1978 (8) TMI 61 - HC - Income Tax

Summary

Issues:
1. Whether the regular assessment under the Business Profits Tax Act must be made within four years of the end of the chargeable accounting period?
2. If not, whether making such an assessment after 20 years is within a reasonable time?

Analysis:
The High Court considered the issue of the timing of regular assessments under the Business Profits Tax Act. The Tribunal had ruled that regular assessments under section 12 should be completed within four years of the end of the chargeable accounting period. Additionally, the Tribunal found a 20-year delay to be unreasonably long, with the department failing to justify the delay, resulting in the quashing of the regular assessments. The Court referred to the Supreme Court case of CIT v. Narsee Nagsee & Co., where it was held that a notice under section 11(1) must be issued within one year of the end of the chargeable accounting period, and the assessment must be completed within four years thereafter. The Court emphasized that assessments made after a significant delay could render certain provisions of the Act otiose, as evidenced by the inability to claim refunds after a certain period. Therefore, the Court affirmed the Tribunal's decision that regular assessments should be completed within the prescribed time limits.

The Court also addressed the issue of whether the profits of another company should be added to the profits of the assessee-company. The Tribunal accepted the submission that the profits of the other company should not be included, directing the Business Profits Tax Officer to recompute the chargeable profits accordingly. The Court upheld this decision, emphasizing the importance of accurate computation of chargeable profits for taxation purposes.

In conclusion, the High Court answered the first question in the affirmative, in favor of the assessee and against the department. The second question, regarding the reasonableness of making a regular assessment after 20 years, was left unanswered as it became academic in light of the first question's resolution. The parties were directed to bear their own costs in the matter.