that the bar of the five years' limitation appearing in Section 15 of the Excess Profits Tax Act must be taken to have never been there, and the question of limitation therefore does not arise. I would, therefore, answer the second question posed by the Tribunal in the negative, holding that the assessments were not barred by time.
(5) On the first question Mr. Mittra contends that the very basis of the Excess Profits Tax assessments were the Income-tax assessments, and since those were quashed the Excess Profits Tax assessments had no basis left. There is no substance by this contention. The two assessments are separately made under two separate statutes, and there is no ground for saying that if one is set aside the other must also fall with it. It is, to my mind, of no significance that in making the assessment under the Excess Profits Tax Act the officer concerned can depend on information obtained in connection with an assessment made under the Income-tax Act, or does in fact depend on it. there is no doubt that the Excess Profits Tax Officer had certain information with him in connection with assessments made under the Income-tax Act. He was entitled to rely on that information, and merely because the assessments under the Income-tax Act were set aside it does not follow that the information with him became incapable of being used for assessing Excess Profits tax.
(6) Mr. Mittra then raises another point, suggesting that in the present case notices were issued not under S. 15 of the Excess Profits Tax Act which might conceivably have been issued at any time, but under S. 13 of that Act, and such notice according to learned counsel, should have been issued during the year following the chargeable accounting period. This contention seeks to make Ss. 13 and 15 of the Excess Profits Tax Act water tight provisions, more or less, exclusive of each other. Actually, however, they are complementary one to the other, and the mere fact that the notice were labelled under S. 13 of the Act can make no difference and it is not denied that the notices were in respect of the profits which had escaped assessment. I think, therefore, that the answer to that first question must also be in the negative. This disposes of the reference (Civil Reference No. 10 of 1953).
(7) There remain the four petition by the assessee for requiring certain other questions of law to be referred to this Court. It does not appear that those other questions were urged before the Appellate Tribunal. Nor does in fact appear that there is any substantial content in those questions, except question No. (5) which, however, Mr. Mittra frankly admitted he does not propose even to press. The real questions of law arising in the cases were framed by the Appellate Tribunal and referred to this Court and have been answered. There is, therefore, no point in requiring any other question to be referred to this Court. The four petitions (Income-tax Nos. 9 to 12 of 1953) must, therefore, be dismissed. The assessee will pay the costs of these proceedings before us and we assess the costs as Rs. 250/- in all.
Inder Dev Dua, J.
(8) I agree.
(9) Answered accordingly.