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D. C. Chaudhuri and Another Vs. Agricultural Income-tax Officer, Shillong, and Another. - Court Judgment

LegalCrystal Citation
Subject;Direct Taxation
CourtGuwahati High Court
Decided On
Case NumberCivil Rules Nos. 233-236 and 238-242 of 1961
AppellantD. C. Chaudhuri and Another
RespondentAgricultural Income-tax Officer, Shillong, and Another.
Prior history
MEHROTRA C.J. - These Civil Rules arise out of petitions filed under article 226 of the Constitution of India, and as a common question of law is raised, these are disposed of by one common judgment.
Civil Rules Nos. 233, 234, 235 and 236 of 1961 arise out of petitions filed by Sri D. C. Chaudhuri and Sri S. C. Dutt against the Agricultural Income-tax Officer, Assam, and the State of Assam. The case of the petitioners is that they owned the Martycherra Tea Estate in the district of Cachar, whi
Excerpt:
- - 1, alleging that the petitioner had failed to submit the returns for the years 1950-51 to 1958-59, and asked the petitioner to show cause in writing why the assessments for these years should not be completed summarily. 242 of 1961 relates to the assessment made on the 19th june, 1961, for the assessment year 1955-56. the main point urged by the petitioners in all these petitions is that unless the individual notice under section 19 (2) of the act is served on the assessee, no best judgment assessment can be made under section 20 (4) except by proceedings under section 30 of the act. 20. (1) if the agricultural income-tax officer is satisfied that a return made under section 19 is correct and complete, he shall assess the total agricultural income of the assessee, and shall..... mehrotra c.j. - these civil rules arise out of petitions filed under article 226 of the constitution of india, and as a common question of law is raised, these are disposed of by one common judgment.civil rules nos. 233, 234, 235 and 236 of 1961 arise out of petitions filed by sri d. c. chaudhuri and sri s. c. dutt against the agricultural income-tax officer, assam, and the state of assam. the case of the petitioners is that they owned the martycherra tea estate in the district of cachar, which they purchased on the 1st january, 1948. on the 9th july, 1953, they sold the said garden, and during the period 1st january, 1948, and 9th july, 1953, the petitioners carried on the business of cultivation, manufacture and sale of black tea at the said martycherra tea estate under a partnership......
Judgment:

MEHROTRA C.J. - These Civil Rules arise out of petitions filed under article 226 of the Constitution of India, and as a common question of law is raised, these are disposed of by one common judgment.

Civil Rules Nos. 233, 234, 235 and 236 of 1961 arise out of petitions filed by Sri D. C. Chaudhuri and Sri S. C. Dutt against the Agricultural Income-tax Officer, Assam, and the State of Assam. The case of the petitioners is that they owned the Martycherra Tea Estate in the district of Cachar, which they purchased on the 1st January, 1948. On the 9th July, 1953, they sold the said garden, and during the period 1st January, 1948, and 9th July, 1953, the petitioners carried on the business of cultivation, manufacture and sale of black tea at the said Martycherra Tea Estate under a partnership. The two petitioners were the sole partners of the firm. The partnership firm was served with a notice under the Indian Income-tax Act by the Income-tax Officer and was assessed to income-tax for the assessment year 1951-52. Appeals were filed against the assessment order before the Appellate Tribunal. In appeal, the petitioners got substantial reliefs. After the sale of the Martycherra Tea Estate by the petitioners on the 9th July, 1953, they ceased to have any agricultural income. On the 25th January, 1961, directing the two petitioners to furnish the returns of their agricultural incomes for the assessment year 1949-50 to 1953-54. On the 27th January, 1961, the petitioners received a notice of demand under section 23 of the Assam Agricultural Income-tax Act, 1939, hereinafter called the Act, directing them to pay Rs. 8,128 as agricultural income-tax within the 21st July, 1961, for the assessment year 1950-51. The assessment was made under section 20 (4) of the Act. This order of assessment dated the 8th of June, 1961, under section 20 (4) of the Act in respect of the assessment year 1950-51 has been impugned by means of a petition under article 226 of the Constitution of India, giving rise to Civil Rule No. 233 of 1961. The petition under article 226 of the Constitution by which the assessment order for the year 1951-52 under section 20 (4) of the Act has been challenged, is the subject-matter of Civil Rule No. 234 of 1961. The order of assessment was passed in this case on the 8th June, 1961. Civil Rule No. 235 of 1961 relates to the assessment for the year 1952-53 made under section 20 (4) of the Act on the 8th June, 1961. Civil Rule No. 236 of 1961 relates to the assessment year 1953-54 made under section 20 (4) on the 8th June, 1961.

The petition under article 226 of the constitution which has given rise to Civil Rule No. 238 of 1961 has been filed by the Eastern Tea Estate Private Limited. The case of the petitioner is that it is a private limited company incorporated in the State of Assam on the 4th July, 1950, and has its registered office at Silchar. Two tea estates are owned by this private limited company known as Chandana Tea Estate and Martycherra Tea Estate. The Chandana Tea Estate was purchased in 1950 from the Indian Tea and Mill Industries Limited. The transfer took place on the 15th May, 1950, to the promoters of the petitioner company, though the actual conveyance was executed and registered on 27th September, 1950. The Martycherra Tea Estate was purchased from Messrs. D. C. Chaudhuri and S. C. Dutt on the 9th July, 1953. This petitioner also received a notice under the Indian Income-tax Act for the assessment year 1951-52. As no notice under section 19 (2) of the Assam Agricultural Income-tax Act, 1939, was received by the petitioner for the assessment years 1951-52 to 1955-56, both inclusive, no returns were filed. On the 19th October, 1959, the petitioner received a letter from respondent No. 1, the Agricultural Income-tax Officer, Shillong, asking the petitioner to submit returns and certified central assessment copies in respect of Martycherra Tea Estate for the assessment years 1950-51 and onward. The petitioner company wrote on the 18th November, 1959, to the Agricultural Income-tax Officer that no notice was served on the petitioner under the Act previously, and that the letter dated the 19th October, 1959, was the first communication on the subject. In this letter, it was pointed out that the petitioner owned the Chandana Tea Estate, beside the Martycherra Tea Estate, and the petitioner proposed to submit returns for the years in respect of which it was liable under the Act. On the 19th October, 1959, the petitioner received a notice under section 19 (2) of the Act in the prescribed form, which directed the petitioner to submit the returns of agricultural income in respect of the previous year for Martycherra Tea Estate. In response to this notice, the petitioner submitted the return for the year ending 31st December, 1958, in respect of the agricultural income from both these two tea estates. After the said return was submitted on the 18th December, 1959, the petitioner received another letter dated the 20th August, 1959, directing the petitioner to submit returns of agricultural income and copies of central assessments in respect of Chandana Tea Estate for the years 1951-52 and onward on the allegation that the petitioner had purchased the said estate from one late Bipin Chandra Bhattacharjya in 1949. On the same day, a notice under section 19 (2) of the Act was received in respect of the Chandana Tea Estate and another notice under section 30 of the Act in the prescribed form, alleging that agricultural income from all sources chargeable to agricultural income-tax for the assessment years, ending 31st March, 1958 and 1959, had wholly escaped assessment and the petitioner was directed to deliver within thirty days of the receipt of the notice, a return in the prescribed form. On the 23rd December, 1959, the petitioner sent a letter indicating compliance of the notice under section 30, and respondent No. 1 was informed that the return for the assessment year 1956-60 had already been sent on the 18th November, 1959. On the 7th January, 1960, the petitioner received another letter dated January 2, 1960, asking the petitioner to submit return and central assessment copies for the assessment years 1950-51 to 1958-59. The returns for the assessment years 1957-58 and 1958-59 were sent on the 13th January, 1960. It was pointed out in the covering letter that the income-tax assessments for these years were not yet completed. On the 25th January, 1960, the petitioner received another letter dated the 23rd January, 1960, from respondent No. 1, alleging that the petitioner had failed to submit the returns for the years 1950-51 to 1958-59, and asked the petitioner to show cause in writing why the assessments for these years should not be completed summarily. Cause was shown by the petitioners letter dated the 24th February, 1960. The petitioner was reminded to submit the returns for the years 1950-51 to 1956-57, by letter dated September 12, 1960. By letter dated November 2, 1960, the petitioner was asked to appear before the Agricultural Income-tax Officer on the 23rd November, 1960, in connection with the assessments for the years 1950-51 and onward and on that date, the petitioners accountant appeared before the Agricultural Income-tax Officer and pointed out that no notice under section 19 (2) or under section 30 of the Act was served in respect of the assessment years 1950-51 to 1956-57. On the 22nd February, 1961, the petitioner was asked to produce certain documents mentioned in the letter, and on March 1, 1961, the petitioner enquired under which provision of the Act, the demand to produce the said documents was made. On the 25th June, 1961, the petitioner received an assessment order dated June 19, 1961, in respect of the assessment year 1951-52 made under section 20 (4) of the Act, together with a notice of demand under section 23 of the Act for payment of Rs. 2,573.50 nP. as agricultural income-tax. This order of the 19th June, 1961, has been challenged by the petition numbered as Civil Rule No. 238. Civil Rule No. 239 of 1961 arises out of a petition by which the agricultural income-tax assessed under section 20 (4) of the Act for the assessment year 1952-53 has been challenged. Civil Rule No. 240 of 1961 arises out of a petition by which the assessment order dated June 19, 1961, in respect of the assessment year 1953-54 has been challenged. Civil Rule No. 241 of 1961 relates to the assessment made on the 19th June, 1961, for the assessment year 1954-55. Civil Rule No. 242 of 1961 relates to the assessment made on the 19th June, 1961, for the assessment year 1955-56.

The main point urged by the petitioners in all these petitions is that unless the individual notice under section 19 (2) of the Act is served on the assessee, no best judgment assessment can be made under section 20 (4) except by proceedings under section 30 of the Act. No action was taken in the present case under section 30 of the Act.

It is urged that an assessment can be made after due notice under section 19 (2) or by initiating proceedings under section 30 of the Act. Section 19 (2) requires that an individual notice be served in the financial year. If, however, no notice is served under section 19 (2), proceedings under section 30 can be initiated by a notice under section 19 at any time within there years of the end of that financial year. As no such notice was served in the present case within the period specified under section 30, the assessment under section 20 (4) was without jurisdiction. It is convenient to refer to certain provisions of the Act to appreciate the point raised by the counsel for the petitioners.

Section 2 (a) (2) defines "agricultural income", meaning any income derived from land by agriculture. The Explanation to this section lays down that agricultural income derived from such land by the cultivation of tea means that portion of the income derived from the cultivation, manufacture and sale of tea as is defined to be agricultural income for the purposes of the enactments relating to Indian income-tax. Section 3 is the charging section. The proviso to section 8 lays down that in cases of agricultural income from cultivation and manufacture of tea, the agricultural income from cultivation and manufacture of tea, the agricultural income for the purposes of the Act shall be deemed to be that portion of the income from cultivation, manufacture and sale which is agricultural income within the meaning of the Indian Income-tax Act and shall be ascertained by computing the income from the cultivation, manufacture and sale of tea as computed for Indian income-tax from which shall be deducted any allowances by this Act authorised in so far as the same shall not have been allowed in the computation for the Indian Income-tax Act.

Sections 19, 20 and 21 read as under :

"19. (1) The Agricultural Income-tax Officer shall, on or before the first day may or for the year commencing 1st April, 1939, or any later day notified by Government in each year, give notice by publication in the press and otherwise in the manner prescribed by rules, requiring every person whose agricultural income exceeds the limits of taxable income prescribed in section 6 to furnish, within such period not being less than thirty days as may be specified in the notice, a return, in the prescribed form and verified in the prescribed manner, setting forth (along with such other particulars as may be required by the notice) his total agricultural income during the previous year :

Provided that the Agricultural Income-tax Officer may in his discretion extend the date for the delivery of the return in the case of any person or class of persons;

(2) In the case of any person whose total agricultural income is, in the opinion of the Agricultural Income-tax Officer, of such amount as to render such person liable to payment of agricultural income-tax for any financial year the Agricultural Income-tax Officer may serve in that financial year, a notice in the prescribed form upon him requiring him to furnish, within the prescribed period, a return in the prescribed form and verified in the prescribed manner setting forth his total agricultural income during the previous year.

(3) If any person has not furnished a return within the time allowed by or under sub-section (1), or sub-section (2) or, having furnished a return under either of those sub-sections, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made and any return so made shall be deemed to be made in due time under this section.

20. (1) If the Agricultural Income-tax Officer is satisfied that a return made under section 19 is correct and complete, he shall assess the total agricultural income of the assessee, and shall determine the sum payable by him on the basis of such return.

(2) If the Agricultural Income-tax Officer has reason to believe that a return made under section 19 is incorrect or incomplete, he shall serve on the person who made the return a notice requiring him, on the date to be specified therein, either to attend at the office of the Agricultural Income-tax Officer or to produce or to cause to be there produced any evidence on which such person may rely in support of the return.

(3) On the day specified in the notice under sub-section (2) or as soon afterwards as may be, the Agricultural Income-tax Officer after hearing such evidence as such person may produce and such other evidence as the Agricultural Income-tax Officer may require on specified points, shall be an order in writing, assess the total agricultural income of the assessee and determine the sum payable by him on such assessment :

Provided that the Agricultural Income-tax Officer shall not require the production of any accounts relating to a period more than three years prior to the previous year.

(4) If the principal officer of any company or other person fails to make a return under sub-section (1) or sub-section (2) of section 19, as the case may be, or, having made the return, fails to comply with all the terms of the notice issued under sub-section (2) of this section, or to produce any evidence required under sub-section (3) of this section, the Agricultural Income-tax Officer shall make the assessment to the best of his judgment, and determine the sum payable by the assessee on the basis of such assessment :-

Provided that before making such assessment the Agricultural Income-tax Officer may allow the assessee such further time as he thinks fit to make the return or comply with the terms of the notice or to produce the evidence......

21. Where an assessee, or in the case of a company the principal officer thereof, within one month from the service of a notice a demand issued as hereinafter provided satisfies the Agricultural Income-tax Officer that he was prevented by sufficient cause from making the return required by section 19 or that he did not receive the notice issued under sub-section (2) of section 19 or sub-section (2) of section 20 of that he had not a reasonable opportunity to comply or was prevented by sufficient cause from complying with the terms of the last mentioned notices, the Agricultural Income-tax Officer shall cancel the assessment and proceed to make a fresh assessment in accordance with the provisions of the section 20."

Section 30 reads as follows :

"If for any reason any agricultural income chargeable to agricultural income-tax has escaped assessment for any financial year, or has been assessed at too low a rate or has been the subject of undue relief under this Act, the Agricultural Income-tax Officer may, at any time within three years of the end of that financial year, serve on the person liable to pay agricultural income-tax on such agricultural income or, in the case of a company on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 19, and may proceed to assess or reassess such income, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section :

Provided that the tax shall be charged at the rate at which it would have been charged if such income had not escaped assessment or full assessment, as the case may be :

Provided further that when the income, profits or gains concerned are agricultural income, profits or gains liable to assessment for a year ending prior to the commencement of this Act, or where the assessment made or to be made is an assessment made or to be made on a person deemed to be the agent of a non-resident person, this sub-section shall have effect as if for the period of three years a period of one year were substituted."

Section 43 (2) (a) lays down that :

"An assessee may, on receipt of the first notice served on him under sub-section (2) of section 19, apply to the Agricultural Income-tax Officer by whom such notice is served to be assessed at his usual place of residence or at the place where the accounts relating to his agricultural income are kept, if either of such places is situated in the State of Assam, and such Agricultural Income-tax Officer may pass an order that the assessee shall be assessed at the place specified in the application, the said place being situated in the State of Assam, or refer the matter to the Assistant Commissioner of Agricultural Income-tax, whose decision shall be final."

The counsel for the assessee has referred to sections 21 and 43 (2) (a) to show that the issue of notice under section 19 (2) confers a valuable right on the assessee. Under section 21, the Agricultural Income-tax Officer is bound to cancel an assessment if no notice under section 19 (2) had been served and under section 43 (2) (a), as soon as a notice is served on the assessee under section 19 (2), he gets a right to choose his own forum for the assessment. In case no notice is issued under section 19 (2), the assessee acquires a valuable right to get the assessment cancelled and loses his option to get the assessment done at the place and by the Agricultural Income-tax Officer of his own choice. It is urged that these two sections show that the condition precedent for the assessment is the service of a notice under section 19 (2). It is further argued that the assessment proceedings against an individual assessee commence not by issue of general notice under section 19 (1), but by service of a notice under section 19 (2). It may be that in pursuance of a general notice under section 19 (1) the assessee may file a return and if once the return has been filed, even though in pursuance of a general notice, the proceedings for assessment commence, and it does not terminate unless the assessment is completed. This reasoning will not apply to a case where no return has been filed in pursuance of a general notice. Merely by issuing a general notice under section 19 (1), no assessment proceedings can commence against an individual. The question thus of completing the assessment will not arise in cases where no return has been filed and proceedings for assessment have not commenced. Under section 20, clause (4), it is urged that power is given to the assessing authority to make a best judgment assessment. This is a penal provision, which can only be invoked if the assessee does not file a return on a notice being issued under section 19 (2). The question of making a penal assessment will not arise in a case where it is not obligatory for an assessee to file a return. It is urged that if section 20 (4) is interpreted as suggested by the Advocate-General in his reply, the effect will be that the assessing authority can, at any time, quietly sitting in his office, assess an assessee without giving him any opportunity to prove that his income is not liable to assessment. The proviso to section 20 (4) is alleged to be mandatory. It is, however, further contended that the notice required under the proviso can be issued only within three years of the expiry of the financial year. If power is given under section 20 (4), after giving the required notice under the proviso, to assess at any time and no period is fixed for making such an assessment, the provisions of section 30 will become redundant. The assessing authority will have recourse to section 20 (4) even in cases where section 30 is attracted. It is argued that section 20 (4) has to be read along with section 30.

The Advocate-General contends that the language of section 20 (4) gives wide power to the Agricultural Income-tax Officer to make a best judgment assessment, if the assessee fails to make a return under sub-section (1) of section 19. Section 19 (1) provides for a constructive notice to the assessee and after such a notice has been published, there is a duty cast upon the principal officer of any company or any other person to make a return and the omission to file a return in pursuance of the said constructive notice constitutes a failure on the part of the assessee to make a return. There is no time-limit fixed under section 20 (4) for completing the assessment. The proceedings start against an assessee as soon as the notice is published under section 19 (1), and section 20 (4) only gives a right to the Agricultural Income-tax Officer to quantify the amount of tax. It is further urged by the Advocate-General that section 30 will only be attracted if any agricultural income has escaped assessment. The words "escaped assessment" cannot be equated with the words "not assessed". If the proceedings for assessment start after the constructive notice is given under section 19 (1), the Agricultural Income-tax Officer completes the assessment under section 20 (4) and till the assessment is completed, it cannot be said that the income has escaped assessment for the financial year. Section 30, in his submission, is attracted only if the assessment or has completed and any part of the income has escaped assessment or has been assessed at too low a rate. Section 30 authorises an Agricultural Income-tax Officer to act if any agricultural income has escaped assessment for any reason. The Agricultural Income-tax Officer has to serve on the person liable to pay agricultural income-tax, a notice containing all or any of the requirements, which may be included in a notice under that sub-section and thereupon, he may proceed to assess or reassess such income. This notice has to be given within three years of the end of the financial year for which the agricultural income has escaped assessment. The condition precedent for exercising power under section 30 to assess or reassess an assessee is the issue of a notice under section 19 (2) within three years of the end of the financial year. If on the issue of a general notice under section 19 (2) within three years of the end of the financial year. If on the issue of a general notice under section 19 (1), the Agricultural Income-tax Officer can make a best judgment assessment under section 20 (4) at any time of failure of the assessee to submit a return as required under section 19 (1), the Agricultural Income-tax Officer need proceed under section 30 of the Act. Section 20 (4) and section 30 should be read together. Reading these two sections together, it will be clear that if the Agricultural Income-tax Officer wishes to assess an assessee on the ground that his agricultural income has escaped assessment during the financial year, he has to proceed under section 30 by issuing a notice under clause (2) of section 19. In cases where the agricultural income can be said to have escaped assessment during any financial year for want of a return in pursuance of the notice under section 19 (1), before an assessee can be assessed to agricultural income-tax in respect of the said agricultural income, proceedings under section 30 have to be initiated. In cases where in pursuance of a notice under section 19 (1) an assessee has voluntarily filed a return or where under section 19 (3) an assessee had filed a return after the expiry of the time mentioned in the notice issued under section 30 will arise, as the return has already been filed in respect of the financial year, and what remains for the Agricultural Income-tax Officer is to complete the assessment. It cannot be said in these circumstances that the agricultural income has escaped assessment during the financial year. If section 20 (4) and 30 are read together, the following result will follow. Section 20 (4) is attracted during the assessment proceedings. If the return has been filed in pursuance of a notice under section 19 (1) or cases where an individual notice has been given under section 19 (2), the assessment proceedings have commenced and section 20 (4) will be applicable. The assessing authorities can complete the assessment by making a best judgment assessment. In cases where no returns have been filed in spite of the notice under section 19 (1), the income for the assessment year has escaped assessment and proceedings for assessment will commence by a notice under section 30 and during the proceeding for assessment section 20 (4) will be attracted. Where by failure to submit a return, the agricultural income has escaped assessment, the proper section under which the assessment can be made will be section 30 and not section 20, as section 30 expressly lays down that after the notice has been given under section 19 (2), the Agricultural Income-tax Officer may proceed to assess or reassess and then the provisions of the Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. The provisions of section 20 (4) are attracted in cases of assessment under section 30 by virtue of this provision and not on their own force.

At this stage, it may be convenient to refer to the authorities cited at the Bar. The authorities mostly deal with the Indian Income-tax Act. Under section 22 (1) of the Indian Income-tax Act, 1922, a general notice is issued before the 1st day of May in each year requiring every person whose total income during the previous year exceeded the maximum amount which is not chargeable to income-tax to furnish a return of his total income within a specific period. Under sub-section (2) of section 22, an individual notice may be served on a person, who is liable to pay income-tax in the opinion of the Income-tax Officer. Section 23 deals with the assessment and under section 23 (4), if any person fails to make the return required by any notice given under sub-section (2) of section 22 and has not made a return or a revised return under sub-section (3) of the same section, or fails to comply with all the terms of a notice issued under sub-section (4) of the same section or, having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 23, the Income-tax Officer shall make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment. Under sub-section (1) of section 34, if the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for the year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, the Income-tax Officer may proceed to assess or reassess an assessee after issuing a notice containing all or any of the requirements, which have to be included in the notice under sub-section (2) of section 22 of the Indian Income-tax Act. Section 34 has undergone several amendments from time to time, but before section 34 could be invoked at any time, it is necessary that the income should have escaped assessment during the assessment year.

The advocate-General, who appears for the opposite parties, has contended that the provisions of section 20 (4) of the Act in question are not similar to the provisions of section 23(4) of the Indian Income-tax Act. Under the Indian Income-tax Act, the failure on the part of an assessee to make a return on income required by notice under sub-section (2) of section 22 gives power to the Income-tax Officer to make a best judgment assessment, while under section 20(4) of the Act, power is given to make a best judgment assessment even in cases where the assessee has failed to file his return in pursuance of the general notice under section 19 (1) of the Act. His contention is that the proceedings for assessment commenced as soon as the general notice under section 19 (1) is given and thus section 20 (4), what the Agricultural Income-tax Officer does is to complete the assessment proceedings started on the issue of a general notice under section 19 (1) of the Act and does not act under section 30. His argument in effect is that if a person has not been assessed during the financial year, it cannot be said that income has escaped assessment. What the Agricultural Income-tax Officer does under section 20 (4) is to quantify the amount of tax and thus the authorities under the Indian Income-tax Act are of no assistance.

The Advocate-General, however, strongly relied upon the case of Rajendranath Mukherjee v. Commissioner of Income-tax. This case arose out of proceedings under the Indian Income-tax Act. Section 34 of the Indian Income-tax Act, as it stood at that time was as follows :

"If for any reason income, profits or gains chargeable to income-tax has escaped assessment in any year, or has been assessed at too low a rate, the Income-tax Officer may, at any time within one year of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assess or reassess such income, profits or gains, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section : ..."

The facts of that case were that on the 8th November, 1930, the Income-tax officer made an assessment order on Burn and Company, an unregistered firm, assessing them to income-tax and super-tax for the year 1927-28. The contention raised by the appellants, who were the partners of Burn and Company, was that the Income-tax Officer was not competent to make this assessment on the firm after the expiry of the 31st March, 1928, of the year in respect of which the assessment was made. This contention was repelled. The appellants had relied upon section 34 of the Indian Income-tax Act for the argument that the assessment could not be made beyond one year of the expiry of the tax year. The Advocate-General referred to the following passage at page 77 of the report :

"The appellants however submit that this is a case of income escaping assessment within the meaning of section 34. Assessment, they argue, is a definite act, indeed the most critical act in the process of taxation. If an assessment is not made on income within the tax year then that income, they submit, has escaped assessment within that year, and can be subsequently assessed only under section 34 with its time limitation. This involves reading the expression has escaped assessment as equivalent to has not been assessed. Their Lordships cannot assent to this reading. It gives too narrow a meaning to the word assessment and too wide a meaning to the word escaped. That the word assessment is not confined in the statute to the definite act of making an order of assessment appears from section 66 which refers to the course of any assessment. To say that the income of Burn and Co., which in January, 1928, was returned for assessment and which was accepted as correctly returned, though it was erroneously included in the assessment of Martin and Co., has escaped assessment in 1927-28 seems to their Lordships an inadmissible reading. The fact that section 34 requires a notice to be served calling for a return of income which has escaped assessment strongly suggests that income which has already been duly returned for assessment cannot be said to have escaped assessment within the statutory meaning."

These observation would show that their Lordships held in that case that it was not a case escaped assessment, as the return had been filed and what the Income-tax Officer had done in that case was that he completed the assessment and not assessed an "escaped income". The following two passages will make this point abundantly clear. At page 76 of the report, their Lordships observed :

"It may be that in the two cases to which the section (section 34) applies if no notice is served within the year following the tax year, no sub-sequent assessment or reassessment can be made of the income which has escaped assessment or been assessed too low, but that is not to say that in no other case can an assessment be made after the expiry of the tax year."

At another place in the same page, their Lordships, after quoting the observation of Rankin C.J., stated :

"It may be that if no notice calling for a return under section 22 is issued within the tax year then section 34 provides the only means available to the Crown of remedying the omission, but that is a different matter."

As the return had been filed in that case and Burn and Co. had been assessed on the basis of that return their Lordships held that it was not a case of escaped assessment.

In Chatturam Horilram Ltd. v. Commissioner of Income-tax, their Lordships of the Supreme Court considered the above Privy Councils decision. In this case, the assessment proceedings had in fact been initiated, but they failed to result in a valid assessment owing to some lacuna and it was held that it would be a case of chargeable income escaping assessment and not a case of mere non-assessment of income-tax. While agreeing with the dictum of their Lordships of the Privy Council that the escapement from assessment should not be equated to non-assessment simpliciter, the Supreme Court held that in the circumstances of that case when the first proceedings resulted in no valid order of assessment, it was a case of escaped assessment and not non-assessment simpliciter. In Madan Mohan Lal v. Commissioner of Income-tax, Commissioner of Income-tax v. Pirojbai N. Contractor and Kunwar Bishwanath Singh v. Commissioner of Income-tax, the decision of the Privy Council referred to earlier had been explained, and it had been held that the observations of the Privy Council had reference to the facts of that case where the proceedings by way of initial assessment were still pending. In Harakchand Makanji & Co. v. Commissioner of Income-tax, the facts were that a notice under section 34 was issued against a non-resident assessee and the assessee filed his return in respect of the income for the assessment year 1941-42. With regard to the assessment year 1942-43 no notice was served on the assessee, but it filed its return on the 18th June, 1943. The contention raised by the assessee was that no assessment could be made as notice under section 34 was not served on it and further that no it and further that no individual notice was served on it for the assessment year 1942-43. It was held in that case that the proceedings for assessment against non-residents also started by issue of a general notice under section 22(1), and as a return had been filed voluntarily on the 18th June, 1943, without any individual notice having been served upon the applicants under section 22(2), no question could arise under section 34 of assessment escaping. What the authorities did in that case was to complete the assessment on the basis of the return filed by the assessee and not to assess the assessee on the ground that his income had escaped assessment. This was also a case where a return had been filed. It was pointed out in this case that notice under section 34 was only necessary if at the end of the assessment year, no return had been made by the assessee and the income-tax authorities wished to proceed under section 22(2) by serving a notice individually. In that case, it may be said that as the assessment year had come to an end and as no return had been furnished, and as the income-tax authorities wished to proceed under section 22(2), they could not do so under section 34.

In In re P. S. Rama Iyer it has been held by the Madras High Court that a voluntary return filed in response to a public notice under section 22(2) and which is not preceded by notice under section 22(2), is a "return" even though the quantum of the income disclosed in the return is less than the taxable limit. On the submission of such a return, the Income-tax Officer is entitled to proceed with the assessment applying the other provisions of the enactment including that for ignoring the return and estimating the income. Dealing with the case of Commissioner of Agricultural Income-tax v. Sultan Ali, the Madras High Court agreed with the view expressed by Chagla C.J. in the case of Harakchand Makanji and Co. v. Commissioner of Income-tax and disagreed with the view of Chakravartti J. in the above case. So far as the decision of Chakravartti J. that the proceedings will be deemed to have commenced only if the return has been filed by the assessee, the Madras High Court did not express any opinion.

In Commissioner of Income-tax v. Ranchhoddas Karsondas, after setting out the difference in opinion between the Calcutta and the Bombay High Court, their Lordships held that the following observations by Chagla C.J. in Harakchand Makanji and Co. v. Commissioner of Income-tax lays down the correct law :

"Notice under section 34 is only necessary if at the end of the assessment year no return has been made by the assessee, and the authorities wish to proceed under section 22(2), but where the assessee himself chooses voluntarily to make a return, no question can arise under section 34 of assessment escaping, and therefore there is no necessity to serve any notice under section 34."

In the present case, no notice under section 30 of the Assam Agriculture Income-tax Act, 1939, was served and as no return was filed, the income for the return period escaped assessment and the department could only assess the applicants after serving a proper notice on term under section 30 of the Act.

In the petitions giving rise to Civil Rules Nos. 233, 234, 235 and 236, the petitioners allege that they sold the Martycherra Tea Estate on the 9th July, 1953. The case set up in paragraph 5 of the petition is that the petitioners of the firm at no stage were served with any notice under section 19(2) or section 30 of the Act. It was only on the 25th January, 1961, that the petitioner No. 1 received a letter asking him to furnish the returns of their agricultural income for the assessment years 1949-50 to 1953-54. In reply to this allegation in the counter-affidavit filed by Sri C. A. Roy, Assistant Commissioner of Taxes, Assam, it is stated that the allegations in paragraph 5 of the petition are denied, that at no stage the petitioners were served with any notice under section 19(2) or section 30 of the Act. In paragraph 6 of the counter-affidavit, it is stated that the petitioners refused to accept service of the notices under section 19(2) or section 30 of the Act. Thereafter, it is stated that even if no notice was served under section 19(2) or section 30 of the Act, as the petitioners failed to submit their returns in spite of the issue of the notice under section 19(1), they were liable to be assessed to agricultural income-tax under section 20(4) of the Act. In reply to the counter-affidavit, it was stated in paragraph 5 that no such notices were ever served on the petitioners. In paragraph 5, it is further stated that after the receipt of the order dated July 26, 1961, the petitioners applied for certified copies of the various notices and reminders alleged to have been issued in respect of the assessment year and supplied the necessary folios and court fees, but no such copies were supplied to them. In paragraph 6 of the rejoinder-affidavit, it is denied that the petitioner No. 2 ever refused to accept service of notice under section 19(2) or section 30 of the Act. The petitioners made a supplementary application supported by an affidavit praying for permission to argue some additional grounds. An affidavit was filed in reply to the affidavit of the petitioner in support of the additional application and for the first time, in this affidavit in paragraph 4, it was pointed out that the petitioners were notified to submit agricultural income-tax returns for the following assessment years :

Assessment Year

Notice issued under section

Date of issue of the notice

1949-50

30

29th August, 1952

1950-51

30

-do-

1951-52

30

-do-

1952-53

19(2)

-do-

It is stated that the petitioners refused to accept service of the aforesaid notices issued to them by registered post. For the assessment year 1953-54, notice under section 30 of the Act is alleged to have been issued to the petitioners by registered post on 2nd of June, 1954. From these allegations, it is now argued that notices were issued under section 19(2) and under section 30 of the Act, which the petitioners refused to accept. If the notices were in fact issued and served on the petitioners under section 19(2) and section 30 of the Act, the Agricultural Income-tax Officer had ample jurisdiction under section 20(4) to make best judgment assessments on the ground that under the general notice under section 19(1), the petitioners failed to file the returns. As I have set out the facts, clearly, when this allegations was made in the affidavit of the petitioners that no notices were issued on them, there was a bare denial of the statement. The dates which are now given as the dates on which the notices were alleged to have been issued under section 30 and section 19(2) of the Act were not mentioned in the counter-affidavit at all. No explanation has been given as to why the certified copies were not supplied to the petitioners. It will appear from the dates given in the supplementary affidavit that all the notices were issued on the same date, namely, 29th August, 1952, except for the assessment year 1953-54, in respect of which it is alleged to have been issued on 2nd June, 1954. The Martycherra Tea Estate was sold by the petitioners on the 9th July 1953. On the materials before us, it is difficult to hold that the notices were in fact issued under section 19(2) or under section 30 of the Act. There is no evidence to show that the notices were refused. The postal acknowledgment receipts have not been filed by the opposite parties. The case was mainly argued on the ground that as the notices under section 19(2) were issued, there was an obligation on the part of the assessee to file his return, and on his failure to do so, the provisions of section 20(4) were attracted. By the letter dated the 19th January, 1961, the petitioners were called upon to submit their returns for the assessment periods 1949-50 to 1953-54, by the 18th February, 1961, failing which best judgment assessment was to be made. This notice was in pursuance of the proviso to section 20(4) of the Act and not under section 19(2) or under section 30 of the Act.

It is also contended in this connection that under section 20A(1) of the Act, where agricultural income is received or deemed to be received by a firm or association of individuals and the business of such firm or association is discontinued in any year, an assessment may be made in that year on the basis of the agricultural income received or deemed to be received during the period between the end of the previous year and the date of such discontinuance in addition to the assessment, if any, made on the basis of the agricultural income received or deemed to be received in the previous year. Every person who was a partner of such firm or a member of such association at the time of such discontinuance shall be jointly and severally liable to assessment on such agricultural income and for the amount payable as tax, and all the provisions of the Act shall, so far as may be, apply accordingly. Under sub-section (2) of section 20A of the Act, any person discontinuing any such business shall give to the Agricultural Income-tax Officer notice of such discontinuance within fifteen days thereof, and where any person fails to give the notice required by this sub-section, the Agricultural Income-tax Officer may direct that a sum shall be recovered from him by way of penalty not exceeding the amount of agricultural income-tax subsequently assessed on him in respect of any agricultural income of the firm or association of individuals up to the date of the discontinuance of its business. It is contended that section 20A casts an obligation on the petitioners, when they discontinued their business, to inform the Agricultural Income-Officer of such a discontinuance. This section, to our mind, does not apply to the transfer of the land from which the agricultural income is derived. If an agricultural income is received by a firm or an association of individuals, and the business of such firm or association is discontinued then a notice has to be given in order to ascertain the liability of the partners, but if the land from which the agricultural income is derived, has been transferred, the transferor cannot be said to have any agricultural income from the date of the transfer, so as to make him liable for the tax, and no obligation under section 20A is cast upon him to inform the Agricultural Income-tax Officer of the transfer. Rule 24 (3) of the Assam Agricultural Income-tax Rules, 1939, provides that where a person carrying on any business, the income of which is wholly or in part agricultural income chargeable under the Act, has been succeeded in such capacity by another person, such person and such other persons shall each be assessed in respect of his actual share, if any, of the agricultural income of the previous year. This rule also shows that the successor is liable to pay the agricultural income-tax and there is no obligation on the transferor to inform the Agricultural Income-tax Officer of the transfer.

In the other civil rules, it is not asserted that any notice under section 19(2) of the Act was issued within the financial year. The point was also raised by the petitioners that there was no proof of the fact that the notice under section 19(1) was duly published. In the absence of any clear allegation in the petition, it will be presumed that the official act was done in the normal course and properly. There is thus no force in the contention that no proper notice was published in the Gazette under section 19(1) of the Act.

The last point contended in these rules is that the Explanation to section 2 of the Act only provides that agricultural income derived from such land by the cultivation of tea means that portion of the income derived from the cultivation, manufacture and sale of tea as is defined to be agricultural income for the purposes of the enactments relating to Indian income-tax. The Indian Income-tax Act does not define "agricultural income" for the purposes of the Indian Income-tax Act and in the absence of any such definition, the Explanation will not be attracted. The proviso to section 8 of the Act lays down that in cases of agricultural income from cultivation and manufacture of tea, the agricultural income for the purposes of this Act shall be deemed to be that portion of the income from cultivation, manufacture and sale which is agricultural income within the meaning of the Indian Income-tax Act and shall be ascertained by computing the income from the cultivation, manufacture and sale of tea as computed for Indian income-tax from which shall be deducted any allowances by this Act authorised in so far as the same shall not have been allowed in the computation for the Indian Income-tax Act. Section 2(1)(a) of the Indian Income-tax Act defines "agricultural income" meaning any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government, and under sub-clause (b), any income derived from agriculture. Under the definition of "agricultural income", the income derived from lands by agriculture will be considered as agricultural income, and agricultural income is not liable to income-tax. In cases of the lands of tea cultivation, the question arises which portion of the income can be regarded as an agricultural income. In case of tea cultivation, the producer carries on business by selling tea and thus, it cannot be said that the entire profit made by the owner of a tea garden is agricultural income. Some portion of the income may be regarded as profit from the business. In order to remove any doubt, rules have been framed under the Indian Income-tax Act under which 40% of such income is to be regarded as income from business and 60 % as agricultural income. The Agricultural Income-tax Act thus taxes 60% of the income from a tea garden as agricultural income. If the proviso is interpreted as contended for by the petitioners, the result will be that the whole income will be regarded as agricultural income, inasmuch as the entire income derived by agriculture is defined to be agricultural income under the Indian Income-tax Act, and thus the entire income may be liable to pay agricultural income-tax. The income-tax department, on the other hand, may hold that the entire income is business income, inasmuch as it is difficult to ascertain what proportion of the income is from business and thus, here may be difference of opinion between the income-tax and the agricultural income-tax authorities on this point and the applicants may be liable to pay double tax. To avoid this conflict between the two authorities, the Legislature has provided under section 8 of the Act that the portion of the income from cultivation, manufacture and sale, which is regarded under the Indian Income-tax Act as the agricultural income, will be liable to tax under the Act and the portion which is not considered to be agricultural income under the Indian Income-tax Act, will be taxable under the Income-tax Act. There is no force in this contention that the Explanation attached to section 2 of the Act has not been complied with.

Another point urged was that the proviso to section 20(4) of the Act is not mandatory. The Advocate-General however contended that even if it was considered to be mandatory, in the present case, the proviso was complied with. The proviso clearly lays down that before making such assessment, the Agricultural Income-tax Officer may allow the assessee such further time as he thinks fit to make the return or comply with the terms of the notice or to produce the evidence. If section 20(4) is interpreted to mean that no best judgment assessment can be made in cases where no return has been filed in compliance with the provisions of section 19(1), unless a notice under section 30 is given, the proviso may be regarded as obligatory. Before action under section 20(4) is taken, in such a case notice will have to be given under section 30 of the Act calling upon the assessee to file a return, and if such a notice is given, the proviso need not be followed. It becomes optional with the Agricultural Income-tax Officer to give further opportunity to the assessee to file a return. In cases, however, where section 30 is not attracted, action can be taken under section 20(4) and the proviso, in my opinion, will be mandatory. In the present cases, however, notices were issued asking the assessee to submit returns, which can be treated as notices under the proviso. On the finding, however, that the assessments could not be made under section 20(4) in the absence of any notice under section 30, the assessments made in the present cases are illegal and the petitioners are entitled to a mandamus directing the opposite parties not to give effect to the ex parte assessments made under section 20(4) of the Act. The applications are allowed with costs which we fix at Rs. 200. Each set will get Rs. 100.

DUTTA J. - I have had the advantage of reading the judgment of my lord the Chief Justice and I agree with him that the assessments made in the cases before us are illegal and that a mandamus should issue directing the opposite parties not to give effect to the same. I, however, give my reasons in a separate judgment.

The facts in each case are fully stated by my lord the Chief Justice and I need not repeat them. It will suffice for my purpose to refer to the relevant sections of the Assam Agricultural Income-tax Act, 1939 (hereinafter called the Act). Under sub-section (1) of section 19 of the Act the Agricultural Income-tax Officer has to give a public notification on or before the first May in any financial year, asking every person who has an assessable income to furnish his return within a specified time setting forth his total agricultural income during the previous year.

Under sub-section (2) of the above section the Agricultural Income-tax Officer may serve in the financial year an individual notice on a person who in his opinion has an assessable income, asking him to furnish his return within the prescribed time, setting forth his agricultural income during the previous year.

If a person does not furnish any return in answer to the public notification under sub-section (1) or the individual notification under sub-section (2) of section 19 the Agricultural Income-tax Officer may make an assessment to the best of his judgment under sub-section (4) of section 20 of the Act. A proviso to this sub-section is as follows :

"Provided that before making such assessment the Agricultural Income-tax Officer may allow the assessee such further time as he thinks fit to make the return or comply with the terms of the notice or to produce the evidence."

In the cases before us the petitioners were assessed for various years under section 20 (4) of the Act. There is nothing to show that any individual notice under sub-section (2) of section 19 was served on any of the petitioners. In every case steps under section 20 (4) were taken long after the assessment year (i.e., financial year) concerned was over. It is an admitted fact that no return was furnished by any of the petitioners for any of the years in question.

The learned Advocate-General submits that the assessment proceedings commence with the public under section 19(1). He point out that there is no provision in that Act fixing any limit of time for the completion of assessment. Once the proceedings commence, they can be completed at any time. Thus his contention is that although no return is submitted by a person with assessable income, he can be assessed at any time under section 20(4) after the publication of the notice under section 19(1). But if this be so, the question arises as to when then section 30 of the Act will come into operation. This section runs as follows :

"If for any reason any agricultural income chargeable to agricultural income-tax has escaped assessment for any financial year, or has been assessed at too low a rate or has been the subject of undue relief under the Act, the Agricultural Income-tax Officer may, at any time within three years of the end of that financial year, serve on the person liable to pay agricultural income-tax on such agricultural income or, in the case of a company on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 19, and may proceed to assess or reassess such income, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section.

Provided .......

Provided ......."

Now if the contention that assessment proceedings commence with the public notice is accepted, there cannot be any escaped assessment from the publication of the notice till the completion of the assessment, i.e., so long as such a proceeding is pending. If a proceeding is pending it cannot be a case of escaped assessment.

The learned Advocate-General, however, submits that no assessment under section 30 can be made unless and until the assessment is completed. On completion of assessment if it found that some income has escaped assessment or some income is assessed at too low a rate or undue relief has been granted, assessment or reassessment can be made under the aforesaid section provided a notice of the nature of a notice under section 19(2) is served within three years of the end of the financial year.

So, we come to the question as to how far the contention that the assessment proceedings commence with the public notification, is correct. There is a conflict of judicial opinion on this point. The Bombay and Madras High Courts have held that assessment proceedings commence with the public notice. The Calcutta High Court has held a contrary view.

In Commissioner of Agricultural Income-tax v. Sultan Ali Gharami it has been held by the Calcutta High Court that no assessment proceeding commences by a mere notice under section 24(1) of the Bengal Agricultural Income-tax Act, 1944 (corresponding to section 19(1) of the Assam Agricultural Income-tax Act). In this connection the following observation was made by Chakravartti J. (as he then was) :

"It therefore appears that so far as section 24(1) is concerned no assessment proceeding is started by the mere notice under the section and that a proceeding commences only when a return under the section is filed if any such return is filed at all. If no such return is filed an assessment proceeding commences only when a notice under section 24(2) is served. In so far as it was held in C. V. Govindarajulu Iyer v. Commissioner of Income-tax and Harakchand Makanji v. Commissioner of Income-tax with reference to the Indian Income-tax Act, that assessment proceedings commenced with the general notice under section 22(1), I am with respect unable to agree with the decisions. If the Madras and Bombay view be correct there can be no occasion in any case, where no return has been filed within the assessment year in compliance with the notice under section 22(1), to issue a notice under section 34 up to the end of the period of limitation for an assessment, for income cannot be said to have escaped assessment while assessment proceedings are pending."

I respectfully agree with the view of the Calcutta High Court. In the Bombay case mentioned above (Harakchand Makanji v. Commissioner of Income-tax) it was observed that one the public notice was given the assessment proceedings commenced. It was held in that case that if a return was made, no possible question could arise of any income escaping assessment. It is, however, not understood how any question of income escaping assessment could arise if no return was made but the proceedings were presumed to have commenced with the public notice. In Rajendra Nath Mukherjee v. Commissioner of Income-tax, the following observation made by Rankin C.J. in Lachiram Basantlal v. Commissioner of Income-tax was quoted with approval by their Lordships of the Privy Council :

"Income has not escaped assessment if there are pending at the time proceedings for the assessment of the assesses income which have not yet terminated in final assessment thereof."

In the Madras case mentioned, i.e., C. V. Govindarajulu Iyer v. Commissioner of Income-tax the Bombay decision that proceeding commenced with the public notice was followed. It was held that if proceeding were started under section 34 of the Indian Income-tax Act, 1922 (corresponding to section 30 of the Assam Agricultural Income-tax Act), such proceedings must be deemed to relate to the proceedings which commenced with the public notice. It is not understood how proceedings under section 34 for escaped assessment could if there was a pending proceeding which commenced with the public notice.

In Commissioner of Income-tax v. Ranchhoddas Karsondas the Supreme Court held that where in answer to a public notice, the assessee himself chose to make a return, no question arose of assessment escaping. From this view, it is quite clear that assessment proceedings cannot start with the public notice. Had it done so, there could not be any question of assessment escaping even when an assessee chose not to make any return.

So, if no return is made in response to the public notice under section 19 of the Act and no individual notice is served under section 19(2) of the Act, there is no pending proceeding and there will be escaped assessment in such circumstances. But this escaped assessment "for any financial year" within the meaning of section 30 of the Act will be there only when the financial year is over. So from the publication of the notice under section 19(1) till the end of the financial year, there will be no escaped assessment for the financial year even if no return is filed and no individual notice is served. Once the financial year is over and no return is made or no individual notice has been served there is "escaped assessment for the financial year". Section 30 of the Act will then be attracted. If no return is filed in response to the public notice and no individual notice is given, the Agricultural Income-tax Officer can make a best judgment assessment under section 20(4) of the Act. But the assessment must be made within the financial year of some step as provided in the proviso to sub-section (4) of section 20 must be taken within the financial year. If a step is so taken, the assessment proceeding becomes pending proceeding and in such circumstances there can be no escaped assessment. But if the assessment is neither completed nor any step is taken within the financial year, it will be a case of income escaping assessment for that financial year and in such a case section 30 of the Act will be attracted. In short, once the income becomes income which has escaped assessment for the financial year, it cannot be assessed without the aid of section 30. After section 30 comes into operation, a notice of the nature of a notice under section 19(2) has to be given within three years of the financial year. Section 30 says that thereafter the Agricultural Income-tax Officer may proceed to assess or reassess and that the provisions of the Act will apply as if the notice was under section 19(2). Hence, if a return is made in answer to this notice the Agricultural Income-tax Officer will follow the provisions laid down in sub-section (1), (2) and (3) of section 20 of the Act. But if no return is filed, best judgment assessment will be made in accordance with sub-section (4) of section 20. Had there been no provision like section 30, the best judgment assessment could be made under section 20(4) without any limit of time. But as is apparent from the above discussion, section 30 has introduced a limit of time to such a power.

In the present cases, all the incomes escaped assessment for the relevant financial years and hence they could not be assessed under section 20. Section 30 is the only provision under which they could be assessed. But no assessment could be made under section 30 also as the notice of the nature of a notice under section 19(2) had to be issued within three years of the end of the respective financial years. This was not done. In the result therefore the assessments made are illegal.

I will like to add a few words regarding section 20A of the Act. The Martycherra Tea Estate formerly belonged to a partnership firm. It was sold to a company on July 9, 1953. Under section 20A (2), where a person discontinues any business receiving agricultural income, he has to give notice of such discontinuance to the Agricultural Income-tax Officer. If by sale of the Martycherra Tea Estate the partners discontinued all their business of receiving agricultural income, they had to give such a notice. In default of such a notice, they could be subjected to a penalty not exceeding the agricultural income-tax subsequently assessed. But, in the present cases, when the subsequent assessments have been held to be illegal the question of imposing penalty cannot arise.


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