' GUL MUHAMMAD KHAN, J.-This reference made by the Appellate Tribunal at the instance of the Commissioner of Income-tax, Lahore Zone, Lahore arises out of an order dated 3rd October 1967, passed by the Income-tax Appellate Tribunal (Pakistan) Lahore, under the Business Profits Tax Act.
The question is:- "Whether on the facts and in the circumstances of the case the Tribunal was justified in cancelling the assessm ent when section 34 (2-B) of the Income-tax Act, adapted for Business Profits Tax Act, had extended the period of limitation."
2. The facts leading to this reference are that the respondent was assessed on 31st of March 1963, to pay business profits tax for the chargeable accounting period ending 31st December 1957. The respondent took an appeal before the Appellate Tribunal who accepted the same and set aside the assessm ent on the ground that as the last date by which the assessment should have been completed, was 31st December 1962, the assessment made on 31st March 1963, was without jurisdiction.
3. Meanwhile section 34 of the Income-tax Act was amended vide Finance Act, 1963 and subsections (2-B) and (2-D) incorporated. These provisions did away with the limitation provided in section 341) & 34(2). The case was therefore, taken up again by the Investigation Circle of the Income-tax Department, who served the assessee with a notice under section 34 (2-B) of the Income-tax Act read with section 19 of the Business Profits Tax Act on 14th October 1965. The assessm ent was completed under section 12(1) of the Business Profits Tax Act, on 18th December 1965. The assessee again appealed before the Income-tax Appellate Tribunal. The contention raised was that even the second assessment was barred by time. As regards the applicability of section 34 (2-B) of the Income-tax Act, as introduced by the Finance Act of 1963, it was submitted that the same was not attracted to the facts of the case. In the alternative it was pleaded that even if section 34 (2-B) applied the last date for the completion of the assessment could not be beyond 30-6-1965 in view of the law laid down in Messrs Dada Ltd. v. Commissioner of Income-tax (1). The Appellate Tribunal agreed with the assessee and held that section 34 (2-B) could not be applied retrospectively under section 19 of the Business Profits Tax Act. The order of the Income-tax Officer was, therefore, set aside as having been passed beyond the period of limitation.
4. Before us the learned counsel for the petitioner submitted that by virtue of section 19(2) of the Business Profits Tax Act even the subsequent amendments in the Income-tax Act shall be read into the Business Profits Tax Act and these previsions shall apply to a case as if they were applicable on a
(1) PLD 1974 SC 310 date, when the assessm ent was under completion. Section 19 of the Business Profits Tax Act reads as under:- "(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 A A, 1922, shall apply with such modifications, 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 provision 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 reference in the said provisions to the assessee shall be construed as reference 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, reference to section 46 of the said Act shall be deemed to include reference to subsections (8), (9) and (10) of that section."
The learned counsel for the petitioner did not dispute the well-established position of law that when some provisions of an earlier Act are incorporated in a later Act, the incorporated provisions, for all practical purposes, become part and parcel of the later Act and no subsequent change in the earlier Act, even though retrospective in its application, shall apply to the incorporated provisions of the later Act unless the same had been made applicable expressly or by necessary intendment. He, therefore, conceded that if section 19(2) of the Business Profits Tax Act was not there, he would have no justification to challenge the correctness of the order of the Tribunal. His case is that it was because of section 19(2) of the Business Profits Tax Act, that all the subsequent amendments, as they are found at the time of assessment, would apply. It was contended that the Income-tax Officer has to apply all those provisions of the Income-tax Act as are referred to in the Business Profits Tax Act including section 19 as found at the time when he is passing the order and not as they existed during the chargeable accounting period. Reliance in this respect was placed on the phrase Any reference in this Act to the Income-tax Act shall mean the said Act as in force in the relevant period' as provided in section 19(2). As to the plea that section 34 (2-B) of the Income- tax Act was a curative law and so retroactive in its application, the learned counsel relied on I. T.
0. v. Sulaiman Bhai Jiwa (1). It may be noted here that section 34 (2-B) was enacted on 30th of June 1963, but had empowered the Income-tax Officer to reopen cases with effect from 1955. This amendment would ordinarily cover the assessee's case for the present chargeable accounting period only if it is proved to have been made applicable to cases under the Business Profits Tax Act.
7. The learned counsel for the respondent submitted that as even section 34 (2-B) did not empower the Income-tax Officer to exercise his jurisdiction at a time when the notice was issued and the assessm ent completed, the question of its application to the Business Profits Tax Act
(1) PLD 1970 SC SO did not arise. He further pleaded that no subsequent amendment in Income-tax Act, even though of a retroactive nature, could be applied retrospectively to the Business Profits Tax Act under its section 19(2). Finance Act, 1963 amended section 34 of the Income-tax Act on 30th June 1963 to add subsection (2-B). It empowered the Income-tax Officer to issue a notice and complete an assessm ent or reassessm ent before 31st December 1963 for any year ending between 31st March 1955 and 30th June 1959. The Finance Act of 1964 again amended this subsection by substituting the figure '1964' for '1963'. Section 11 of the Finance Act, 1965 [PLD 1965 Statute 196], further amended section 34 (2-B) to substitute the figure '1965' for '1964', on and from 1st July 1964. The position as obtaining on 14th October 1965, when notice was issued and on 18th December 1965, when the assessm ent was made, was that the Income-tax Officer did have the power to issue a notice under section 34, on any date before 31st December 1965 with regard to Income-tax for any year ending between 31st March 1955, and 30th June 1959. So the result is that if this effect could be read into the Business Profits Tax Act also, the order of the Income-tax Officer could not have been interfered with by the Tribunal.
8. The Supreme Court considered the effect of the incorporation of section 34 in the Business Profits Tax Act in Commissioner of Income-tax v. Messrs Reyaz-O-Khalid Co., Karachi (1), and in Dada Limited v. C. I. T. (2), and came to the conclusion that the maximum period available to an Income- tax Officer to complete assessm ent was four years after the end of the normal assessment period.
This means that after allowing one year for normal assessment, the case should have been completed by 31st March 1962. This time limit was done away with by the introduction of subsection (2-B) on 30th June 1963, whereby a special period of limitation was provided to issue notice for any chargeable period between 31st March 1955 and 30th June 1959 (both days inclusive). Section 19(2) provided that the reference to provisions of the Income-tax Act would apply as in force in the relevant period. Section 34 (2-B) has been held by their Lordships of the Supreme Court to be effective by legal fiction from 1st day of April 1955. The relevant passage from I. T.
0. v. Sulaiman Bhai Jiwa may be reproduced here with advantage :- ". . . .After the annulment of assessm ents, the impugned notices under section 22(4) and 23(2) of the Act were issued on different dates during the months of November and December 1963. The terminal date upto which such notices could be issued on the authority of subsection (2-B) of section 34 is the 30th day of June 1969. Thus, the impugned notices were issued within the time limit prescribed by the said subsection (2-B) which, by legal fiction, shall be deemed to have been in force from the 1st day of April 1955, that is, from before the dates on which the assessments in question were annulled. Accordingly, the orders annulling the assessments, on the ground of limitation in view of the extension of the period of limitation by ex post facto legislation, shall be deemed to have been made without lawful authority."
Section 34 (2-B), therefore, was in force in the eye of law in the chargeable accounting period ending on 31st December 1957, and would govern the situation. The Tribunal thus was not right in holding otherwise. In view of the above our answer to the question referred to us will be in the negative. The respondent shall pay the costs.
1) PLD 1973 SC (2) P D 1974 SC 310