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Mallappa Kallappa Ugare Vs. Agricultural Income-tax Officer, Bijapur - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Judge
Reported in[1973]91ITR529(KAR); [1973]91ITR529(Karn); (1973)2MysLJ425
ActsMysore Agricultural Income Tax Act, 1957 - Sections 19(4)
AppellantMallappa Kallappa Ugare
RespondentAgricultural Income-tax Officer, Bijapur
Appellant AdvocateK.S. Srinivasa Iyengar, Adv.
Respondent AdvocateH.N. Narayana, Adv.
Excerpt:
.....of payment of commission to agents held, though a tax payer may resort to a device to divert the income before it accrues or arises to him, the effectiveness of the device depends upon its genuineness. the substance of the transaction has to be assessed by applying the taxing statute so as to ascertain whether it is a sham or make believe transaction or one which is genuine and therefore is eligible for deduction under the act. hence, courts have to look into the form of the transaction to find out its substance so as to ensure that there is no avoidance of tax by a method impermissible in law. on facts held, the creation of m/s. r.m.c. as well as m/s. o.m.c (as agencies) was nothing but a device adopted by the appellant for siphoning of the profits of the appellants company in the..........the total income of the assessee on which he leaved the tax. 2. the short question raised in these writ petitions is that the petitioner was not afforded an opportunity of being heard as required under the second proviso to sub-section (4) of section 19 of the act. it is clear from a perusal of the notice dated may 12, 1971, that the respondent had merely directed the assessee to prefer his objections, if any, to the proposition notice, but did not fix any date for hearing. in that view the order of assessment impugned in these writ petitions cannot be sustained. 3. accordingly, we allow these writ petitions, quash the impugned orders of assessment dated august 17, 1971, for the assessment years 1966-67 and 1967-68, reserving liberty to the respondent to proceed with the hearing of the.....
Judgment:

Govinda Bhat, C.J.

1. The writ petitions relate to the assessment year 1966-67 and 1967-68. The petitioner was served with a proposition notice under section 19 (4) read with section 36 of the Mysore Agricultural Income-tax Act, 1957 (hereinafter called 'the Act'). That proposition notice is dated April 17, 1971, and required the petitioner to prefer his objections, if any, by April 22, 1971. But, notices were served on April 24, 1971. Therefore, the respondent, Agricultural Income-tax Officer, issued a second notice dated May 12, 1971, calling upon the assessee to file his objections, if any, within ten days from the date of receipt of the said notice. In response to the second notice, the assessee submitted his written objections under letter dated May 25, 1971. After receipt of the objections the respondent did not post the case for hearing with regard to the objections raised by the assessee, but straightaway passed two orders on August 17, 1971, determining the total income of the assessee on which he leaved the tax.

2. The short question raised in these writ petitions is that the petitioner was not afforded an opportunity of being heard as required under the second proviso to sub-section (4) of section 19 of the Act. It is clear from a perusal of the notice dated May 12, 1971, that the respondent had merely directed the assessee to prefer his objections, if any, to the proposition notice, but did not fix any date for hearing. In that view the order of assessment impugned in these writ petitions cannot be sustained.

3. Accordingly, we allow these writ petitions, quash the impugned orders of assessment dated August 17, 1971, for the assessment years 1966-67 and 1967-68, reserving liberty to the respondent to proceed with the hearing of the objections of the assessee after fixing a date of hearing in accordance with law. It is ordered accordingly. No costs.

4. Petitions allowed.


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