Satish Chandra, C.J.

1. THE interesting questions of law which arise for our consideration in this reference under the Indian I.T. Act are :

"(1) Whether the regular assessment under the Business Profits Tax Act is required to be made within four years of the end of the chargeable accounting period ? and

(2) If not, whether the making of such an assessment after 20 years was making it within a reasonable time ?"

2. THE Tribunal answered the first question in the affirmative and the second in the negative. Hence, this reference at the instance of the CIT.

In respect of various chargeable accounting periods ranging from 1st April, 1946, to 31st March, 1949, the ITO issued a notice under Section 11 of the Business Profits Tax Act, 1947, within a year, and so were provisional assessments made under Section 13 of the Act, the details whereof are as under. The regular assessments were, however, made nearly 20 years later on 30th December, 1969, for all these periods. The tax demand created by the provisional and the regular assessments is also indicated below.

Chargeable Date of Date of Amount of tax Date Amount

Accounting service of provisional of regular of tax

Period notice assessment assessment

Order order

Rs. Rs.

(a) 1-4-46 to within a 17-3-48 12,33,333 30-12-69 13,68,085

31-12-48 year

(b) 1-1-47 to do 20-11-48 do 3,06,726

31-3-47

(c) 1-4-47 to do 27-12-48 6,88,333 do 5,42,232

31-12-47

(d) 1-4-48 to do 31-12-49 10,91,850/12 do 13,87,146

31-12-48

(e) 1-1-49 to do 22-1-51 1,43,078 do 3,23,308

31-1-49 .

3. IT is apparent that the tax demand was considerably increased by the regular assessment.

4. THE assessee went up in appeal. THE submission that the regular assessment made after 20 years was illegal was repelled on the ground that no period of limitation has been prescribed for it. The other submission that the profits of Smith Stanistreet and Co. Ltd., should not be added to the profits of the assessee-company was accepted and the Business Profits Tax Officer was directed to recompute the chargeable profits on that basis.

5. THE assessee took the matter to the Tribunal. THE Tribunal held that the regular assessment under Section 12 has to be made within four years of the end of the chargeable accounting period. In the alternative, it was held that 20 years was an unreasonably long period. THE department has failed to justify the delay. THE regular assessments were hence quashed.

6. IN CIT v. Narsee Nagsee and Co. [1960] 40 ITR 307, the Supreme Court by majority held that the notice under Section 11(1) of the Act ought to be issued within the financial year commencing next after the expiry of the accounting period. This conclusion was reached by a process of construction of Sections 11(1) and 14 of the Act read with Section 50 of the Indian I.T. Act as adapted by the Business Profits Tax Rules. Section 11(1) did not prescribe any period of limitation for issuing the notice with a view to bring the chargeable profits to tax under the Business Profits Tax Act. Section 14, which covered escaped assessments provided a limit of 4 years. The Supreme Court held that since Section 14 extended to cases where no notice had been issued under Section 11(1) and consequently no assessment had at all been made, it would be anomalous that for a notice under Section 14 there should be a limit of four years while there should be none for a notice under Section 11. The majority opinion of the Supreme Court was also influenced by the fact that the modified Section 50 of the Indian I.T. Act as applied by the Business Profits Tax Rules provided that a claim to any refund of tax under the Act shall be allowed only if it is made within four years from the last day of the financial year commencing next after the expiry of the accounting period. Their Lordships held (p. 317) :

"If the contention of the appellant is correct then this section will