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PETITIONER: M. M. PARIKH, INCOME-TAX OFFICER, SPECIALINVESTIGATION CIRCL

       Vs.

RESPONDENT: NAVANAGAR TRANSPORT & INDUSTRIESLTD. & ANR.

DATE OF JUDGMENT: 01/11/1966

BENCH: SHAH, J.C. BENCH: SHAH, J.C. RAMASWAMI, V. BHARGAVA, VISHISHTHA

CITATION:  1967 AIR  823            1967 SCR  (2)  38  CITATOR INFO :  D          1968 SC 816  (4)  F          1971 SC2471  (9)  F          1972 SC 236  (1,4,5,8,10)  RF         1977 SC 459  (1,5,6)

ACT: Indian  Income-tax  Act (11 of 1922),  s.  23A-Order  under- Whether  an "order of  assessment" -Section 23A,  whether  a charging section Limitation under s. 34(3) if applies.

HEADNOTE: The  appellant-Income-tax  Officer issued a  notice  to  the assessee company to show cause why an order under s. 23A  of the  Indian Income-tax Act, 1922 should not be made for  the assessment  year 1957-58.  The assessee applied to the  High Court  for  ’a writ to restrain the  appellant  from  giving effect to the notice.  The High Court held that an order un- der  s.  23A of the Act after its amendment by  the  Finance Act, 1955, was an "order of assessment" to which the  period of limitation prescribed by s. 34(3) applied and since  such an  order  could not be made after the  expiration  of  four years  from  the  end of the  assessment  year  1957-58  the proceedings  initiated against the; assessee in  respect  of the assessment year 1957-58 after March 31, 1962 was without jurisdiction. HELD Section 23A is not a charging section and an order made thereunder  is  not an "order of assessment"  to  which  the period of limitation prescribed by s. 34(3) applied. Section  23A before it was amended by Finance Act, 1955  was procedural.   Section  23A(1), after it was amended  by  the Finance  Act.  1955  provides within  itself  machinery  for imposition of liability to pay additional super tax, but  it has  not  on that account been made a charging  section.   A charge  to  tax arises under ss. 3, 4 and 5 of the  Act  for payment  of income-tax and super tax and not under  s.  23A. [47 E] Section 23A does not use the expression "assessment" in  the body  of cl. (1) : and to the title of the section after  it was  amended, viz.  "Power to assess companies to  super-tax on undistributed income in certain cases", it is  impossible to  give  any exalted meaning so as lo convert  what  is  an

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order directing payment of tax into an order of  ’assessment within the meaning of s. 34(3) of the Indian Income-tax Act, 1922.  Every order which contemplates computation of  income for  determination  of the amount of tax payable is  not  an order  of  assessment within the meaning of the Act  :  -nor does  prescribing of procedure for determining and  imposing tax  liability make it an order of assessment.  ’Me  Income- tax Act contemplates making of diverse orders by  Income-tax Officers  directing payments of sums of money by tax  payers which  are of the nature of orders for payment of  tax,  but still are not orders of assessment. [45 A-D]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1082  of 1965. 39 Appeal  from the judgment and order dated February 21,  1964 of  the Gujarat High Court in Special Civil Application  No. 802 of 1962. S.V. Gupte, Solicitor-General, R. D. Karkhanis and R.  N. Sachthey, for appellant. S.   T. Desai and K. R. Chaudhari, for the respondents. R.   Vankatraman  and R. Gopalakrishnan, for intervener  No. 1. S.   P. Mehta, D. Pal and D. N. Gupta, for intervener No. 2. D.   Pal and D. N. Gupta, for intervener No. 3. R.   Gopalakrishnan  and S. Swaminathan, for intervener  No. 4. The Judgment of the Court was delivered by Shah,   J.  M/s  Navanagar  Transport  &  Industries   Ltd.- hereinafter called ’the assessee’-is a company in which "the public are not substantially interested" within the  meaning of s. 23A of the Indian Income-tax Act, 1922.  At the annual general  meeting  held  on December  4,  1957,  the  Company declared  Rs. 8,767/as dividend payable to the  shareholders for the year ending March 31, 1957.  The Income-tax Officer, Special  Investigation  Circle,  Ahmedabad,  determined  the taxable income of the assessee for the assessment year 1957- 58  at Rs. 1,10,769/-.  Since the dividend declared  by  the Company was less than the statutory percentage of the  total income of the Company, as reduced by the taxes specified  in cls.  (a)  &  (b) of sub-s. (1) of s.  23A,  the  Income-tax Officer  issued a notice on November 15, 1961  calling  upon the assessee to show cause why an order under s. 23A  should not  be made for the assessment year 1957-58  and  submitted the record to the Inspecting Assistant Commissioner  seeking permission  under sub-s. (8).  The assesses then applied  to the High Court of Gujarat under Art. 226 of the Constitution for  a writ of mandamus restraining the  Income-tax  Officer from  giving effect to the notice under s. 23A  against  the assessee. The  High  Court  held that an order under  s.  23A  of  the Income-tax  Act,  1922, after its amendment by  the  Finance Act,  1955, is an "order of assessment" to which the  period of limitation prescribed by s. 34(3) applies and since  such an  order cannot be made after the expiration of four  years from the end of the assessment year 1957-58 the  proceedings initiated against the assessee in respect of the  assessment year 1957-58 after March 31, 1962 was without  jurisdiction. The  Income-tax  Officer  has appealed to  this  Court  with certificates granted by the High Court. Section 23A has undergone changes from time to time.  Before it was amended by the Finance Act, 1955, s. 23A enacted that

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40 where   the  Income-tax  Officer  is  satisfied,  that   the dividends distributed by the Company are less than sixty per cent  of the assessable income of the Company as reduced  by the income-tax and supertax payable by the Company, he shall make  an order (except in certain  circumstances  specified) that  the undistributed portion of the assessable income  of the  Company computed for income-tax purposes as reduced  by the income-tax and super-tax in respect thereof be deemed to have  been distributed as dividends among  the  shareholders and  thereupon the proportionate share of  each  shareholder shall  be included in the total income of  each  shareholder for  the purpose of assessing his total income.   Before  an order under s. 23A, as it then stood, became effective,  two steps  had to be taken(i) an order had to be made  that  the undistributed  portion  of  the  assessable  income  of  the Company  shall  be  deemed  to  have  been  distributed   as dividends among the shareholders; and (ii) the deemed income of  each shareholder had to be included in the total  income of  such shareholder for the purpose of assessing his  total -income.  An order declaring that the undistributed  portion of  the income shall be deemed to have been distributed  was not an order of assessment: the order of assessment was made only  when the Income-tax Officer took action  against  each shareholder   for  bringing  the  deemed  income   of   each shareholder  to  tax  in  his  individual  assessment.   The Legislature  did  not provide any period of  limitation  for making an order declaring that the undistributed portion  of the  income shall be deemed to be distributed as  dividends. But since the order had to be followed up in the assessments of the -shareholders individually, the order would, if made, be  ineffective,  if  it  was not  made  within  the  period prescribed  by  s. 34(3); see  Commissioner  of  Income-tax, Bombay  City-I  v.  Robert  J.  Sas  .,and  Others.(1).  The procedure  for  bringing  to  tax  undistributed  income  of companies   which  distributed  less  than   the   statutory percentage  of  its total income was  clumsy  and  dilatory. Before  tax could be recovered, enquiry had to be made  into the  matters referred to in s. 23A (1) and also whether  the Company was one in ’which the ’Public were not substantially interested,  and after the order was made,  each  individual shareholder  had to be separately .,assessed. in respect  of the deemed income. The Legislature by the Finance Act, 1955, altered the scheme for  imposition  and  collection of  tax.   Section  23A  as amended by -the Finance Act, 1955, read as follows:               "(1) Subject to the provisions of sub-sections               (3)  and (4), where the Income-tax Officer  is               satisfied that in respect of any previous year               the profits and gains distributed as dividends               by  any  company  within  the  twelve   months               immediately  following  the  expiry  of   that               previous year (1) [1963]             : 209:48 I.T.R. 177. Supp. 2 S.C.R. 41               are  less  than sixty per cent  of  the  total               income of the company of that previous year as               reduced by-               (a)the  amount of income-tax and  super-tax               payable by the company in respect of its total               income, but excluding the amount of any super-               tax payable under this section;               (b)the  amount of any other tax  levied  under               any  law  for the time being in force  on  the

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             company  by  the  Government  or  by  a  local               authority  in  excess of the amount,  if  any,               which has been allowed in computing the total               income;and               (c)in  the case of a banking  company,  the               amount actually transferred to a reserve  fund               under section 17 of the Banking Companies Act,               1949 (X of 1949);               the  Income-tax  Officer shall, unless  he  is               satisfied   that,  having  regard  to   losses               incurred by the company in earlier years or to               the smallness of the profits made in the previous               year,  the payment of a dividend or  a  larger               dividend   than   that   declared   would   be               unreasonable,  make "an order in writing  that               the   company  shall,  apart  from   the   sum               determined  as payable by it on the  basis  of               the assessment under section 23, be liable  to               pay super-tax at the rate of four annas in the               rupee  on  the undistributed  balance  of  the               total income of the previous year, that is  to               say,  on  the  total  income  reduced  by  the               amounts,   if any, referred to in clause  (a),               clause  (b)  or clause (c) and  the  dividends               actually distributed, if any:  Provided that-                     (a)  in  the  case of  a  company  whose               business  consists.  wholly or mainly  in  the               dealing in or holding of investments; and  (b)  in the case of any other  company  where               the    reserves   (including    the    amounts               capitalised   from   the   earlier   reserves)               representing accumulations of past profits      whic h               have  not been the subject of an  order  under               this sub-section, exceed either the  aggregate               of               (i)   the  paid-up  capital  of  the   company               exclusive of the capital, if any, created  out               of  its profits and gains which have not  been               the  subject  of  an  order  under  this  sub-               section, and               (ii)any loan capital which is the property  of               the  shareholders, or the actual cost  of  the               fixed assets of the  company,   whichever   of               these is greater,  Sup. CI/67-4 42               this  section shall apply as if for the  words               sixty per cent of the total income’,  wherever               they occur, the words ’the whole of the  total               income’ had been substituted.               (2)   No order under sub-section (1) shall  be               made’-               (i)   in the case of a company referred to  in               clause (a) of the Proviso to that  subsection,               which has distributed not less than ninety per               cent  of  its total income as reduced  by  the               amounts,  if any, referred to in  clause  (a),               clause               (b)   or clause (c) of that sub-section, or               (ii)in the case of any other company which has               distributed not less than fifty-five per  cent               of  its  total  in,come  as  reduced  by   the               amounts, if any, aforesaid, or

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             (iii)in  any  case  where  according  to  the               return made by a company under section 22,  it               has  distributed not less than sixty per  cent               of its total income as reduced by the amounts,               if any, aforesaid, but in the assessment  made               by  the Income-tax Officer under section 23  a               higher  total  income is arrived at,  and  the               difference in the total income does not  arise               out  of  the  application of  the  proviso  to               section  13 "or sub-section (4) of section  23               or the omission by the company to disclose its               total  income  fully  and  truly,  unless  the               company,  on  receipt  of a  notice  from  the               Incometax  Officer  that he proposes  to  make               such  an  order, fails to  make  within  three               months of the receipt of such notice a further               distribution of its profits and gains so  that               the  total distribution made is not less  than               sixty  per  cent of the total  income  of  the               company  of  the  relevant  previous  year  as               reduced by the amounts, if any, aforesaid.               (3)Where on an application presented to him               in this behalf by a company within the  period               of  twelve months referred to  in  sub-section               (1)  or  within  the period  of  three  months               referred   to   in   sub-section   (2),    the               Commissioner  -of  Income-tax  is   satisfied,               having  regard to the current requirements  of               the   company’s   business   or   such   other               requirements as may be necessary or  advisable               for  the maintenance and development  of  that               business,  the  declaration or  payment  of  a               dividend   or  a  larger  dividend  than   the               proposed  to  be  declared or  paid  would  be               unreasonable, he may reduce the amount of  the               minimum distribution required of that  company               under sub-section (1) to such figure as he may               consider fit and further determine the  period               within which such distribution should be made.               The principal change made by the amendment was               that  in  the  conditions  prescribed  by  the               section, the Company and not the 43 shareholders  were  made  liable to pay tax,  and  for  that purpose the procedure was rationalised.  The original scheme which  contemplated two orders--One against the Company  and the  other against each individual shareholder was  replaced by the imposition of tax liability upon the Company, on  the income-tax  Officer being satisfied about the  existence  of preliminary   conditions   which  attracted   liability   to additional super-tax. By the Finance Act 26 of 1957 the section was further  modi- fied.  Sub-sections (1) & (2), insofar as they are material, were substituted by the following sub-sections:               "   (1)  Where  the  Income-tax   Officer   is               satisfied that in respect of any previous year               the profits and gains distributed as dividends               by  any  company  within  the  twelve   months               immediately  following  the  expiry  of   that               previous  year  are less  than  the  statutory               percentage of the total income of the  company               of that previous year as reduced by-               (a)the of income-tax and super-tax payable  by               the  company in respect of its  total  income,               but  excluding  the amount  of  any  super-tax

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             payable under this section;               (b)   the amount of any other tax levied under               any  law  for the time being in force  on  the               company  by  the  Government  or  by  a  local               authority  in  excess of the amount,  if  any,               which has been allowed in computing the  total               income; and               (c)   in  the case of a banking  company,  the               amount actually transferred to a reserve  fund               under section 17 of the Banking Companies Act,               1949- the  Income-tax Officer, shall, unless he is satisfied  that having  regard to losses incurred by the company in  earlier years or to the smallness of the profits made in the  previ- ous  year,  the payment of a dividend or a  larger  dividend than that declared would be unreasonable., make an order  in writing   that  the  company  shall,  apart  from  the   sum determined  as payable by it on the basis of the  assessment under section 23, be liable to pay super-tax at the rate  of fifty  per  cent  in the case of a  company  whose  business consists  wholly or mainly in the dealing in or  holding  of investments, and at the rate of thirty-seven per cent in the case  of any other company, on the undistributed balance  of the  total income of the previous year, that ’is to say,  on the total income reduced by the amounts, if any, referred to in  clause (a), clause (b) or clause (c) and  the  dividends actually distributed, if any. 44               (2)  No  order undersub-section (1)  shall  be               made,-               (i)   in the case of a company whose  business               consists wholly or mainly in the dealing in or               holding  of investments which has  distributed               not  less  than ninety per cent of  its  total               income  as  reduced by the  amounts,  if  any,               referred  to  in  clause (a),  clause  (b)  or               clause (c) of sub-section (1); or               (ii)in  the  case of any other  company  whose               distribution  falls  short  of  the  statutory               percentage  I by not more than five  per  cent               of,  its  total  income  as  reduced  by   the               amounts, if any, aforesaid; or               (iii)in  any  case  where  according  to  the               return made by a company under section 22,  it               has  distributed not less than  the  statutory               percentage of its total but in the  assessment               made by the Incometax Officer under section 23               a  higher total income does not arise  out  of               the  application of the proviso to section  13               or  sub-section  (4)  of  section  23  or  the               omission by the company to disclose its income               fully and truly;               unless  the  company, on receipt of  a  notice               from the Income-tax Officer, that he  proposes               -to  make such an order, fails to make  within               three  months of the receipt of such notice  a               further distribution of its profits and gains,               so  that  the total distribution made  is  not               less  than  the statutory  percentage  of  the               total income of the company as reduced by  the               amounts, if any, aforesaid;" Sub-sections  (3)  to  (7) of s. 23A as  introduced  by  the Finance  Act,  1955, were omitted.  By this  amendment,  the scheme  for  imposing liability for  payment  of  additional super-tax was not altered.

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It  was  urged  before  the High  Court,  and  the  argument appealed  to the High Court, that an order under s.  23A  as amended by the Finance Act, 1955, and as further modified by the  Finance Act, 1957, by the Income-tax Officer  directing payment  of additional supertax was an order  of  assessment which could only be made before the expiry of the period  of limitation  prescribed  by s. 34(3) of the  Income-tax  Act, 1922.   In  support  of  this view, it  was  said  that  the expression  "assessment" used in the Indian Income-tax  Act, 1922,  has  different meanings in the context  in  which  it occurs:  sometimes  it  is used as  meaning  computation  of income,  sometimes  as determination of the  amount  of  tax payable, and sometimes the procedure for imposing  liability upon the tax-payer.                              45 Reliance in this behalf was placed upon the judgment of  the Privy   Council  in  Commissioner  of   Income-tax,   Bombay Presidency  & Aden v. Khemchand Ramdas.(1) But s.  23A  does not use the expression "assessment" in the body of cl.  (1): and  to the title of the section after it was amended,  viz. "Power  to  assess companies to super-tax  on  undistributed income  in  certain  cases", it is impossible  to  give  any exalted meaning so as to convert what is an order  directing payment  of  tax  into an order  of  assessment  within  the meaning  of  s. 34(3) of the Indian  Income-tax  Act,  1922. Every  order  which contemplates computation of  income  for determination  of the amount of tax payable is not an  order of  assessment  within  the meaning of  the  Act:  nor  does prescribing  of procedure for determining and  imposing  tax liability  make it an order of assessment.   The  Income-tax Act  contemplates  making of diverse  orders  by  Income-tax Officers  directing payments of sums of money by  tax-payers which  are of the nature of orders for payment of  tax,  but which  are  still not orders of assessment.   For  instance, under s. 18A(1) the Income-tax Officer is entitled to direct advance payment of tax.  An order may also be made under  s. 35(9)  where  the Income-tax Officer is satisfied  that  the income-tax payable by a Company on its profits and gains out of  which the Company has declared a dividend, has not  been paid  within three years after the financial year  in  which the  dividend was declared, he may proceed to recompute  the amount by reducing it in, the same proportion as the  amount of  income-tax remaining unpaid by the Company bears to  the amount  of;  income-tax payable by it on  such  profits  and gains.  Similarly under sub-s. (10) of s. 35, before it :was deleted by the Finance Act, 1959, where a rebate of  income- tax  was allowed to a company on a part of its total  income and  subsequently the amount on which the rebate of  income- tax was allowed was availed of by the Company, for declaring dividends  in  any  year,  the  Incometax  Officer  had   to recompute the tax by reducing the rebate originally allowed. Again  by  s. 35(l1), as added by the Finance Act  of  1958, development rebate in respect of a ship, machinery or  plant under  s. 10(2)(vi-b) could be deemed to have  been  wrongly allowed  if  the  ship,  machinery  or  plant  was  sold  or otherwise transferred, or the amount credited to the reserve account  under that clause was diverted for another  purpose within ten years, and the Incometax Officer had to recompute the  income, and levy tax on the footing of such  recomputed income.   In  each of these cases there  is  computation  of income,  determination  of  tax  payable  and  procedure  is prescribed  for imposing liability upon the tax-payer.   But still these are not orders of assessment within the  meaning of s. 23.  The salient feature of these and other orders  is that  the  liability to pay tax arises not from  the  charge

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created  by  statute, but from the order of  the  Income-tax Officer. (1)  6 I.T.R. 414. 46 The  argument  that  S.  23A  is  a  self-contained  section imposing  liability  to pay additional  super-tax  does  not convert that section into one for assessment of tax.   There is  undoubtedly  a hearing before liability is  imposed  for payment  of  additional super-tax; there is  declaration  of liability  and  the liability is determined  in  the  manner prescribed  by  the section.  That there is, as  was  argued before this Court, "a considerable parallel between ss. 23 & 23A" will not justify the assumption that what is done by an order  under  s.  23A  as  amended  is  assessment  of   tax liability.    There  is  a  vital  difference  between   the assessment  of tax under s. 23 and imposition  of  liability under s. 23A.  Tax liability quantified by an order under s. 23 is a charge statutorily imposed by ss. 3 & 4 of the  Act. It  is true that the statutory liability is, till  the  last day  of the year of account, ambulatory, but the  charge  is still  a  statutory charge on income.  The function  of  the Income-tax  Officer is to compute the taxable income and  to crystallize the charge on the taxable income.  Under S.  23A there is no statutory charge in respect of additional super- tax and the liability is imposed by the order of the Income- tax  Officer.   Source of the liability  to  pay  additional super-tax  is  not in ss. 3 & 4 of the Act: it lies  in  and arises  out of the order of the Income-tax Officer.   Before imposing liability for additional super-tax, the  Income-tax Officer has to determine whether the Company is one to which the  provisions  of s. 23A apply; he has also  to  determine whether  the  Company has distributed within  twelve  months immediately  following the expiry of the previous  year  the statutory  percentage of the total income of the Company  as reduced  by the taxes and levies prescribed therein; he  has also  to  determine  whether,  having  regard  to  the  loss incurred  by  the  Company in the earlier years  or  to  the smallness  of  the profits made in the  previous  year,  the payment  of  a  dividend  or a  larger  dividend  than  that declared  would be unreasonable.  It is after  making  these enquiries  that  the Income-tax Officer may make  the  order directing  payment  of  additional super-tax  at  the  rates prescribed.   The process to be followed is not the  process of  assessment,  but of determining  whether  the  liability should be charged and imposed.  For that purpose the Company is  given  a  right to explain the reasons  for  failure  to distribute the statutory percentage of profits as dividends. In certain special circumstances contemplated by sub-s.  (2) of  S. 23A, the order imposing tax liability cannot be  made unless the Company after receiving a notice from the Income- tax Officer that he proposes to make such an order fails  to make  within three months of the order further  distribution of  its  income so that the total distribution made  is  not less  than the statutory percentage of the total  income  of the Company of the relevant previous year as reduced by  the amounts, if any, aforesaid.  Provision was also made in sub- s.  (3) inserted by the Finance Act of 1955 authorising  the Commissioner  of Income-tax to reduce the amount of  minimum distribution required of a Company, if having regard to  the current                              47 requirements  of  the  Company’s  business  or  such   other requirements  as  may  be necessary, or  advisable  for  the maintenance or development of the business, the  declaration or  payment  of a dividend or a larger  dividend  than  that

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proposed to be declared was unreasonable. It was urged that under the Indian Income-tax Act 43 of 1961 the Parliament has prescribed by s. 106 for making an  order under  s. 104 (of which the scheme is similar to the  scheme of  s. 23A as amended) a period of limitation.  Section  106 of  the Income-tax Act, 1961, provides that no  order  under s.104 shall be made after the expiry of four years from  the end  of  the assessment year relevant to the  previous  year referred  to  in sub-s. (1) of that section,  or  after  the expiry  of  one year from the end of the financial  year  in which  the  assessment or re-assessment of the  profits  and gains  of the previous year aforesaid is made, whichever  is later.  But the provisions of s. 23A have to be construed as they stood before the Act of 1961 was enacted, and the  mere fact that the Legislature has chosen to specify a period  of limitation  for making an order imposing liability under  s. 104  of the Act of 1961 upon a Company which has  failed  to distribute  the  statutory percentage of  its  distributable income  will not justify an inference that such a period  of limitation was implicit in the previous Act. Section 23A, before it was amended by the Finance Act, 1955, was  undoubtedly  procedural:  Commissioner  of  Income-tax, Bombay  City-I v. Afco (Private) Ltd.(1). Section  23A  (1), after  it  was amended by the Finance  Act,  1955,  provides within  itself machinery for imposition of liability to  pay additional  super-tax, but it has not on that  account  been made  a charging section.  A charge to tax arises under  ss. 3, 4 & 55 of the Act for payment of income-tax and super-tax and not under s. 23A. Some additional indication which supports the view which  we have  expressed  is furnished by ss. 30 & 31 of  the  Indian Income-tax,  Act.   Section  30 provides  for  appeals  from certain  specified orders of the Income-tax Officer  to  the Appellate  Assistant Commissioner.  Under s. 30 an  assessee denying  his  liability  to be assessed under  the  Act  may appeal against the order of assessment.  If the assessee  is a company it may also appeal against an order made under  s. 23A  (1) under s. 30.  If an order under s. 23A were  to  be regarded   as  an  order  of  assessment,  it  was   plainly unnecessary  to retain, after the amendment by  the  Finance Act, 1955, the right to appeal against the order made  under sub-s.  (1) of s. 23A by an independent clause.  It is  true that by s. 20(4) of the Finance Act, 1955, it was  expressly enacted that the provisions of s. 23A of the Income-tax  Act as in force immediately before April 1, 1955, shall continue to apply to a company in respect of which profits and  gains of the (1)  [1963] Supp.  1 S.C.R. 766: 48 I.T.R. 76. 48 previous  year relating to the assessment year prior to  the assessment  year  ending  March 31, 1956, and  also  to  its shareholders referred to in sub-s. (1) of s. 23A as then  in force  in respect of their appropriate previous  years,  and this necessitated that the right to appeal against the order under s. 23A before it was amended be preserved.  But  there is  nothing. in s. 30 which indicates that the reference  to the  right of appeal was restricted to orders under s.  23A, before  the Act was amended by the Finance, Act;  1955,  and that it did not refer to an order made under s. 23A(1) after that  clause was amended.  The specific clause  relating  to the right of appeal reserved against the order under  sub-s. (1)  of  s. 23A is general, and confers a  right  of  appeal against  the order passed under sub-s. (1) of s. 23A  before it  was amended by the Finance Act, 1955, and also under  s. 23A  after it was amended.  There is no such reservation  of

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the nature suggested by counsel for the assessee, and we see no reason to hold that the Legislature intended to make such a reservation and did not expressly so provide. Under  sub-s. (2) of s. 30 different periods  of  limitation for filing appeals against various orders under the  Income- tax Act are prescribed.  Against an order of assessment,  an appeal  lies  within  30 days from the date  of  receipt  of notice of demand objected to, and against an order under  s. 23A. an appeal lies within 30 days from the intimation of an order  under that section.  The Act does not call the  order under  s.  23A  (1) for payment of  additional  super-tax  a notice  of demand.  If the argument that an order  under  s. 23A,  after  it  wag amended, is  an  order  of  assessment, evidently  the  period of limitation covered  by  the  first clause,  namely, thirty days from the receipt of  notice  of demand will apply.  It could not have been intended that the right of appeal could be exercised either within thirty days from  the date on which an order under s. 23A was  intimated or within thirty days from the date of receipt of notice  of demand.   Similarly,  s. 31, which deals with the  right  of appeal  from  an  order  of  assessment  to  the   Appellate Assistant  Commissioner,  provides  by sub-s.  (3)  that  in disposing of an appeal the Appellate Assistant  Commissioner may,  in  the case of an order  of  assessment-(a)  confirm, reduce, enhance or annul the assessment or (b) set aside the assessment and direct the Income-tax Officer to make a fresh assessment after making such further inquiry as the  Income- tax  Officer  thinks fit, or the  Appellate  Assistant  Com- missioner may direct, etc. and in the case of an order under sub-s.  (1) of s. 23A under cl. (d) confirm, cancel or  vary such  order.  If an order under sub-s. (1) of s. 23A was  an order of assessment, even after the Act was amended, it  was unnecessary to retain cl. (d) in that form. The  right to prefer an appeal could obviously be  exercised both against an order under s. 23A before it was amended and after it was amended.  Since the Legislature has not  chosen to make 49 suitable amendments to restrict the right of appeal only  to those  cases where the right is exercised against  an  order declaring that the undistributed portion of the income shall be  deemed to be distributed, it May reasonably be  inferred that the right is exercisable in respect of the orders  made prior  to the amendment made by the Finance Act,  1955,  and also orders made thereafter. It was pointed out that under s. 45 of the Act reference  to sub-s.  (3)  of s. 23A could only be to the  section  as  it stood  before  the  amendment  by  the  Finance  Act,  1955. Insofar as it is material, s. 45 provides:               "Any  amount specified as payable in a  notice               of demand under sub-section (3) of section 23A               Shall  be paid within the time, at  the  place               and  to the period mentioned in the notice  or               order Under  sub-s.  (3) of s. 23A before it was  amended  by  the Finance Act of 1955, tax payable on the proportionate  share of any member of a company in the undistributed profits  was liable to be recovered from the Company, if it could not  be recovered  from the shareholder.  By the Finance Act,  1955, this clause was deleted and another clause which had nothing to  do with recovery of tax was substituted as  sub-s.  (3). By  the  Finance  Act, 1957, that new sub-s.  (3)  has  been deleted.   Section 45 deals with recovery of tax and in  the context in which it occurs, reference in s. 45 to sub-s’ (3) of s. 23A can only mean reference to that sub-section as  it

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stood prior to the Finance Act of 1955.  But that can not be a ground forinferring that by s.23A which is referred to  in ss.  30  & 31 only intended to refer to the  section  as  it stood before the Finance Act, 1955. The appeal is allowed and the petition filed by the assessee its dismissed with costs in this Court and the High Court. Y.P. Appeal allowed. 50