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Commissioner of Agricultural Income-tax Vs. Ramkuvar and Others - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMumbai High Court
Decided On
Case NumberTax Reference No. 94 of 1976
Judge
Reported in[1983]141ITR85(Bom)
ActsIncome Tax Act, 1961 - Sections 139(2), 147 and 148
AppellantCommissioner of Agricultural Income-tax
RespondentRamkuvar and Others
Excerpt:
direct taxation - assessment - sections 139 (2) 147 and 148 of income tax act, 1961 and section 41 of income tax act, 1922 - whether tribunal was correct in law in holding that assessment made on assessee was valid assessment - acquiescence by assessee cannot confer jurisdiction upon ito to make an order under section 41 against assessee - held, assessment was not valid. - - 36,000. 4. on receipt of this information, the said sto by his letter dated february 14, 1967, intimated to the assessee the said information and called upon him to attend at the inspection bungalow, dahanu, on february 24, 1967, without fail. (3) however you failed to furnish the return for the said period required by the notice and did not show any reasonable cause for your failure to furnish the said return......madon, j.1. this case has been stated and three questions of law referred to us by the maharashtra sales tax tribunal under s. 39 of the maharashtra agrl. i.t. act, 1962 (maharashtra act no. xli of 1962) (hereinafter referred to as 'the said act'), the first two at the instance of the commissioner of agrl. i.t. and the third at the instance of the original assessee. these three questions are as follows :'(1) whether, on the facts and in the circumstances of the case, the tribunal was correct in law in observing that the element of ownership of the assets used in deriving agricultural income is not a condition precedent to the claim of depreciation ? (2) whether, on the facts and in the circumstances of the case, the tribunal was correct in law in holding that the opponent (that is, the.....
Judgment:

Madon, J.

1. This case has been stated and three questions of law referred to us by the Maharashtra Sales Tax Tribunal under s. 39 of the Maharashtra Agrl. I.T. Act, 1962 (Maharashtra Act No. XLI of 1962) (hereinafter referred to as 'the said Act'), the first two at the instance of the Commissioner of Agrl. I.T. and the third at the instance of the original assessee. These three questions are as follows :

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in observing that the element of ownership of the assets used in deriving agricultural income is not a condition precedent to the claim of depreciation ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the opponent (that is, the original assessee), was entitled to claim depreciation on the assets on the basis of the original cost and not on the basis of cost price less depreciation allowable under the Act (that is the Maharashtra Agricultural Income-tax Act, 1962) or on the written down value disclosed by the books of account maintained by the opponent ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that assessment made on the assessee was a valid assessment ?'

2. Before we set out the material facts necessary for understanding the controversy between the parties we may state that the original respondent to this reference, Baijnath Mahadeo Thakur, died pending this reference. He had been assessed to agricultural income-tax on the basis that he was have been brought on the record of this reference as respondents. We will, therefore, for the sake of convenience hereafter referred to the said Baijnath Mahadeo Thakur as 'the assessee'. The assessee owned agricultural lands at Vangaon in Taluka Dahanu in the District of Thane. The assessee was being assessed to income-tax. It appears that the mamlatdar, Dahanu, gave information to the Sales Tax Officer, Palghar, District Thane, that the agricultural income of the assessee exceeded Rs. 36,000. It may be mentioned that for the purposes of the said Act the State Govt. has constituted the authorities under the Bombay Sales Tax Act, 1959, to be the Agrl. I.T. authorities under s. 20 of the said Act. The reason appears to be that having a ready-made hierarchy of taxing authorities available, the State Govt. though it advisable as also practicable to confer upon the same administrative hierarchy the assessment and tax object is also apparent from s. 21 of the said Act under which the Tribunal constituted under the said Bombay Sales Tax is also to be the Tribunal for the purpose of hearing appeals under the said Act.

3. The reason for the mamlatdar giving the aforesaid information to the STO was that the latter was also the Agrl. ITO for the Palghar area which would have jurisdiction to tax the agricultural income, if any, of the assessee. The relevance of mentioning the figure of Rs. 36,000 was because under sub-s. (2) of s. 4 of the said Act agricultural income-tax is payable is respect of agricultural income exceeding Rs. 36,000 at the rate of 50 naye paise for each rupee in excess of Rs. 36,000.

4. On receipt of this information, the said STO by his letter dated February 14, 1967, intimated to the assessee the said information and called upon him to attend at the Inspection Bungalow, Dahanu, on February 24, 1967, without fail. The said letter further stated that information regarding agricultural income should be brought by the assessee from April 1, 1961, onwards. In pursuance of the said letter the assessee's nephew attended with the books of account at the Inspection Bungalow, Dahanu, and those books were inspected by an inspector in the office of the STO, who, as mentioned before, was also the Agrl. ITO. The said Inspector made a report dated February 24, 1967. The said report showed that the turnover of the assessee during the assessment year 1961-62 was more than Rs. 36,000. Thereupon the said Agrl. ITO issued to the assessee a notice dated March 7, 1967. In view of the arguments advanced before us, it will be convenient to reproduce the said notice. It is as follows :

'Office of the Sales Tax Officer,

Agrl. Income Tax Officer,

Palghar.

To

M/s. Baijnath Mahadev Thakur,

Vangaon, Taluka Dahanu.

No. N (URO)-Agrl-I/B-1458 Palghar : Dt. 7-3-67.

Sub : Assessment proceedings under section 41 of the Maharashtra agricultural Income-tax Act, 1962, for the year 1961-62.

Gentlemen,

(1) Whereas you were liable under section 4 of the Act, did not furnish return under section 22 of the Act, showing your agricultural income for the year ended on 31-3-62.

(2) You are hereby directed to attended my officer on 25-3-67 at Sales Tax Office, Palghar, at 10.30 a.m. with your books of account and to show cause why you should not be assessed under section 41 of the Act for 1961-62 and why penalty under section 29 of the Act should not be imposed.

Yours faithfully,

Sd.

Agricultural Income-tax Officer.

N. B :

This office notice of 1-3-67, if received by you, be treated as cancelled. You need not attend this office on 23-3-1967. However in terms of this notice you should this office on 25-3-67 at 10.30 a.m. with the following information.

(1) Your complete books of account for 61-62.

(2) Constitution, along with the documentary evidence.

(3) Copy of income-tax orders for 61-62 and 62-63.

(4) Revenue record.

(5) Copy of balance-sheet for 61-62 and documentary evidence in support of items mentioned herein.

Note : In case no compliance is received from you, action deemed fit will be taken in the matter.'

5. This notice was enclosed along with another notice bearing the same date, which also, it would be convenient to reproduce in extenso in view of the arguments advanced before us. It is as follows :

'Office of the Sales Tax Officer,

Palghar.

To

M/s. Baijnath Mahadev Thakur,

Nangaon, Taluka Dahanu.

No. N (URO) Agri-J-I/B-1457

Sub : Show-case notice for non-submission of returns for the accounting year ended on 31-6-62.

(1) In pursuance of sub-section (1) of section 22 of the Maharashtra Agricultural Income-tax Act, 1962, read with rule 8 of the Maharashtra Agricultural Income-tax Rules, 1962, a notice was given that the persons whose total agricultural income during the previous year (i.e.), exceeded rupees thirty-six thousand, shall furnish returns in Form No. 3 within the prescribed period.

(2) As per your books for 61-62 produced before me on 24-2-67 have every reason to believe that your income during the year ended on 31-3-62 exceeded the prescribed limit under section 4 of the Act.

(3) However you failed to furnish the return for the said period required by the notice and did not show any reasonable cause for your failure to furnish the said return.

(4) In view of the above you have rendered yourself liable to a penalty under section 29 of the Act and the same is leviable at an amount not exceeding the amount of agricultural income-tax payable by you, or penal action under section 58 of the Act with simple imprisonment which may extent to six months or with fine not exceeding two thousand rupees or with both.

(5) In view of the above you are hereby directed to show cause as to why :

(a) You should not be assessed under section 41 of the Act for the above period ; and

(b) Penal action as proposed in para. No. 4 of this notice should not be taken against you.

(6) You are, therefore, directed to appear before me on 25-3-67 at 10.30 a.m. at Sales Tax Office, Palghar, for hearing with your books of account and with your written explanation, if any ; notice for assessment under section 41 of the Act is enclosed.

Your faithfully.

Sd.

Agricultural Income-tax Officer.

Encl : Notice.'

On the date mentioned in both the above notices, namely, March 25, 1967, the assessee attended before the Agrl. ITO, Palghar, with his books of account. Two days later, namely, on March 27, 1967, he filed a returns in respect of S.Y. 2017 relating to the assessment year 1962-63. On March 31, 1967, the Agrl. ITO, Palghar, passed an order of assessment. This order of assessment is divided into two parts. The first deals with the notice dated March 7, 1967, which was issued under s. 41 of the said Act, and the second is the other notice dated March 7, 1967, calling upon the assessee to show cause why a penalty should not be levied upon him and at the same time also calling upon him to show cause why he should not be assessed under the said s. 41. The second part of the said Act. The first five paragraphs of the said order are material and are required to be reproduced. They are as follows :

'1. Order of assessment u/s. 41 read with sec. 23 of the Maharashtra Agricultural Income-tax Act, 1962, for the period : Accounting period S.Y. 2017.

2. The assessee is carrying on business of developing agriculture at the above address and he is cultivating agricultural produce, viz., grass, paddy and vegetables, for sale. The activities are carried on jointly, i.e., by an HUF.

The notice u/s. 22 read with rule 8 of the Act and the Rules was issued but the assessee, though liable, did not file the returns for the accounting year S.Y. 2017 nor paid the tax.

4. As the assessee failed to furnish the returns. he was issued a notice dt. 7-3-67 under section 41 of the Act and he was directed to produce the books of account. The said notice was acknowledged by him on 7-3-67 and the dealer attended the office on 25-3-67. In terms of the said notice, Shri Pratap Mohan Singh Thakur, nephew of Shri Baijnath M. Thakur, duly assisted Shri M. R. Shaikh, I.T.P., and attended and produced the books of account for the S.Y. 2017 which are duly closed and adjusted.

5. Though the assessee was issued show-cause letter dated 7-3-67, he did not file return for the accounting year S.Y. 2017. However, books viz., Rojwal, Khatavahi, referred to above, were produced and they were examined. It is ascertained that the said books of account are maintained in the regular course of business and hence the book results, so far total sales of grass, paddy and vegetables are concerned, are accepted.'

6. In paras 6 to 8 of the said order the said officer deals with the position with respect to the agricultural income earned by the assessee as shown by his books of account. In paras. 9 to 13 he deals with the expenses which had been incurred by the assessee. Paragraph 14 states the final position and shows the taxable income at Rs. 74,909 and the amount of tax payable thereon at Rs. 37,454.50. So far as the other part of the order is concerned, the relevant portion of it is follows :

'Levy of penalty :

The assessee was issued show-cause notice dt. 7-3-67 as referred to above for non-submissions of return. There is no reply from him. But now he has filed the returns on 27-3-67. However, it is fit case for levy of penalty u/s. 29 of the Act. After taking a lenient view, I levy penalty of Rs. 3,800.'

7. Against the said order the assessee filed an appeal to the Assistant Commissioner of Agrl. I.T., which appeal was dismissed. The assessee there upon filed a second appeal to the Tribunal. In the said appeal the order appealed against was confirmed except on the count of depreciation claimed by the assessee. With respect to this claim the Tribunal remanded the matter to the Assistant Commissioner of Agrl. I.T. to decide the question as to what was the original cost of the items in respect of which depreciation was claimed. As mentioned above, both the parties made applications to the Tribunal under s. 39(1) of the said Act, which applications were granted by the Tribunal.

8. It will be convenient to deal with the third question set out above which has been referred by the Tribunal to this High Court at the instance of the assessee, because if the answer to that question were in favour of the assessee, the other two questions would not arise for determination.

9. It was the submission of Mr. Patil, learned counsel for the respondents, that s. 41 of the said Act correspondents to s. 34 of the old Indian I.T. Act, 1922, and s. 148 of the present I.T. Act, 1961. In Mr. Patil's submission the conditions prescribed which go to the validity of the jurisdiction to be exercised under that section, and if any one of these conditions is not complied with, the officer would have no jurisdiction to pass an order under the said s. 41, and the order would, therefore, be invalid and of no effect in law.

10. Before we proceed to examine these submission it will be convenient to set out the relevant provisions of sub-s. (1) of s. 41 of the said Act. The said sub-section without the proviso thereto, which is not relevant for our purposes, is as follows :

'41. Income escaping assessment. - (1) If the Agricultural Income-tax Officer discovers that agricultural income chargeable to agricultural income-tax has escaped assessment in any year, or has been under-assessed, or has been the subject or excessive relief under this Act, the Agricultural Income-tax Officer may, in any case in which the income chargeable under the Income-tax Act (that is, the Income-tax Act, 1961), under the head 'Profits and gains of business or profession' or in which he has to reason to believe that the assessee has concealed the particulars of the agricultural income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within five years of the end of that 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 of such company, 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 re-assess such agricultural 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.'

11. Sub-section (2) provides a period of limitation for making an order of assessment or reassessment under the said sub-s. (1). There is no dispute before us that the order complained of was made within the period of limitation. As the provisions of sub-s. (2) of s. 22 of the said Act are referred to in the said s. 41, it will be convenient at this stage briefly to notice not only those provisions but also the mode of assessment under the said Act. Under sub-s. (1) of s. 22, the Commissioner of Agrl. I.T. is, on or before such date in each year as may be prescribed, to give notice, by publication in such newspapers, as he thinks fit, as also in such other manner as may be prescribed, requiring every person whose total agricultural income during the previous year exceeded Rs. 36,000 to furnish to the Agrl. ITO concerned within such period, not being less than 60 days as may be specified in the said notice, a return in the prescribed form. Sub-sections (2) and (3) of s. 22 are as follows :

'(2) In the case of any person whose total agricultural income is, in the Agricultural Income-tax Officer's opinion, of such an amount as to render such person liable to agricultural income-tax, the Agricultural Income-tax Officer may serve a notice upon him requiring him 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 provided for in the notice, his total agricultural income during the previous year :

Provided that, on an application made in the prescribed manner, the Agricultural Income-tax Officer may extend the date for furnishing the return for a period not exceeding ninety days.'

(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 these 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.'

12. Section 23 provides for the manner of making an order of assessment where a return has been filed under s. 22. Sub-section (5) of s. 23 provides for the making of a best judgment assessment where a person has failed to file a return under sub-s. (2) of s. 22, or has not made a return or revised return under sub-s. (3) of that section, or if he fails to comply with all the terms of a notice issued to him under sub-s. (5) of s. 22, that is, to produce or cause to be produced such accounts or documents as the Agrl. ITO may require, or having made a return, fails to comply with all the terms of the notice issued under sub-s. (2), of s. 22, or fails to produce before him any order under the I.T. Act, 1961, or a certified copy thereof which might be necessary for the purpose of enabling any assessment to be made under s. 9 of the said Act. Section 34 of the Indian I.T. Act, 1922, is in pari material with the said s. 41, the language of the relevant provisions thereof being identical with that used in the said s. 41. The said s. 34 provided as follows :

'34. Income escaping assessment. - (1) If

(a) 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 that 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 of depreciation allowance has been computed, or

(b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed.

he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is 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 or recompute the loss or depreciation allowance ; 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.'

13. Section 22 of the Indian I.T. Act, 1922, corresponds to s. 22 of the said Act. Sub-section (2) of the said s. 22 is in pari materia with sub-s. (2) of the said Act and is as follows :

'(2) In the case of any person whose total income is, in the Income-tax Officer's opinion, of such an amount as to render such person liable to income-tax, the Income-tax Officer may serve a notice upon him requiring him 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 provided for in the notice) his total income and total world income during the previous year :

Provided that the Income-tax Officer in his discretion extend the date for the delivery of the return.'

14. Similar provisions occur in the I.T. Act, 1961. What has been set out in s. 34 of the 1922 Act has now been split over to two sections of the 1961 Act, namely, ss. 147 and 148. Section 147 confers upon the ITO the power to assess or reassess escaped income, while s. 148 deals with the issuance of a notice 'where income has escaped assessment'. The only difference in this behalf between the said s. 34 and the said s. 148 is that in the said s. 148 the words used are 'the Income-tax Officer shall serve on the assessee a notice', and instead of a reference to s. 22(2) of the 1922 Act, the reference is to s. 139(2) of the 1961 Act.

15. The judgment which has become the leading authority on s. 34 of the 1922 Act is the decision of a Division Bench of this High Court consisting of Chagla C.J. and Tendolkar J., namely, CIT v. Ramsukh Motilal : [1955]27ITR54(Bom) . In that case the court held that if a notice under the said s. 34 embodies any of the requirements under s. 22(2) of the 1922 Act, it must at the same time permit the assessee to comply with the requirement within a period which is not less than thirty days. The court further held that whereas it would be perfectly true to say that s. 22(2) was a procedural section and the failure to give notice or a defect in a notice under that section was a procedural defect, in the case of s. 34 it was not a procedural defect but was a failure to comply with a condition precedent to the assumption of jurisdiction. In that case the notice which had been issued gave only six days to the assessee to make a return. In pursuance of the said notice the assessee filed a return within five days. None the less, the Division Bench held that the condition precedent prescribed by the said s. 34 had not been complied with and that the illegality in the assumption of jurisdiction could not be waived by the assessee, and set aside the impugned order. This case has been consistently followed by the other High Courts, and we have not been shown any decision which lays down a contrary position. In CIT v. Kurban Hussain Ibrahimji Mithiborwala : [1971]82ITR821(SC) , the Supreme Court observed (at p. 823) :

'It is well settled that the Income-tax Officer's jurisdiction to reopen as assessment under section 34 depends upon the issuance of a valid notice. If the notice issued by him is invalid for any reason the entire proceedings taken by him would become void for want of jurisdiction.'

16. The principle enunciated by this High Court has thus received the imprimatur of the Supreme Court.

17. Relying upon these decisions, Mr. Patil submitted that the notice issued in the present case suffered from two jurisdictional infirmities : (1) that it did not require the assessee to file a return, and (2) that it gave to the assessee less than 30 days' time for complying with the notice.

16. We are unable to accept Mr. Patil's submission with respect to the first alleged defect. In our opinion, it is not necessary that a notice, to be given under the said s. 41, must contain all the requirements which can be included in a notice under s. 22(2) of the said Act. The very terms of the said s. 41 itself states that the notice to be served under s. 41 is to contain 'all or any of the requirements which may be included in a notice under sub-section (2) of section 22'. The Bombay decision relied upon by Mr. Patil also does not bear out Mr. Patil's submission. What the court said in that case was, to reproduce the language of the judgment itself (at p. 59) : 'Therefore, it is clear that if a notice under section 34 embodies any of the requirements under section 22(2), it must at the same time permit the assessee to comply with that requirement within a period which is not less than 30 days.' Mr. Patil's contention that the failure to include in the notice issued to the assessee a direction to file a return is a jurisdictional defect, must, therefore, be negatived. So far as the second defect contended for by Mr. Patil is concerned, in the Bombay case it was pointed out that each of the three requirements mentioned in the said s. 22(2) was qualified by the Legislature providing that the notice must give time to the assessee to comply with that requirement within a period which cannot be shorter than 30 days. Admittedly, the period given here was much less, and the notice will on that could be clearly invalid, and the Agrl. ITO had no jurisdiction to make the assessment in question, and the assessment made by him must be held to be invalid.

17. Mr. Jetly, learned counsel for the applicant, however, submitted that the assessment made by the Agrl. ITO was not one under the said s. 41 but was a regular assessment made under the said s. 23, because the assessee had voluntarily filed a return before the order of assessment was made. This was an argument which had found favour with the Tribunal. We will now examine the validity of this contention. If we turn to the said order of assessment, the relevant paragraphs of which we have set out earlier, it is clear that the order is not based upon the return filed by the assessee. It, in express terms, begins by stating that it is an order of assessment under s. 41 read with s. 23 of the said Act for the accounting period in question. Throughout the order for the purpose of arriving at the taxable agricultural income of the assessee what is referred to are the books of account produced by the assessee in pursuance of the first of the said two notices dated March 7, 1967. It is only after the agricultural income of the assessee had been assessed and the amount of tax payable by him determined that while discussing the question whether penalty should be levied or not that the said officer has referred to the return filed by the assessee on March 27, 1967. He has referred to it solely for the purpose of considering whether this filing of the return could be said to be an extenuating circumstance for non-levy of penalty, and he has held that none the less this was a fit case for the levy of the penalty but in view of the filing of the return he was taking a lenient view and imposing penalty in the sum of Rs. 3,800 only. Thus the only reason why the return filed by the assessee has featured in the order of assessment is for the purpose of determining whether or no penalty for non-filing of the return should be levied or not and if so in what amount.

18. In support of his submission that because a return had been filed by the assessee, the assessment out of which the present reference arises, was a regular assessment under s. 23 and not an assessment under s. 41. Mr. Jetly, learned counsel for the Department, relied upon three decisions of the Supreme Court. The first of these decisions was State of Assam v. Deva Prasad Barua : [1970]75ITR18(SC) . That was a case under the Assam Agrl. I.T. Act, 1939. Section 19(1) of the said Assam Act was the same as s. 22 (1) of the said Act with which we are concerned. Section 20 of the Assam Act was similar to s. 23 of the Indian I.T. Act, 1922, while s. 30 of the Assam Act dealt with escapement of agricultural income-tax and was in terms similar to ours s. 41 and s. 34 of the Indian I.T. Act. In that case a general notice was issued under the said s. 19(1). Though the Department contended that a special notice had also been issued to the assessee under s. 19(2) of the Assam Act, that fact was denied by the assessee and was not taken into account by the Supreme Court. Section 19(2) of the Assam Act correspond to s. 22(2) of the said Act. The assessee in that case filed a return and he was assessed. He thereupon filed a petition under arts. 226 and 227 of the Constitution of India challenging the assessment primarily on the ground that a notice under the said s. 19(2) had not been served upon him and, therefore, there was no jurisdiction in the Agrl. ITO to pass an order of assessment under s. 20 (1). The Supreme Court held that the words 'at any time' in s. 19(3) of the Assam Act, which corresponded to s. 22(3) of the said Act with which we are concerned, were not to be limited to the year of assessment, and if a return of agricultural income was voluntarily submitted by an assessee under the said s. 19(3) after the expiry of the relevant assessment year, then s. 30 of the said Assam Act would not apply, and an assessment on the basis of the return submitted by the assessee could be completed even after the expiry of the period mentioned in the said s. 30. In our opinion, this authority has no application to the case before us. In that case no notice under the said s. 30 corresponding to s. 41 had at any time been issued to the assessee. The assessee had himself voluntarily filed a return on the basis of which he had been assessed. The order of assessment was not made under the said s. 30 but under the said s. 20 which corresponded to out s. 23. None of these features is present in the case before us. In the present reference a notice under s. 41 was issued to the assessee. The return filed by the assessee could hardly be said to have been voluntarily filed, for it is obvious that it was filed as a result of the said second notice dated March 7, 1967, which called upon him to show cause why penalty should not be levied upon him to show cause why penalty should not be levied upon him for his failure to file a return as required by the general notice. It was to escape the levy of penalty or to lessen the amount of penalty that the assessee had filed the return for the relevant year. The Agrl. ITO also understood the filing of the return by the assessee in the sense we have mentioned earlier, as is clear from that part of his order of assessment which deals with levy of penalty.

19. The second decision relied upon by Mr. Jetly was Boloma Tea Estate v. Asst. Commr. of Taxes : [1972]86ITR774(SC) . It is unnecessary to refer to this decision in detail. The facts of that case and the contentions therein were the same as those in Deva Prasad Barua's case : [1970]75ITR18(SC) . In that case on facts similar to those in Deva Prasad Barua's case the Supreme Court applied to that case the ratio of its decision in Deva Prasad Barua's case.

20. The third decision relied upon by Mr. Jetly was CIT v. Ranchhoddas Karsondas : [1959]36ITR569(SC) . In that case a return showing income below the taxable limit was filed voluntarily by an assessee in answer to a general notice under s. 22(1) of the Indian I.T. Act, 1922. Ignoring this return the ITO issued a notice under s. 34 of that Act and proceeded to make an order under that section. The Supreme Court held that where in respect of any year a return had been voluntarily submitted before assessment, the ITO could not choose to ignore the return, and any notice issued and consequent assessment made under s. 34 ignoring the said return would be invalid. It will be pertinent to note that in that case the return was filed prior to the issue of the notice under s. 34 and the ITO had proceeded to ignore that return and had acted as if no return had been filed before him. The position in the case before us is very different. The notice under s. 41 of the said Act was issued prior to the return filed by the assessee. The return which was filed by the assessee was filed not in pursuance of any general notice but with a view to escape the levy of penalty upon him in respect of which a show-cause notice had already been issued to him.

21. Assuming that we are wrong in our reading of the decisions relied upon by Mr. Jetly, the result would be that the assessment would equally be invalid. If Mr. Jetly's submissions were correct, then in view of the return filed by the assessee on March 27, 1967, it was not open to the Agrl. ITO to make an order of assessment under s. 41 of the said Act, but he could have assessed under s. 41 would be invalid. So, either way we look at it, the order of assessment would be invalid. To escape this position Mr. Jetly contended that the mention of s. 41 in the said order should be ignored and it should be read as s. 23. Mr. Jetly submitted that the mention of a wrong section in an order would not invalidate the order and that the order must be so construed as to relate it to a jurisdiction which would confer validity upon it. In support of this submission Mr. Jetly relied upon four authorities. We, however, do not propose to refer to any of them because, in our opinion, none of them have any application. It was not at any time anybody's case that the Agrl. ITO had by mistake mentioned s. 41 in his order of assessment. In fact, such a position could never have been taken on the facts of this case. A reading of the said order of assessment makes it abundantly clear that it was not a regular order of assessment under s. 23 but was an order assessing escaped agricultural income under s. 41. This position becomes all the more clear when we read the two notices dated March 7, 1967, which were issued by the said officer. They clearly pointed out to the assessee that he had failed to file returns for the relevant year, and called upon him to attend with his books of account to show cause why he should not be assessed under s. 41 and why a penalty under s. 29 should not be levied upon him. It is to show that the above submission on behalf of the applicant is without any foundation that we have been at pains to reproduce in the earlier part of our judgment the two notices in question and the relevant paragraphs of the said order of assessment. The decision which is directly on all fours with the one before us is that of the Kerala High Court in Commr. of Agrl. I.T. v. Amalgamated Coffee Estates Ltd. : [1962]45ITR348(Ker) . In that case it was argued that the prescribed period of 30 days would apply when a return was asked to be filed by the notice but not when no return was asked for, but only particulars were required. This contention was rejected, and the court held that if a notice under s. 35 of the Madras Plantations Agricultural Income-tax Act, 1955, which corresponded to out s. 41, did not give 30 days' time to submit particulars, it was defective, and the reassessment made in pursuance of that notice was illegal and void.

22. It was next contended by Mr. Jetly that under the Maharashtra Agrl. I.T. Rules, 1962, made in exercise of the powers conferred by sub-ss. (1) and (2) of s. 72 of the said Act, there was no form prescribed for a notice under s. 41. There is equally no form prescribed for a notice under s. 22(2). The only form which is prescribed under sub-r.(1) of r. 8 of the said Rules is in respect of a general notice under s.22(1), which is Form 2 to the said Rules. The fact that no form has been prescribed can, in our opinion, have no relevance whatever. Section 41 states what a notice under that section is to contain. It is to contain all or any of the particulars which may be included in a notice under s. 22 (2). What s. 22(2) required is the serving of a notice upon an assessee calling upon him to furnish within a period of not less than 30 days a return in the prescribed form, verified in the prescribed manner, along with such other particulars as may be provided in the notice. What, therefore, the requirements of a notice under s. 22(2) or s. 41 are to be clear from these sections, and a perusal of the two notices in question can leave no doubt that these were notices issued under s. 41.

23. Mr. Jetly next submitted that s. 41 of the said Act applied only to a case of reassessment and not to a case of assessment. In support of this submission Mr. Jetly stated that all the cases under s. 34 of the Indian I.T. Act, 1922, as also under s. 148 of the I.T. Act, 1961, were cases of reassessment and there was not a single case of assessment under the said s. 34 or the said s. 148 which had come before the courts. For the sake of argument we are prepared to accept this statements of Mr. Jetly as being correct, but where does it lead us to The fact that a particular point may not have at any time arisen for a determination by the court previously is no ground for the court refusing to decide it when it does arise in a case. The argument of Mr. Jetly is contrary to the express words of s. 41 itself. That section provides that the Agrl. ITO 'may proceed to assess or reassess such agricultural income'. Identical words occurred in the said s. 34 and are to be found in the said s. 148. If the section itself contemplates an assessment where income has escaped assessment, there is no reason to confine it only to a case of reassessment, and the conditions precedent for the assumption of jurisdiction to reassess prescribed by s. 41 would also apply as conditions precedent to a case where an Agrl. ITO proceeds to assess escaped income.

24. It was lastly submitted by Mr. Jetly that all that s. 41 required is the giving of a reasonable opportunity to the assessee and that if there was any defect in the notice it had been waived or cured by the acquiescence of the assessee. In support of this submission Mr. Jetly relied upon a decision of the Supreme Court in Anandji Haridas and Co. (p.) Ltd. v. S. P. Kushare, STO : [1968]1SCR661 . In fairness to Mr. Jetly we must state that Mr. Jetly had prefaced his citation of this decision by a statement that it, strictly speaking, did not apply to the facts of the present case and that the section with which the court was concerned in that case was different. We then wonder why this decision was at all cited, but since it has been cited, we will refer to it. That was a case under the old C.P. and the Berar Sales Tax Act, 1947. Section 11A of that Act provided for assessment or reassessment of escaped income. Under that section assessment or reassessment was to be done 'after giving the dealer a reasonable opportunity of being heard'. No time-limit was prescribed by that section, either directly or by a reference to another section, as has been done by our s. 41. Rule 32 of the Rules made under the said C.P. and Berar Act, however, prescribed that a notice should 'ordinarily be of not less than thirty days'. The Supreme Court pointed out that the period of thirty days prescribed by the said r. 32 was not mandatory and the notice under the said s. 11A was not similar to a notice to be issued under s. 34 of the Indian I.T. Act, 1922. Mr. Jetly also relied upon the observations of the Supreme Court in that case that no prejudice had been caused to the appellants in that case by giving them a period shorter than thirty days to comply with the requirements of the notice. These observations of the Supreme Court must be read in the context of what the court held, namely, that the period prescribed by the said r. 32 was not mandatory and that the notice under s. 11A was not the same as a notice under s. 34 of the Indian I.T. Act. In CIT v. Ramsukh Motilal : [1955]27ITR54(Bom) , referred to earlier, it was held that an illegality in a notice under s. 34 of the Indian I.T. Act cannot be waived by the assessee. The position under s. 41 of the said Act would be the same, and a mere acquiescence by the assessee cannot confer jurisdiction upon the Agrl. ITO to make an order under s. 41 against the assessee.

25. As in our opinion the assessment in the present case was not valid, questions Nos. 1 and 2 do not rise for our determination.

26. In the result, we answer the questions as follows :

Question No. 1 : Does not arise for determination.

Question No. 2 : Does not arise for determination.

Question No. 3 : In the negative, that is, in favour of the assessee and against the Department.

27. So far as the costs of this reference are concerned, when this reference reached hearing, Mr. Patil, learned counsel for the respondents, informed us that it would be very difficult for him to support the Tribunal's observations with respect to the question of depreciation and that he was not going to make an attempt to do so.

28. So far as question No. 2 was concerned, M. Jetly also informed us at the outset that in view of the judgment of this court in Commr. of Agrl. I.T. v. Phalton Sugar Works Ltd. : [1980]121ITR920(Bom) , it will have to be answered in favour of the assessee and against the Department. The entire time taken up in the hearing of this reference has thus been by reason of the arguments advanced on question No. 3, and accordingly the applicant will pay to the respondents the costs of this reference fixed at Rs. 300.


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