Judgment

KAPUR, J. : (For himself and S. K. DAS J.) This is an appeal against the judgment and order of the High Court of Bombay passed in Income Tax Reference No. 31 of 1956. The appellant is the Commissioner of Income-tax and the respondent is a firm carrying on business in Bombay and the question for decision arises under the Business Profits Tax Act (Act XXI of 1947) hereinafter referred to as the Act.

2. The assessment relates to the year of assessment 1949-50 and the chargeable accounting period was from November 13, 1947 to October 31, 1948. On January 12, 1953, the Income-tax Officer issued a notice on the respondent under S. 11(1) of the Act in respect of the abovementioned chargeable accounting period which was served on the respondent on January 21, 1953. The respondent filed a return under protest. The assessment was completed by the Income-tax Officer on November 30, 1953. Against this order the respondent took an appeal to the Appellate Assistant Commissioner on the ground that the respondent was not liable to Business Profits Tax because it was beyond the period of four years limitation under S. 14 of the Act. This plea was upheld by the Appellate Assistant Commissioner. The Income-tax Officer then appealed the Appellate Tribunal and it confirmed the order of the Appellate Assistant Commissioner. At the instance of the appellant a case was stated to the High Court of Bombay on the following two questions of law :

(1) "Whether the Income-tax Officer had jurisdiction to assess the assessee firm under the Business Profits Tax Act by issue of a notice under S. 11(1) of the Business Profits Tax Act on 12-1-1953 in respect of the chargeable accounting period 13-11-1947 to 31-10-1948 without having recourse to S. 14 of the Business Profits Tax Act?

(2) If the answer to Question No. 1 is in the negative whether the B. P. T. assessment could be considered to have been validly made?"

The High Court modified the first question by deleting the words "without having recourse to S. 14 of the Business Profits Tax Act" and answered both the questions in the negative. The Income-tax Appellate Tribunal had held that as under S. 14 of the Act the period of limitation commenced from the end of the chargeable accounting period in question the notice under S. 11(1) had to be issued before that period. The High Court did not accept this view. It held that both Ss. 11 and 14 had to be read together and the mention of four years in S. 14 was an important indication of the period of limitation in regard to the issue of notice under S. 11 also and further if profits which escaped assessment as in the present case, could only be taxed within four years of the end of the chargeable accounting period because of S. 14 of the Act, then inferentially the escape of assessment must be at sometime anterior to the period mentioned in S. 14 and as on the facts of the present case the notice had been issued four years after the close of the chargeable accounting period the notice under S. 11 was not valid. Against this order the appellant has come in appeal to this Court on a certificate, of the High Court.

3. It is submitted by the appellant that though Ss. 11 and 14 may have to be read together, they apply to different sets of circumstances; S. 11 applies to a case where the Income-tax Officer requires any person whom he believes to be engaged in any business to which the Act applies or to have been so engaged during any chargeable accounting period and calls upon him to furnish a return with respect to such chargeable accounting period; and S. 14 applies to a case where, in consequence of definite information possessed by him, the Income-tax Officer discovers in regard to any chargeable accounting period that the profits of any business have escaped assessment. In other words S. 11 applies to original assessments after the first notice calling upon an assessee to make a return in regard to the profits of any chargeable accounting period and S. 14 appl