P.N. BHAGWATI, J.M. SHELAT

(1) A very interesting question of law arises on this petition. The question is whether an order under sec. 23A of the Income- tax Act 1922 as it stood after its amendment by the Finance Act 1955 can be made at any time or whether it is governed by the time-limit specified in sec. 34(3). The facts giving rise to this petition are few and may be briefly stated as follows. The first petitioner is a Public Limited Company carrying on business of transporting goods and has its registered office at Jamnagar. Though the first petitioner is a Public Limited Company it is not a Company in which the public are substantially interested within the meaning of sec. 23A. The second petitioner is the Managing Director of the first petitioner. The relevant accounting year of the first petitioner corresponding to the assessment year 1957-58 was the financial year ending 31st March 1957. The profit of the first petitioner for the assessment year 1957-58 according to its profit and loss account was Rs. 65 4731 The first petitioner returned a sum of Rs. 74 102 as its income for that assessment year. The Income-tax Officer added to the income returned four amounts: Rs. 12 500 on account of excessive expenditure in respect of stores and spare-parts and over- time wages which were disallowed and certain receipts which were treated as income (2) Rs. 8 746 on account of excessive Managing Agency Commission which was disallowed (3) Rs. 13 129 on account of excessive depreciation and (4) Rs. 10 921 on account of certain other expenses which were disallowed. The Income-tax Officer thus determined the assess- able income of the first petitioner at Rs. 1 10 789 The first petitioner appealed against this assessment but the appeal was unsuccessful. The general meeting of the Company for passing the accounts for the accounting year 1956-57 which was the previous year for the assessment year 1957 was held on 4th December 1957 and at this meeting a dividend of Rs. 8 767 was declared. Since this dividend of Rs. 8 767 was less than 60 per cent of the assessable income of the first petitioner after deducting therefrom the amount of income-tax and super-tax payable by the first petitioner the Income-tax Officer issued a notice dated 15th November 1961 to the first petitioner calling upon the first petitioner to show cause if any why an order under sec. 23A should not be made against the first petitioner for the assessment year 1957-58. The first petitioner by its letters dated 24th April 1962 8 May 1962 and 19th May 1962 pointed out to the Income-tax Officer the reasons why no order should be made under sec. 23A. The reasons were various but it is not necessary for the purpose of the present petition to set them out. It is sufficient to state that amongst various reasons the main reason then emphasized was that having regard to the smallness of the profit actually made it would have been unreasonable for the first petitioner to distribute a larger dividend. The matter then went to the Inspecting Assistant Commissioner for his approval under sub-sec. (8) of sec. 23A and at that stage the first petitioner was again heard as required by that sub-section. The first petitioner reiterated before the Inspecting Assistant Commissioner the same submissions which he had made in reply to the notice of the Income-tax Officer and added one further sub- mission namely that proceedings under sec. 23A wore barred by reason of the period of limitation prescribed in section 3(3) and that no order could therefore be made against the first petitioner under section 23A. These submissions were put on record by the first petitioner by its letter dated 9th July 1962 addressed to the Inspecting Assistant Commissioner. Before the Inspecting Assistant Commissioner could decide whether he should grant or refuse approval to the Income-tax Officer for making an order against the first petitioner under Section 23A the petitioners filed the present petition for a writ of prohibition restraining the Income-tax Officer from taking action against the first petitioner under sec. 23A for the assessment year 1957-58 and a writ of certiorari quashing and setting aside the notice under section 23A issued by the Income-tax Officer against the first petitioner. The petition was opposed by the Income-tax Officer who was the respondent to the petition and he submitted an affidavit in reply to the petition pointing out the reasons for which in his submission the petition should be dismissed.

(2) There were two grounds set out in the petition challenging the legality of the proceedings under section 23-A and both the grounds were pressed before us by Mr. Kaji on behalf of the petitioners The first ground was that by reason of the provisions of section 34(3) the proceeding under section 23-A were barred. That was the main ground debated before us and we shall discuss it in some detail a little later but a subsidiary ground-which was the second ground-was also advanced and that ground was that the first petitioner had no commercial profits in respect of which it could be asked to make a further distribution and that if such further distribution was ordered it would amount to distribution of capital which would be contrary to law. Now whatever be the merits of this ground we do not see why we should entertain it on this petition. The Inspecting Assistant Commissioner has not yet given his approval. It may be that he may accept the validity of the contention of the first petitioner and refuse to give his approval. even if the Inspecting Assistant Commissioner gives his approval the first petitioner would still have an opportunity to argue its case before the Income-tax Officer and to persuade him not to make an order under section 23-A on the ground that such order would not be justified by the facts of the case. If the first petitioner fails before the Income-tax Officer it can carry the matter in appeal before the Appellate Assistant Commissioner and ii necessary from the Appellate Assistant Commissioner to the Tribunal. The first petitioner may even approach this Court by way of Reference under section 66 if a question of law arises out of the order of the Tribunal. The first petitioner has therefore a specific and adequate alternative remedy available to it and it must pursue that remedy. Besides it is clear from the language of section 23-A that the question whether having regard to the smallness of the profit made the payment of a larger dividend than that declared would be unreasonable or not is a question which is entrusted by the Legislature to the determination of the revenue authorities and except on a Reference under section 66 which may or may not lie to this court according as a question of law arises or does not arise out of the order of the Tribunal this Court cannot interfere and arrive at its own opinion on this question and on the strength of such opinion prevent the Revenue authorities from exacting the question for the purpose of deciding whether an order under section 23-A should be made. We are therefore of the view that this ground affecting the merits of the case is not a ground which we should entertain on this petition.

(3) That lakes us to the first ground which was the ground really pressed by Mr. Kaji on behalf of the petitioners. Mr. Kaji contended that an order under section 23-A as it stood at the material time was an order of assessment and since section 34(3) provided that no order of assessment shall be made after the expiry of four years form the end of the assessment year no order under section 23A in respect of the assessment year 1957-58 could be trade after the expiry of four years from the end of the assessment year 1957-58 i. e. after 31 st March 1962 and the proceedings initiated by the Income-tax Officer for taking action against the first petitioner under section 23-A for that assessment year were therefore beyond time and consequently without jurisdiction. This ground raised the question which we have set out at the commencement of the judgment namely whether an order under section 23-A can be made at any time or whether it is governed by the period of limitation prescribed by section 34(3). Now in order to answer this question it is necessary first to consider the terms of section 34(3). The section reads as follows:-

"34 (3) No order of assessment or reassessment other than an order of assessment under sec. 23 to which clause (c) of sub-section (1) of sec. 28 applies or an order of assessment or reassessment in cases falling within clause (a) of sub-sec. (1) or sub-sec. (1A) of this section shall be made after the expiry of four years from the end of the year in which the income profits or gains were first assessable: Provided that where a notice under clause (b) of sub-section (1) has been issued within the time therein limited the assessment or reassessment to be made in pursuance of such notice may be made before the expiry of one year from the date of the service of the notice even if at the time of the assessment or reassessment the four years aforesaid have already elapsed: Provided further that nothing contained in this section limiting the time within which any action may be taken or any order assessment or reassessment may be made shall apply to a reassessment made under section 27 or to an assessment or reassessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under sec. 31 section 33 section 33A section 33B section 66 or sectio n 66A."

It is clear from the language that the section is general in its application and prescribes a period of limitation for every order of assessment or reassessment other than an order under section 23 to which clause (c) of sub-section (1) of section 28 applies or an order of assessment or reassessment in cases falling within clause(a) of sub-section (1) or sub-sec. (A) of section 34. The period of limitation is relaxed in the case specified in the first proviso while it is dispensed with in the cases specified in the second proviso. We are however not directly concerned with these two provisos and we need not therefore say anything more about them. Since section 34(3) applies generally to every order of assessment or reassessment barring the exceptions we have set out above the next question we must consider is what is an order of assessment within the meaning of the section.

(4) It is a matter of common knowledge that the word assessment has been used in the Income-tax Act in different senses at different places. As observed by the Judicial Committee of the Privy Council in Commissioner of Income-tax Bom. and Aden v. Khemchand Ramdas (1938) 6 I.T.R. 414 at 416 one of the peculiarities of most Income-tax Acts is that the word assessment is used as meaning sometimes the computation of income sometimes the determination of the amount of tax payable and sometimes the whole procedure laid down in the Act for imposing liability upon the taxpayer. The Indian Income-tax Act is no exception in this respect What we must therefore consider is what is the meaning which the word assessment has in section 34(3). The subject matter with which sec. 34 deals and the reference in it to sections 23 and 34 makes it clear that the word assessment Which is referred to in the section comprises the entire procedure for imposing liability on the assessee and the order of assessment is the order computing the income and determining the tax liability which is the culmination of the entire process of assessment. if an order under section 23A is an order of assessment in the sense that it results in the imposition of tax liability on the assessee it would be governed by the period of limitation set out in sec. 34(3). The question which would therefore required to be considered is: what is the nature of an order made under sec. 232. Does it involve the process of assessment resulting in imposition of tax liability on the assessee

(5.) Now when we examine this question it is necessary to bear in mind that sec. 23A has not always been the same as we find it at the material time. Section 23A as it stood prior to its amendment by the Finance Act 1955 was radically different from the section as it stood after the amendment and the section with which we are concerned in this petition is the section as it stood after the amendment for the question that is required to be considered has arisen in regard to the assessment year 1957 It is however necessary to consider the position as it obtained when Section 23A was unamended because there are two decisions of the Supreme Court which have taken the view that an order under sec. 23A as unamended could be made at any time and there was no period of limitation which prevented the Income-tax Officer from resorting to that section at any time he liked. Mr. Kaji contended that that was un- doubtedly the position on the unamended section but after the amendment the position is entirely different and those decisions of the Supreme Court cannot be regarded as having any application in relation to the amended section.. Section 23A prior to the amendment provided as follows: (we are setting out here only the material part of the section):-

"23A, Power to assess individual members of certain companies:- (1) Where the Income-tax Officer is satisfied that in respect of any previous year the profits and gams distributed as dividends by any company up to the end of the sixth month alter its accounts for that previous year are laid before the company on general meeting are less than Sixty per cent of the assessable income of the company of that previous year as reduced by the amount of income-tax and super-tax payable by the company in respect thereof he shall unless he is satisfied that having regard to losses incurred by the company in earlier years or to the smallness of the profit made the payment of a dividend or a larger dividend than that declared would be unreasonable make with the previous approval of the Inspecting Assistant Commissioner an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income-tax purposes and reduced by the amount of income-tax and super- tax payable by the Company in respect thereof shall be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting aforesaid and thereupon the proportionate share thereof of each share- holder shall be included in the total income of such shareholder for the purpose of assessing his total income: ... ... ... ... This unamended section came up for consideration before the Supreme Court In Sardar Baldev Singh v. Commissioner of Income-tax (1960) 40 I. T. R. 605. The Supreme Court pointed out the meaning and effect of the unamended section in the following words: " ..........Section 23A requires that on an order being made under it the undis tributed portion of the assessable income of the company for a year as computed for income-tax purposes and after the deductions provided in the section is to be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting being the meeting at which the accounts for the year concerned were passed and thereupon the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income. The section creates a fictional income arising as on a specified date in the past and it does so for the purpose of that income being included In the income of the shareholders for assessment of their income-tax The income must therefore be deemed to have been in existence on the date mentioned for the purpose of assessment to tax We are unable to agree that an assessment could be made under sec 23A. That section does not provide for any assessment being made. It only talks of the fictional income being included in the total income of the shareholders for the purpose of assessing his total income. The assessment therefore has to be made under the other provisions of the Act including sec. 34. authorizing assess- rents. In our view the assessment in this case had been properly made by. the Income-tax Officer Delhi under the provisions of sec. 34".

The Supreme Court took the view that section 23A was merely a computation section and not an assessment section. It enacted merely a deeming provision creating fictional income in the hands of the share- holders and the fiction stopped there. The section did not provide for the making of an assessment on the shareholders in respect of such fictional income. The assessment of such fictional income in the hands of the shareholders could be made only by resort to the other provisions of the Act authorizing assessment namely sections 23 and 34. If at the date when an order was made under section 23A. the assessment of the shareholder was not completed the fictional income created by reason of the order under sec. 234 would be assessed in the hands of the share- bolder along with his other income under section 23 If however at the date of the order under sec. 23A the assessment of the shareholder was completed the Revenue would have to take resort to section 34. This was the view taken by the Supreme Court and in the later decision in Commissioner of Income-Tax v. Navinchandra Mafatlal (1961) 42 I.T.R. 53 this view was reaffirmed by the Supreme Court. The same view was also reiterated by the Supreme Court in Commissioner of Income-tax v. Robert J. Sas (1963) 48 I. T. R. 177. Since section 23A as it stood unamended was merely a machinery or computation section and was not an assessment section providing for making of an assessment obviously an order under sec 23A could not be said to be an order of assessment. Such an order did not either compute the total income of the assessee or deter- mine the tax liability of the assessee. It had to be followed by an order under section 23 or section 34 read with section 23 and it was the latter order which was the order of assessment. It was for this reason that the Supreme Court said in Robert J. Sass case that an order under section 23A could be made at any time. Since the order under section 23A was not an order of assessment section 34(3) could clearly not apply to it. Apart from sec. 34(3) there was no other provision in the Act which prescribed any period of limitation for an order under section 23A. An order under section 23A could therefore be made at any time. But for the purpose of assessing the fictional income created by the order under section 23A the Revenue had to proceed under section 2 or section 34 and if the assessment under either of the two sections was barred such fictional income could not be brought to tax. This was the position as sit obtained in regard to the unamended section 23A

(6) The question is: has the amendment of section 234 made any difference to this position Mr. Kaji contended that whereas prior to the amendment section 23A was merely a computation section it has now become an assessment section and an order under sec. 23A is an order of assessment of a Company to super-tax in certain cases specified in the section. The contention of the Department in relation to the un- amended sec. 23A namely that sec 23A was a self-contained section providing for making of an assessment on the shareholders which was negatived by the Supreme Court now holds good in regard to the amended sec. 23A and the amended sec. 23A Is argued Mr. Kaji a self-contained section imposing liability- to super-tax and also providing for its computation and determination and that when an order under the amended section 23A is made it is an order determining the amount of super-tax payable by the Company under the section. This contention was sought to be met by the learned Advocate General appearing on behalf of the Revenue by contending that what was imposed by the amended sec. 23A was not a tax but a penalty and that an Order under the amended section 23A determining the penalty payable by the Company could not be said to be an order of assessment which would attract the applicability of section 34(3). The main controversy between the parties therefore centred round the question as to whether the imposition or levy authorized to be made under sec. 23A as amended was a tax or a penalty.

(7) While considering this question one circumstance stands out and it is that the Legislature has used the word super-tax to describe the imposition or levy authorized under sec. 23A. It is no doubt true that we must have regard to the substance of the matter in ascertaining the character and quality of the imposition or levy and we should not allow ourselves to be swayed unduly by any particular expression which may have been used by the Legislature. But in the context of the Income- tax Act it is certainly not without significance that the Legislature has used the word super-tax to describe the imposition or levy under sec. 23A. The Legislature was aware that in other parts of the statute it has used the word penalty. Reference may be made in this connection to sections 28 and 46. If the Legislature wanted to impose or levy a penalty by sec. 23A. it is reasonable to assume that the Legislature would have used the word penalty which it had used in secs. 28 and 46 and not departed from what may be described as its own dictionary and used the word super-tax which plainly connotes nothing but tax The explanation offered by the learned Advocate General for the Legislature not using the word penalty but using the word super-tax in sec. 23A was a two-fold one. The first explanation was that under sec. 23A in certain cases specified in sub-sec. (2) a locus penitentiae as it were was given to the Company and the Company could avoid payment of super-tax by making on receipt of a notice from the Income-tax Officer a further distribution of its profits and gains so that the total distribution made would not be less than the statutory percentage of the total income of the Company as reduced by the amounts specified in sub-sec. (1) of sec. 23A and since such locus penitentiae was given to the Company the Legislature might have thought it appropriate not to use the word penalty but to use the word super-tax. This explanation does not in our opinion give any convincing reason why the Legislature should not have used the word penalty and should have instead used the word super-tax. Even when a penalty is sought to be imposed a locus penitentiae may be given to the defaulting party. There is nothing inconsistent between the imposition of a penalty and giving of an opportunity to the defaulting party to make good the default if it wants to escape the penalty. Moreover according to the submission of the learned Advocate General the imposition or levy under section 23A though described as super-tax was in fact a penalty and if notwithstanding the imposition of penalty a locus penitentiae was given to the Company there is no reason why the word penalty should not have been used by the Legislature. The second explanation suggested by the learned Advocate General was that perhaps the Legislature used the word super-tax and not penalty because under Article 270 of the Constitution taxes on income are distributable between the Union and the States and taxes on income do not include Corporation Tax so that Corporation Tax can be retained by the Union for its own purposes and since super-tax would be Corporation Tax within the meaning of that expression as used in Article 366(6) the Legislature intending that the imposition or levy collected under sec. 23A(1) should be retained by the Union for its own purposes and should not be distributable between the Union and the States described it as super-tax. But this argument postulates that the imposition or levy under sec. 23A was Corporation Tax and if that be so it would be tax on income as appears clearly from the definition of Corporation Tax contained in Article 366 This argument therefore far from supporting the submission of the learned Advocate General would if correct go to show that the imposition or levy under sec. 23A was tax on income and not penalty. Moreover the legislative intent that the Union should be able to retain the imposition or levy collected under section 23A for its own purposes could have been achieved equally effectively by describing such imposition or levy as penalty and for the purpose of bringing about that result it was not at all necessary for the Legislature to use the word super-tax.

(8) Apart from the use of the word super-tax let us consider the true nature and effect of the order under section 23-A and the object and purpose of the legislature in enacting it. Before however we do so we may refer to the marginal note of section 23-A on which some reliance was placed by Mr. Kaji on behalf of the petitioners. Now it is well-settled that the marginal-note cannot be regarded as an aid to construction of the section and it cannot affect the plain and natural meaning of the language used in the section but it can certainly be referred to as furnishing a clue to the meaning and purpose of the section. The marginal-note to the amended section 23-A is Power to assess companies to super-tax on undistributed income in certain cases . The marginal- note clearly indicates the drift of the section namely that the section is intended for assessment of Companies to super-tax on undistributed income in certain cases and when we turn to the body of the section we find that such is the meaning and effect of the section and the section does authorize assessment of Companies to super-tax on undistributed income in the cases specified in the section.

(9) Another circumstance to which we may also refer is the provision in Clause (a) of sub-section (1) of section 23-A excluding the amount of super-tax payable under the section in computing the amount of income- tax and super-tax payable by the Company by which the total income of the Company is required to be reduced for the purpose of calculation of the statutory percentage. This provision would indicate that but for it super-tax payable under the section would have been included in the expression super-tax payable by the Company and it was therefore necessary to exclude it. But if this be so it is evident that super-tax payable under the section cannot be a penalty but must be a tax like other super-tax payable by the Company. This is of course a very slight circumstance and we do not place much reliance on it but it is certainly a circumstance which cannot be ignored.

(10) . Apart from these circumstances there is inherent evidence in sec. 23A itself to show that the imposition or levy made by the section is a tax and not a penalty. The imposition or levy is not unrelated to the income of the Company. It is of course true that the imposition or levy is not on the total income of the Company but it is on the undistributed income of the Company. The quantum of super-tax is dependent on the extent of the undistributed income of the Company. The rate of 50 per cent is prescribed for a certain class of Companies while the rate of 37 per cent is prescribed for other Companies and that rate is to be applied to the undistributed income of the Company on which super-tax is imposed or levied. It is this characteristic which clearly shows that what is imposed by section 23A is not penalty but a tax. We may also mention here the fact that what sec. 23A provides is that the Company shall be liable to pay super-tax and not that the Company shall be liable to pay any amount by way of super-tax or as super-tax. If the latter expression had been used there might have been some scope for the argument that what is imposed is a penalty and not a tax though even this circumstance would not have been determinative of the question. This distinction appears in secs. 104 and 226 of the Australian Income Tax Act and it has been relied upon in some Australian cases as affording an indication that what is imposed by sec. 104 which corresponds to our sec. 23A is a tax and not a penalty. Moreover the words apart from the sum determined as payable by it on the basis of the assessment under sec. 23 in sec. 23A(1) also emphasize that the imposition or levy authorized under the section is a tax like the tax assessed under sec. 23 and is of the same nature as such tax and is not a penalty.

(11) The conclusion that what is imposed by sec. 23A is a tax and not a penalty is considerably strengthened if we have regard to the object and purpose of the section. Section 23A was brought on the statute book in 1939 to prevent avoidance of liability to pay super-tax by shareholders of certain classes of companies taking advantage of the disparity between the rates of super-tax payable by individuals and by Companies. The rates of super-tax applicable to companies being lower than the highest rates applicable to individual assessees the Legislature enacted sec. 23A to prevent individual assessees from avoiding the higher incidence of super- tax by the expedient of transferring to companies the sources of their income and thereby securing instead of dividends the benefit of the profits of the Company. The Legislature by the unamended section 23A invested the Income-tax Officer with power in certain contingencies prescribed in the section to order that the undistributed balance of the assessable income reduced by the amount of taxes shall be deemed to have been distributed at the date of the general meeting. The Legislature enabled the Income tax Officer to create the fiction of distribution so that super-tax which the shareholders would have been liable to pay had the income of the Company been distributed can in any event be recovered by the Revenue from the shareholders. The object was to strike at avoidance of super- tax by collecting from the shareholders super-tax which they might otherwise succeed in avoiding. The provision in the unamended sec. 23A was thus a fiscal provision and not a penal provision. It sought to get at super-tax which might otherwise have been avoided. The Legislature however it appears felt that rather than create a fictional distribution and then tax the shareholders on such fictional distribution it would be better to collect additional super-tax from the Company itself and there- fore the Legislature amended sec 23A by the Finance Act 1955 The object of the section remained the same namely to get at super-tax which might be avoided. Formerly the Revenue was entitled to recover it from the shareholders now the Revenue can recover it from the Company. The provision still remained a fiscal provision. There is nothing in sec. 23A to indicate that the object of the Legislature when it amended the section was to convert what was a fiscal provision into a punitive provision. Just as the object under the unamended section 23A was to impose a tax on the undistributed income in the hands of the shareholders so also the object under the amended section is to impose a tax on the undistributed income but in the hands of the Company. Since the Company would have already paid income-tax and super-tax on its total income the amended sec. 23A provides that the Company shall be liable to pay additional super-tax on the undistributed income. What the Legislature still seeks to do by the amended sec 23 is to get revenue and the character of the imposition remains as before fiscal and is not converted from fiscal to punitive.

(12) The learned Advocate General strongly relied on that part of section 23-A which says that the Income-tax Officer shall make an order under the section unless he is satisfied that having regard to the losses incurred by the Company in earlier years or to the smallness of the profit made the payment of a dividend or a larger dividend than that declared would be unreasonable. His contention was that the very fact that the determination of the question whether this condition was fulfilled or not was left to the satisfaction of the Income-tax Officer showed that the imposition authorized under the section could not be a tax. Now it is true that the question whether this condition is fulfilled or not in a particular case is a question on which the Income-tax Officer has to be satisfied but that satisfaction is not an arbitrary or subjective satisfaction in the sense that he can decide as he likes. His satisfaction has to be based on reason and is subject to appeal to the Appellate Assistant Commissioner and from the Appellate Assistant Commissioner to the Tribunal. All that has been done by the section is to constitute him the Tribunal for deciding whether this condition is fulfilled. This provision cannot be regarded as so contradictory of the process of assessment of tax that from it we can infer that what is imposed by section 23-A is not tax but penalty. As a matter of fact when we turn to sections 10(4A) and 13 we find that even in what is admittedly a process of assessment questions are left to the opinion of the Income-tax Officer the correctness of which opinion can be tested in appeal before the Appellate Assistant Commissioner and the Tribunal.

(13) The learned Advocate General also relied on the fact that by sub-section (8) of section 23-A the previous approval of the Inspecting Assistant Commissioner is made a condition precedent to the making of an order under the section and the Inspecting Assistant Commissioner is required before giving his approval to give the Company an opportunity of being heard. This provision is however in our opinion quite a neutral provision. Since section 23-A provides for imposition of additional super- tax on a Company which has already been assessed to income-tax and super-tax the Legislature might have thought it fit that some check should be put upon the Income-tax Officer and that he should not be permitted to make an order unless he has obtained the previous approval of the Inspecting Assistant Commissioner and such previous approval should not be given unless the Company has had an opportunity of convincing the Inspecting Assistant Commissioner why an order under the section should not be made assessing it to additional super-tax. An order under section 23-A being an order for payment of additional super-tax the Legislature obviously provided this safeguard to the Company. Such a safeguard was also provided under the unamended section 23-A which admittedly contained a fiscal provision. As a matter of fact we find that even when an assessment is sought to be reopened under Clause (a) of sub-section (1) of section 34 there is a provision that the Income-tax Officer shall not reopen the assessment unless he has recorded his reasons for doing so and the Central Board of Revenue or the Commissioner as the case may be is satisfied on such reasons that it is a fit case for the issue of notice reopening the assessment.

(14) The learned Advocate General then relied on sec. 55 which deals with the charge of super-tax and contended that super-tax would mean only such additional duty of income-tax as is specified in sec. 55 and what is described as super-tax in sec. 23-A is therefore not really super-tax as set out in sec. 55. But we do not see how this argument can help the Revenue to establish its contention that what is imposed by sec. 23-A is not tax but penalty. Super-tax is nothing but an additional duty of income-tax and that is what is stated also by sec. 55. Sec. 55 imposes a charge of super-tax and that charge is on the total income of the Company at the rate or rates laid down by the Finance Act. But that does not mean that there cannot be another charge of super-tax in addition to the charge imposed by sec. 55. While sec. 55 imposes a general charge of super-tax on total income at the rate or rates laid down by the Finance Act sec. 23-A imposes an additional charge of super-tax on undistributed income in the case of certain class of Companies provided certain conditions are fulfilled. There is therefore nothing in sec. 55 which in any way militates against the view that what is imposed by sec. 23-A is a tax and not a penalty.

(15) Lastly the learned Advocate General contended that the view which we are inclined to take would result in this anomaly that in the case of a Company whose income might be reassessed under sec. 34(1)(a) or sec. 34(1)(b) after the expiration of a period of four years from the end of the assessment year it would not be possible to make an order under sec. 23-A even though such re-assessment may reveal that the provisions of sec. 23-A were applicable to the Company. Mr. Kaji tried to point out that such would not be the position because in that event the Revenue would be entitled to pass an order under sec. 34 read with sec. 23-A. It is not necessary to enter into a consideration of these rival views and to decide which of them is correct. It may be that an order under sec. 23-A can be passed by the Revenue by taking resort to sec. 34 or it may be that no such order can be passed by the Revenue. But that is not a consideration which should deter us in placing upon the language of the section the construction which it must necessarily bear. If any hardship is caused to the Revenue the appeal must be to the Legislature and not to the Court.

(16) If what is imposed by sec. 23-A is a tax and not a penalty it is clear that an order under the section is an order of assessment. The Income-tax Officer acting under sec. 23-A has first to ascertain whether the conditions of the section are fulfilled and whether the section is applicable to Company. If it is then he will have to arrive at the undistributed income of the Company liable to additional super-tax. He will then have to determine the rate applicable namely whether it is 502 or 37% according to the nature of the business carried on by the Company and he will then determine the additional super-tax payable by the Company. This process is certainly a process of assessment of the Company to additional super-tax. Sec. 23-A is a self-contained section imposing additional super-tax and providing for its computation and determination and an order under the section is certainly an order of assessment. Of course the result would be that there would be two orders of assessment in respect of the same Company one a regular assessment under sec. 23 and the other an assessment under sec. 23-A. But we do not see why there cannot be two orders of assessment in the case of an assessee. If there are two charges of tax made by the Act not only there may be but there would ordinarily be two separate orders of assessment one in respect of each charge. There is nothing in the scheme of the Act which in any way offends against the making of two different orders of assessment against an assessee.

(17) This in our opinion is the only view of sec. 23-A which we can take on a construction of the language of the section. This view is however fortified by a further consideration as regards the intention of the Legislature. Prior to the amendment by the Finance Act 1455 even though an order under sec. 23-A could be made at any time the fictional income created by the order could not be assessed in the hands of the shareholders after the expiration of a period of four years from the end of the assessment year by reason of the provisions of sec. 34. There was thus in effect an indirect period of limitation for the effective application of sec. 23-A. The Department could not indefinitely keep its sword hanging over the beads of the shareholders. Now that the Legislature has amended the section and shifted the liability on to the Company could the Legislature have intended that the sword of the Department which could not effectively strike after the expiration of a period of four years from the end of the assessment year should now be able to strike after an indefinite length of time When there is a period of limitation provided for taking action under sec. 34(1)(a) in cases where the escaped income does not exceed Rs. 1 0 0 could the Legislature have intended that there should be no period of limitation at all for an order under sec. 23-A which is an order of assessment to additional super-tax and that the threat of such an order should continue to be present up to the end of all time. Is it not reasonable to assume that as sec. 34(3) provided a general period of limitation for all assessment orders and sec. 23-A was converted from a machinery section into an assessment section the Legislature did not think it necessary to provide a separate period of limitation in respect of an order under sec. 23-A for the general period of limitation specified in sec. 34(3) applied to such an o rder

(18) In this view of the matter we are of the opinion that an order under section 23-A after its amendment by the Finance Act 1955 is an order of assessment to which the period of limitation prescribed in section 34(3) applies and such an order cannot therefore be made after the expiration of a period of four years from the end of the assessment year. Since in the present case the period of four years from the end of the assessment year 1957-58 expired on 31st March 1962 no order under section 23-A could be made against the first petitioner in respect of the assessment year 1957-58 after 31st March 1962 and the present proceedings initiated by the Income-tax Officer against the first petitioner are therefore without jurisdiction. There will therefore be a writ of mandamus quashing and setting aside the notice issued by the respondent against the first petitioner and a writ of prohibition restraining the respondent from taking action against the first petitioner under section 23-A for the assessment year 1957-58 on the basis of the notice dated 15th November 1961 issued by the respondent. The respondent will pay the costs of the petition to the first petit ioner.