1. In this Petition under Article 226 of the Constitution, the petitioner has challenged the order dated 19-8-1981 of the Agricultural Income-Tax Officer, Madikere ('AITO') and the consequent notice of demand (Annexure-C) issued on 21-8-1981.
2. For the assessment year 1975-76, relevant to the accounting period ending on 31-3-1975, the petitioner filed his return under the Karnataka Agricultural Income-tax Act. 1957 (Karnataka Act 22 of 1957) ('the Act') before the AITO who on an examination of the same completed the assessment under the Act on 28-5-1976. In the purported exercise of his powers under Section 37 of the Act, the AITO issued a show cause notice on 1-2-1978 proposing to rectify his previous assessment order on diverse grounds, which was objected to by the petitioner. Unfortunately the AITO without realising that there was a period of limitation stipulated in Sub-section (7) of Section 37 of the Act, made his order as late as on 19-8-1981, in which he found that there were circumstances, warranting rectification and enhanced the liability of the petitioner for taxes to an extent of Rs. 3,451-69 and has issued a consequent notice of demand on 21-8-1981.
3. Among other grounds, the petitioner has urged that the rectification order made by the AITO was barred by time.
4. Sri J.N.S. Prasad, Learned Counsel for the Petitioner strenuously contends that the order made by the AITO on 19-8-1981 was barred by time and was without jurisdiction. In support of his contention Sri Prasad strongly relies on a Division Bench ruling of this Court in K.G. Subramanya v. Commissioner of Agricultural Income Tax, Mysore : 73ITR499(KAR) .
5. Sri S. Rajendra Babu, Learned Government Advocate appearing for the respondent in justifying the impugned order contends that if the proceedings were initiated within 4 years of the original assessment order, the same can be completed beyond that period also. In support of his contention Sri Babu strongly relies on a ruling rendered by Venkataramiah, J. (as his Lordship then was) In Sha Vajeshankar Vasudeva and Company v. The Assistant Commissioner of Commercial Taxes (Assessment) Mangalore, 34 STC 257.
6. From the very order made by the AITO, we find that the original assessment order was made on 28.5,1976, that a notice to rectify the same was issued on 11.2,1978 and the rectification order was made by him only on 19.8.1981. From these dates, it is clear that the rectification order was made by the AITO beyond four years from the date the original assessment order was made by him under the Act.
7. Section 37(7) of the Act which prescribes a period of limitation for rectification of the orders made under the Act, reads thus :
'No amendment under this Section shall be made after the expiry of four years from the date of the order sought to be amended.'
On the plain language of the Section, it is clear that the authority empowered to rectify has to make his order within 4 years from the date of the original assessment order made under the Act. The plain and clear language of the Section imperatively requires the authority to make his order within 4 years from the date of the original order. The Section does not provide any scope for an argument on the initiation of proceedings within 4 years and their completion beyond that period as in the case of certain other statutes.
8. Sub-section (7) of Section 37 of the Act commences with negative terms and the same has therefore to be ordinarily construed as mandatory provision. Even otherwise Sub-section (7) of Section 37 of the Act which prescribes a period of limitation must be construed strictly, When so construed, it is clear that a rectification order under Section 37 of the Act, if it is otherwise valid must be made within a period of four years from the date of the original assessment order under the Act. In this view, the procedural requirements to be complied with viz., issue of a show cause notice and an opportunity of hearing, have really no relevance to decide the maximum period of limitation prescribed by Sub-section (7) of Section 37 of the Act.
9. On the above analysis, it follows that the order made by the AITO was beyond the period of four years and was without jurisdiction and illegal.
10. In Subramanya's case : 73ITR499(KAR) , a Division Bench of this Court examining an analogous provision occurring in Section 35 of the Act as it then stood and ruled that an order of revision must be made within a period of four years from the date of the order. In my opinion, the principles enunciated in Subramanya's case : 73ITR499(KAR) hold good in ascertaining the true scope and ambit of Sub-section (7) of Section 37 of the Act.
11. In Sha Vajeshankar Vasudeva and Company's case, 34 STC 257 this Court was examining a rectification proceeding under Section 25(A) of the Karnataka Sales Tax Act of 1957 (ST Act). Section 25(A) of the ST Act is not in pan materia or analogous to Section 37(7) of the Act. In the very case relied on by Sri Babu, Venkataramaiah, J. (as his Lordship than was) referring to Subramanya's case, 34 STC 257 distinguished the same as inapplicable to the language of Section 25(A) of the ST Act. In my view Sha Vajeshankar Vasudeva and Company's case, 34 STC 257 does not really assist Sri Babu to hold that the order is not barred by time.
12. On the above discussion, I hold that the rectification order made by she AITO is barred by time and is without jurisdiction and, therefore, the same is liable to be quashed. When once I hold that the rectification order is liable to be quashed, it necessarily follows that the consequential demand notice issued by the AITO is also liable to be quashed.
13. In the light of my above discussion, I quash the order made by the AITO and the consequential demand notice issued thereto.
14. Rule issued is made absolute. But, in the circumstances of me case. I direct the parties to bear their own costs.