JUDGMENT - Chagla, C.J.

1. The assessee is a private limited company and has succeeded to the business of one Maneklal Chunilal. The assessment on the income of Maneklal Chunilal was made on the 14th of June, 1937, and the assessment was for the accounting Samvat Year 1992. That accounting year closed on the 14th of November, 1936. On the 14th of March, 1939, the Income-tax Officer served a notice under Section 34 upon the assessee company and a further notice was served under Section 22 (4) to produce certain books of account. The assessee company failed to produce the accounts and thereupon the Income-tax Officer made a best judgment assessment under Section 23 (4). An appeal was preferred to the Appellate Assistant Commissioner and finally to the Tribunal, who confirmed the assessment, and the question that arises before us is whether the assessee company was liable to be assessed in respect of the income of Maneklal Chunilal which escaped assessment.

2. The point which has been urged before us by Mr. Palkhiwala is that the assessee company succeeded to Maneklal Chunilal on the 16th of September, 1937, and proceedings under Section 34 have been taken in respect of the assessment for the Samvat Year 1992 and inasmuch as the assessee company had not succeeded to Maneklal Chunilal in the Samvat Year 1992 but succeeded to him subsequently, the Income-tax authorities are not entitled to proceed against the successor in respect of the income of Maneklal Chunilal which escaped assessment.

3. The answer to this question depends upon first whether Section 26 (2) before it was amended applies or the amended section applies. Section 26 (2) was amended on the 31st of March, 1939, and it is common ground that if the amended section applies then the assessee companys contention must be upheld and the company is not liable to pay assessment. If, on the other hand, the old section applies, then we have to consider whether on a true construction of that section the assessee company is liable.

4. Turning to the point which was first urged by Mr. Palkhiwala that even if the old section applies, the assessee company is not liable, it seems to us that there is considerable force in the contention put forward by Mr. Palkhiwala. Sub-section (2) of Section 6 before its amendment ran as follows :-

"Where, at the time of making an assessment under Section 23, it is found that the person carrying on any business, profession or vocation has been succeeded in such capacity by another person, the assessment shall be made on such person succeeding, as if he had been carrying on the business, profession or vocation throughout the previous year, and as if he had received the whole of the profits for that year."

5. Two interpretations of this sub-section which are possible, and which have been urged before us, attach importance and lay emphasis upon two points of time mentioned in this sub-section. The interpretation put forward by the Commissioner attaches importance to the point of time specified in the opening words of the sub-section. viz., "Where, at the time of making an assessment under Section 23", and the interpretation put forward by Mr. Palkhiwala attaches importance to the point of time suggested at the end of the sub-section, viz., "throughout the previous year and as if he had received the whole of the profits for that year." If we were construing this section as res integra we would have found great difficulty in accepting the Commissioners contention and rejecting what has been put forward before us by Mr. Palkhiwala. It seems to us that the expression "as if he had been carrying on the business, profession or vocation throughout the previous year, and as if he had received the whole of the profits for that year" are the key words of that sub-section. These words clearly, in our opinion, indicate that in order to make a successor liable, he must have succeeded in the accounting year for which the assessment is being made. It is precisely bec

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