ORDER

1. This appeal arises from the judgment of the Calcutta High Court answering the question referred to it in the affirmative, i.e., in favour of the Revenue. The question referred under Section 66(1) of the Indian Income Tax Act, 1922 was

"whether on the facts and in the circumstances of the case, the provisions of Section 23-A could be applied to the assessee for the Assessment Year 1960-61".

2. The assessment year concerned herein is 1960-61, the accounting year whereof is the year ending on 31-8-1959. The assessee owns a sugar mill and a farm attached to it in what was then East Pakistan. At the relevant time there were restrictions upon remittances from Pakistan to India. The books of the assessee for the said year showed a profit of Rs. 93,449, after making provision for taxation in India and Pakistan. The Income Tax Officer, however, made an assessment on an income of Rs. 6,92,441. After deducting the tax payable thereon he arrived at the balance of Rs. 3,80,842.55. He found that the assessee had not declared the dividends within twelve months of the expiry of the accounting year. Accordingly, he levied additional super tax on the undistributed balance of Rs. 3,80,842.55 under Section 23-A. The assessees contention was that it had declared the dividend of Rs. 1,80,000 within forty-six days of the expiry of the aforesaid twelve months period and that this delay had occurred on account of the fact that the account books could not be brought to India and that a local auditor had to be appointed, all of which took some time. It submitted further that since the declaration and payment of dividends was conditional upon the Government of Pakistan allowing remittance facilities, and as the remittance was not possible, the dividends were not declared. The Income Tax Officer was not satisfied with the said reasons and levied the additional super tax, as stated above.

3. An appeal preferred by the assessee to the Assistant Appellate Commissioner was dismissed. The assessee carried the matter to the Tribunal. The Tribunal accepted the reasons put forward by the assessee for not declaring the dividends within the aforesaid twelve months period. It opined that the provisions contained in Section 207 of the Companies Act, 1956 or for that matter the provisions contained in the proviso to Section 45 of the Income Tax Act were not reasons enough for rejecting the assessees case. The Tribunal also found that the assessee had incurred substantial liabilities in India in excess of the advances made by it and that the assessee could not have declared the dividends out of its Indian resources. Accordingly, it cancelled the order of the Income Tax Officer made under Section 23-A of the Income Tax Act. Thereupon, the Revenue asked for and obtained the aforesaid reference.

4. When the reference came up for hearing before the High Court, it appears that no one appeared for the assessee. The High Court heard the learned counsel for the Revenue and after referring to Section 45 of the Income Tax Act and Section 207 of the Companies Act, 1956, held that the reasons assigned by the assessee for not declaring the dividends within the prescribed period were not acceptable and that action was rightly taken against it under Section 23-A. The correctness of the said view is questioned in this appeal.

5. Sub-section (1) of Section 23-A, as it obtained at the relevant time, read thus :

"23-A. Power to assess companies to super tax on undistributed income in certain cases. - (1) Where the Income Tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company within the twelve months immediately following the expiry of that previous year are less than the statutory percentage of the total income of the company of that previous year as reduced by -

(a) the amount of income tax and super tax payable by the company in respect of its total income, but excluding the amount of any super tax payable un