ZAFFAR HUSSAIN MIRZA, J.-This is a certificated appeal, under section 66-A of the Income-tax Act, 1922 read with section 19 of the Business Profits Tax Act, 1.947, arising from a judgment of the erstwhile High Court of West Pakistan, Karachi Bench, Karachi dated 19-8-1966, passed in a civil reference under section 66 (1) of the Income-tax Act, 1922.
2. The question of law that requires determination in this appeal arises on account of amendments made in the Business Profit Tax Act by the Finance Act, 1957. As a result of these amending provisions, section 14 of 'the former Act was deleted and section 19 of the said Act was substituted, whereby several sections of the Income-tax Act, 1922, including section 34 were made applicable by incorporation to the Business Profits Tax Act. The Finance Act, 1957, came into force with effect from 4-3-57 (although mistakenly the departmental authorities have referred to the date of enforce--ment of the said Act as 1-4-57). Now these two sections, before the amendment, read as follows :- Section 14.-If, for any reason profits of any chargeable accounting period chargeable to business profits tax have escaped assessm ent, or have been under-assessed or have been the subject of excessive relief, the Income-tax Officer may at any time within four years of the end of the chargeable accounting period in question serve on the person liable to such tax a notice containing all or any of the requirements which may be included in a notice under section 11, and may proceed to assess or re-assess the amount of such profits liable to business profits tax, and the provisions of this Act shall, so far as may be, apply as if the notice were a notice issued under that section Provided that unless definite information have come into his possession the Income- tax Officer shall not initiate proceedings under this section without obtaining the previous approval of the Inspecting Assistant Commissioner of Income-tax.
Section 19.-The sections of the Income-tax Act, 1922, as applied to excess profits tax by virtue of sections 21 and 21-A of the Excess Profits Tax Act, 1940, shall, in so far as they are not repugnant to the provisions of this Act and with such modifications, if any, as may be prescribed, apply to business profits tax as they apply to excess profits tax.
Section 19 of the said Act after its amendment, reads as follows; "Application of the provisions of Act XI of 1921.-(1) The provisions of sections 4-A, 4-B, 10, 13, 24-B, 29, 34, 36 to 44-C (inclusive), 45 to 48 (inclusive) 49-E, 49-F, 50, 54, 61 to 63 (inclusive) and 65 to 67-A (inclusive) of the Income-tax Act, 1922, shall apply with such modifi--cations, if any, as may be prescribed, as if the said provisions were provisions of this Act and referred to business profits tax instead of to income-tax, and every officer exercising powers under the said provisions in regard to income-tax may exercise the like powers under this Act in regard to business profits tax as he exercises in relation to income-tax under the said Act Provided that references in the said provisions to the assessee shall be construed as references to a person to whose business this Act applies.
(2) Any reference in this Act to the Income-tax Act, 1922, shall, in relation to the profits of any chargeable accounting period and to the state of affairs and all the circumstances necessary to determine the charge to business profits tax, mean the said Act as in force in the relevant period Provided that whatever be the relevant period, references to section 46 of the said Act shall be deemed to include reference to subsections (8), (9) and (10) of that section."
3. Now the facts, material for the present appeal, are that the respondent, on 15-1-1958, voluntarily filed Returns under the Business Profits Tax Act, 1947, for five chargeable accounting periods, ending with the calendar years 1952 to 1956. The Income-tax Officer passed the assessment order thereon, on 31-1-1958 Levying business profits tax in respect of all these Returns. The respondent challenged the assessm ent before the Appellate Assistant Commissioner, inter alia, on the ground that section 34 of the Income-tax Act, 1922, was made applicable from 4-7-1958, when modifications therein were notified by an amendment of the Business Profits Tax Rules, 1948, by the Central Board of Revenue, and as the assessm ents were completed on 31-I-1958, they had become time-barred by them. This ground was rejected by the Appellate Assistant Commissioner as untenable, on the reasoning that since the aforesaid modifications were given retrospective effect from 1-4-1957, section 34 was applicable from the said date and, therefore, all the assessments were validly made. The respondent appealed against this decision before the Income-tax Appellate Tribunal, Karachi, who, by order dated 26-4-1960, held that the modifications by rules made by the Central Board of Revenue, having been published in the official Gazette on 4-7-1958, retrospective effect given to them from 1-4-1957 was illegal, for, no such power was given to the Central Board of Revenue under the Finance Act, 1957. However, in the opinion of the Tribunal, since section 14 was deleted with effect from 1-4-1957, the Assessing Officer was free from the fetters of limitation imposed by that section and notwithstanding the expiry of such limitation under the original provision, as far as the two chargeable accounting periods ending 31-12-1952 and 31-12-1953, the assessm ent made in respect thereof on 31-1-1958 was competently made. As regards the subsequent 3 years the time limit had not expired even under the old section 14. On these grounds the Tribunal upheld all the assessm ents and dismissed the ,respondent's appeal.
4. The matter was then referred to the High Court, at the instance of the respondent. In the High Court, it was conceded by the respondent that the assessments as to calendar years 1954, 1955 and 1956 were valid, because the period of four years had not expired by the date of the assessm ent order viz. 31-1-1958. Thus the question before the High Court was confined to two accounting years ending 31-12-1952 and 31-12-1953. Before us, Mr. Ali Akhar, learned counsel for the respondent, further conceded that the assessment in regard to chargeable accounting year ending 31-12-1953 is also not questionable and, therefore, the only accounting year relevant for the present purposes is the year ending 31-12-1952.
5. Out of the two questions of law that were referred to the High Court for decision, the remaining question relevant for the present purposes, was as under; "Whether in the facts and circumstances of the case the assessment for the five chargeable accounting periods in question were time-barred ?"
As already observed, out of the five chargeable accounting periods, only one, namely, the period ending 31-12-1952 remains to be considered in relation to the aforementioned question of law. On behalf of the assessee, it was contended before the High Court that under section 14 which was repealed by the Finance Act, 1957, the assessee had acquired a vested right in respect of the assessm ent for the year in question ; and since there was an embargo placed on the power of Income-tax Officer to make assessm ent in respect of escaped or under-assessed profits, beyond four years of the end of the chargeable accounting period, the assessment was invalid.
Additionally, it was urged that the amended section 19 of the Business Profits Tax Act, incorporating the provisions of section 34 of the Income-tax Act had not come into force until 31-1-1958, therefore, the Department bad no jurisdiction to make any assessment in respect of the chargeable accounting year in question.
6. The learned Judges of the High Court accepted the first contention of the assessee and relying on the dictum laid down in Saeed Ahmad v. The State PLD1964SC266 that in principle there is no difference between repeal and amendment of any provision of law, held that by virtue of section 6 of the General Clauses Act the assessee's liability once extinguished under the repealed enactment cannot be revived by operation of the amended provisions. It was observed; "Thus there is no difference in principle between repeal and amendment and section 6 of the General Clauses Act is applicable to the present case. Under this provision of law the repeal does not affect any right, privilege obligation or liability, acquired, accrued, or incurred under any enactment so repealed. It is not disputed that under section 14 of the Business Profits Tax Act, as it existed before its omission, the Income-tax Officer had no jurisdiction to assess any escaped or under--assessed income beyond four years. The assessment for the chargeable accounting year 31st December, 1952 would, therefore, be outside the jurisdiction of the Income-tax Officer after the expiry of four years which admittedly took place by the end of 31st December, 1956.
Admittedly, the Income-tax Officer made the assessment for the above chargeable accounting year an 31st January, 1958 which was beyond four years provided in section 14 of the Business Profits Tax Act. It was, therefore, incumbent on the Department to prove that a vested right acquired by the petitioners could be defeated by some other provision of law in the Business Profits Tax Act. Mr. S. A. Nusrat, the learned counsel for the Department was unable to draw our attention to any such provision of law. His only contention was that there was a gap of 15 months between the deletion of section 14 and introduction of section 34 of the Income-tax Act and during this period the Department was free to make assessment in respect of escaped or under-assessed income without any limit of time. The contention of the learned counsel for the Department in this respect has no force whatever. As already pointed out, since the petitioners had acquired vested rights in respect of the Business Profits Tax assess--ment for the chargeable accounting period ending 31st. December, 1952 it could not be taken away unless a provision to that effect had been made in the Finance Act of 1957. Admittedly, no such provision was made in the above-mentioned enactment. We therefore, hold that Business Profits Tax assessments for the above chargeable accounting periods was beyond time and is inoperative in law."
In this view of the matter, the question referred to the High Court, so far as it related to the remaining years in dispute, was answered in the affirmative and it was held that the assessment for the chargeable accounting period ending the 31st December, 1952 was beyond time and has no validity in the eye of law.
7. Before adverting to the contentions advanced by the counsel, we may refer to the case of Kohi- Noor Textile Mills Ltd. v. Commissioner of Income-tax, Lahore PLD 1974 SC 284wherein this Court had considered the effect of the modifications made in section 34, Income-tax Act as contemplated in section 19 of the Business Profits Tax Act, by issuance of a notification on 4-7-1958.
It was held in that case that the provisions of section 34 apply of their own force without the modifications as soon as by the operation of the Finance Act, 1957 these provisions stood incorporated in section 19 of the Business Profits Tax Act and their application was not dependent on or postponed until, the issue of the notification. The contention of the Taxing Authority advanced before the High Court that during the interregnum between the commencement of the amended provisions of section 19 on 4-3-1957 and the date of the modifications on 4-7-1958, the limitation imposed by section 14 of the Business Profits Tax Act or section 34 of the Income-tax Act were not in the field to fetter the powers of the Income-tax Officer to assess income beyond the prescribed limitations, was clearly untenable.
8. It may be stated that it was common ground between the parties before us that in respect of the years in question the relevant limitation under section 14 of the Business Profits Tax Act of four years ended on 31-12-1956 and, if section 34 was applicable, the limitation would be six years ending on 31-12-1958. In support of this appeal, the learned counsel appearing for the appellant, has contended that on the date of the assessment in question i. e. 31-1-1958, since section 34 of the Income-tax Act was applicable by virtue of its incorporation in the Business Profits Tax Act, which provided for the powers of assessm ent in respect of escaped assessment for the period within six years prior thereto, even if the amended provisions are prospective in operation, the Income-tax Officer had jurisdiction to pass orders of assessment in regard to the chargeable accounting period ending 31-12-1952 and, therefore, the assessm ent should be held not to have become barred by time. Learned counsel for the assessee, on the other hand, adopted the reasoning advanced by the learned Judges of the High Court and contended that before the coming into force of the amended provisions, the limitation imposed by section 14 prior to its repeal, having expired, a vested right had accrued in favour of the assessee and no power remained thereafter with the Taxing Authority to assess the tax and levy the same on a future date by virtue of any power conferred under the amended provisions.
9. It was further contended on behalf of the appellant that the amendents of 1957, resulting in the application of section 34 of the Income--tax Act were retrospective in operation, with the result that the period of limitation under the existing law was extended to six years and, therefore, the assessm ent was validly made. Both the aforesaid contentions can be disposed of together.
10. In support of the submissions as aforesaid, reliance was placed on the case of Kohi-Noor Textile Mills Ltd. Already referred to above. This Court, in the cited case, considered the true nature of the amendment in question whereby section 34 was incorporated in the Business Profits Tax Act and reached the conclusion as under; "We are also unable to agree that the amendment did not apply to pending proceedings, because, the provisions of section 34 of the Income-tax Act impose no charge on the subject but merely deal with the machinery of assessment as held by the Privy Council in the case of the Commissioner of Income-tax, Bengal v.. Messrs Mahaliram Ramjidas. This was, therefore, an amendment of procedure in which no assessee has a vested right. Such procedural amendments operate retroactively and apply even to pending proceedings."
11. It may, however, be pointed out that their Lordships were consider--ing a case in which notice under section 11 (1), Business Profits Tax Act was first issued to the assessee within the period of limitation prescribed under section 14 thereof, with the result that assessment proceedings had been initiated and subsequently, after the assessee filed a nil return, a further notice under section 11 (2) was issued and the assessm ent order was ultimately passed on 27-11-1957 (after the amendment had come into effect). The question for determination was, whether since before the assessm ent section 34 had already been made applicable, the assessment was -rendered invalid by lapse of 4 years period prescribed in the said section. This was, therefore, a case of pending proceedings, during the course of which the relevant law underwent a change by amendment. The argument of the Taxing Authority was, that there is no time limit for completion of an assessment either under section 11 or section 14, nor is there any time limit fixed for a notice under section 11, and the limitation under section 14 is only for purposes of issuance of a notice. The Court finally held that section 34 was applicable to the case and after expiry of four years from the end of the year in which assessm ent had first to be made, no further step could be taken to recover the tax which had escaped assessm ent or been under-assessed or been the subject of excessive relief even though the notice under section 11 (1) was issued within the period prescribed in the original section 14 of the Business Profits Tax Act.
12. Reference may also be made, at this stage, to another case cited at the bar reported as Dada Ltd. v. Commissioner of Income-tax(l), wherein this Court has held that, notice under section 11 (1) can be issued within reasonable time after termination of the chargeable accounting year and this reasonable period should not extend beyond the period specified in section 34, Income-tax Act (a case pertaining to chargeable accounting periods ending 31-3-1958 and 30-6-1957). The decision in this case followed, the view held in Commissioner of Income-tax, East Pakistan v. Messrs Hossen Kasan Dada Karachi (2), in which it was held, that notice calling for a return under section 11, Business Profits Tax Act should be issued within reasonable time from the termination of the chargeable accounting period and this period should not extend beyond the period specified in section 14.
13. In the case in hand no proceedings were taken until the expiry of the period of limitation prescribed under section 14 by 31-12-1956, long before section 34 of the Income-tax Act became applicable to business profits by virtue of the 1957 amendments. This is, therefore, not a case of pending proceedings. The question that falls for consideration is, whether the extended time for assessm ent under section 34 was applicable, since this provision being a procedural enactment came into effect retrospectively, so as to destroy the right accrued to the assescee by lapse of four years period prescribed under section 14.
14. The principles governing the interpretation of statutes of this nature, were laid down by this Court in the case of Adnan Afzal v. Sher Afzal (3), wherein Hamoodur Rahman, C. J. Observed as follows; "The general principle with regard to the interpretation of statutes as laid down in the well-known case of the Colonial Sugar Refining Company Limited v. Irving is that "if the matter in question be a matter of A procedure only", the provisions would be retrospective. "On the other hand, if it be more than a matter of procedure, if it touches a right in existence at the passing of the Act", then "in accordance with a long line of authorities extending from the time of Lord Coke to the present day", the legislation would not operate retrospetively ,unless the Legislature had either _ by express enactment or by necessary intendment" given the legislation retroactive effect.
To the same effect are the observations of Jassel, Master of the Rolls, in the case of In re : Joseph Suche & Co. Limited, where it was observed that as "a general rule when the Legislature alters the rights of parties by taking away or conferring any right of action, its enactments, unless in express terms they apply to pending actions, do not - affect them. It is said that there is one exception to that rule, namely, that, these enactments merely affect procedure and do not extend to rights of action, they have been held to apply to existing rights." .
It was further observed "Nevertheless, it must be pointed out that if in this . Process any existing rights are affected or the giving of retroactive operation cause incon--venience or injustice, then the Courts will not even in the case of a procedural statute, favour an interpretation giving retrospective effect to the statute."
(1);PLD 1974 SC 310(2) PLD 1961 SC 375
(3) PLD 1969 S -C 187
15. Keeping these principles in view, we are of the opinion that, even though the amending provisions in question, were a part of the procedural law, they cannot be given retrospective effect, in the facts of the present case. There is no dispute between the parties, that but for the amendments, the business profits for the chargeable accounting period in question, were no liable to be assessed on 31-1-1958. On the expiry of, the period of fouryears under section 14, the assessee had, therefore, clearly acquired a right and the assessment for the said year became a past and closed transaction. This right could not, therefore, be taken away by giving retroactive operation to the amended statutory provision extending the period for assessment. The contentions advanced on behalf of the appellant are without substance. We, accordingly; agree with the judgment under appeal.
16. Before concluding, we may refer to another argument Mr. Mansoor Ahmed Khan, raised at the bearing. He contended that, in point of fact, section 34, Income-tax Act, was not attracted in this case, as the assessee had voluntarily filed his return, for which no period of limitation is prescribed anywhere in the Business Profits Tax Act and such a return had to be disposed of by assessment at any time. The short answer to this contention is that this was not a part of the Department's case at any prior stage, and cannot be allowed to be raised now.
17. In our opinion, the answer given to the question in hand, by the High Court, was correct in all the circumstances of this case.
18. The appeal thus fails and is dismissed with costs.