1. This is an appeal from a decision of my learned brother Pearson, J., upon certain questions stated for the opinion of the Court under Section 51, Income-tax Act, 1918. The assessees in this case complained of the amount at which they had been assessed for excess profits duty and they applied to this Court and obtained an order in the nature of mandamus directing the Chief Revenue Authority to state certain questions for the opinion of the Court. The Chief Revenue Authority has stated those questions. In the result it appears that it is necessary for this Court to give its opinion upon the first of the questions so stated. That question is thus framed:
Whether the time prescribed by Section 26, Act 7, of l918 is to be reckoned from the original demand or from the making of the revised assessment whereby refund was ordered on revision of assessment revised by the Board on 2nd December 1921.
2. That question becomes more or less intelligible on consideration of the following facts: The assessees were engaged in three different places including Serajgunj in the District of Pabna in the business of jute, The year for which they were being assessed was the year 1919-20 and on 15th March 1920 a notice of demand was served upon them for income-tax at a certain figure. On 25th March 1920 a notice of demand was served upon them for excess profits duty. According to that notice of demand it would appear that they had to pay in respect of excess profits duty the substantial sum of Rs. 8,384 which they, pending subsequent proceedings, paid. Now, against the assessment to income-tax they appealed to the Commissioner under Section 21, Income-tax Act, 1918. They persuaded the Commissioner that, for the previous year in question they had made no profit and to use the language of Section 22, Income-tax Act, he cancelled the assessment. As regards the assessment to excess profits duty the petitioners lodged a petition with the Chief Revenue Authority as required by the Excess Profits Duty Act.
3. Upon this matter coming before the Chief Revenue Authority that authority took the view, differing from the view that the Commissioner had taken in dealing with the income-tax assessment that the profits had been calculated on the wrong accounting period, that they ought not to have been calculated on Sambat 1975 but either Sambat 1974 or else for the ordinary financial year ending with the 31st March 1919. They remitted the matter on this question of the excess profits duty to the Commissioner. He remitted it to the Collector. The Collector had a report made to him by the assessor and it then appears that the Collector heard the parties, heard what they had to say upon the assessor's report and came to the conclusion that the profits for the purpose amounted to Rs. 77,000. The assessees say that they got no opportunity of examining the assessor's report, but the statement of the case made to the Court by the member of the Board of Revenue is to the contrary. The matter went to the Commissioner. He estimated and held that the profits were Rs. 49,397. Then the matter went to the Chief Revenue Authority by an application which was dealt with on 2nd December 1921. The Chief Revenue Authority came to the conclusion that the figure at which the Commissioner had arrived was the correct figure and accordingly on that basis out of Rs. 8,384 which had been paid on the original assessment, a refund to the assessees was due of Rs. 1,419 and that refund was made. The order of the Commissioner cancelling the assessee's assessment to income-tax and directing a refund of the money paid in that respect was never interfered with and ultimately the assessees obtained refund of all that they had paid for income-tax and they were therefore in the position that, while under Section 19, Income-tax Act, 1918 this might be adjusted upon the actual figures at the end of the year of assessment, the assessees have no grievance in respect of income-tax. Their grievance has reference to excess profits-duty. They say that on going into the assessor's report on the basis of which the Chief Revenue Authority assessed them to excess profits duty on the basis of profits of Rs. 49,397 they discovered that there were three palpable mistakes. In one case by a slip of pen the figure 1. has come before the figure 5 making a difference of Rs. 10,000. It is said also that when you look at the assessor's report you find that he has taken the. closing stock as part of the income for the year. In other words, they say upon, an inspection of the assessor's report that it contains obvious and undoubted-mistakes. Now, on none of the affidavits in this matter and (we are assured by Mr. Bose for the assessees) in no-affidavits before any revenue authority have these allegations as to these palpable mistakes been disputed.
4. In these circumstances, the assessees sought a remedy. They applied first of all to the Collector on 31st May 1922 and1 they asked him to exercise his power a under Section 26 of the Act to correct the mistakes. The words of that section which has been applied to excess profits duty, are these:
The Collector may, at any time within one year from the date of any demand made upon au assessee, rectify any mistake in connexion therewith which has been brought to his notice by such assessee and make a refund to such assessee in respect thereof.
5. The Collector held that the period of 'one year from the date of any demand' refers to the notice of demand to be served under Section 20 of the Act. In this, case the only notice under Section 20 was the original demand which was served in March 1920. The Chief Revenue Authority did not deal with this matter until the 2nd December 1921, that is to say, 18 months or more after the original demand. The Collector says, however, that as regards any mistake in that order he cannot entertain an application because it is more than one year from March 1920. That is the first question and indeed in the end the only question before us.
6. The learned Judge on the original side has agreed with the Collector and his, view is shortly this:
I think that the demand mentioned in Section 26 has reference to the demand in the prescribed form referred to in Section 20. Consequently I would answer the question in para. 25 (sic of the petition by saying that the time under Section 26 must be reckoned from the original demand in March 1920, the only demand there has been.
7. Now, When we coma to consider the question in this Court it is very properly conceded by the learned Advocate-General that in the circumstances of this case the order made by the Chief Revenue Authority on 2nd December 1921 was a demand' within the meaning of Section 26, Income-tax Act, 1918. I have no doubt myself that that is so upon a consideration of the relevant sections. The ordinary section dealing with an original demand is Section 18. It says that if the Collector is satisfied that a return is correct and complete he shall assess the sum payable by the assessees. If he has reason to believe that the return is correct and incomplete then he may require the assessee to attend, and, after examining any account and hearing evidence, he shall by an order in writing determine the total income of the assessee for the previous year, and assess the sum payable by the assessee for the year in which the return is made on the basis of such determination. By Section 19, where in a subsequent year a return has been made and the actual receipts for the then previous year are known it is provided that the difference between the actual profits and the profits upon which income-tax has been paid the year before shall be taken into account and the difference shall be paid by or refunded to the assessee as the case may be. There is a provision in the case of death or insolvency which enables an immediate adjustment to be had in the meantime. Section 20 says that when the Collector has determined a sum to be payable either under Section 18 or Section 19 he shall serve on the assessee a notice of demand. The assessee objecting to the amount to which he has been assessed under Section 18 or to an adjustment under Section 19 may appeal to the Commissioner. The petition shall ordinarily be presented within 30 days of 'receipt of the notice of demand.' The Commissioner shall pass such order thereon whether by way of confirmation, rejection, enhancement or cancellation of the assessment or the adjustment or otherwise and fixing such time for payment as he thinks fit. The Chief Revenue Authority acting under Section 23 may make an order enhancing the sum payable but not without hearing the assessee. By Section 24 the Collector or the Commissioner, if they are satisfied that the assessee has concealed particulars of his income, may direct the assessee to pay double the rate on the difference between the true sum and the sum which has been put forward. Now, bearing in mind these provisions of the Act, the question is: When we come to Section 26 and find the words 'from the date of any demand made upon an assessee' are we to read that as meaning 'from the date of receipt of any notice of demand under Section 20?' In my judgment, that is not the meaning of the phrase. We have to identify the demand in connexion with which the alleged mistake occurred. The word demand' would cover a case of enhancement by the Commissioner under Section 22, or by the Chief Revenue Authority under Section 23. It would cover a case under Section 24 where the Collector or the Commissioner orders a man to pay double the rate. It seems to me looking to the terms of Sub-section 2, Section 21 that when the statute means to say 'from the receipt of the notice of demand' it says so and that the word 'demand' in Section 26 applies to a determination of a sum or extra sum to be payable by the assessee in such manner as to bind the assessee. Therefore, in my judgment, the learned Advocate-General has rightly conceded that the order of the Chief Revenue Authority was demand. That demand was made on 2nd December 1921 and it appears that the Collector within one year from that date has a power to deal with the objections.
8. It seems to me that in this case the other questions which have been referred to us do not arise and need not be dealt with, and as the questions marked (b),(c) and (d) are no longer pressed we confine ourselves to the first question. In my opinion, this matter must be disposed of on the basis that at the time the application was made to the Collector the. application was in time, and we should answer question (a) accordingly.
8. The applicant is entitled to his costs of this appeal and before Pearson, J., and the costs reserved by C.C. Ghose, J., on, 9th July 1925.
9. I agree.