1. The petitioner if the head and manager of a Nambudiri Illom. The Illom was assessed to tax under the Agricultural Income-tax Act. 1950, in respect of the assessment year 1958-59, 1959-60, 1960-61 and 1961-62. All the four assessment orders were passed on 14-3-1962.
2. Section 3 of the Agricultural Income-tax Act, 1950, provides that agricultural income-tax at the rate or rates specified in the Schedule to that Act shall be charged for each financial year in accordance with and subject to the previsions of that Act on the total agricultural income of the previous year. Sub-sections (3) and (4) of that section as they stood on the date of the assessment orders--14-3-1962--read as follows:
'3. In the case of an undivided Aliyasanthana family or branch or Maruniakkathayam tarwad including a Nmbudiri family or a family like that of the Moothathu or any other class governed by the law applicable to Nambudiries consisting of more than five members and whose agricultural income exceeds six thousand rupees, the tax shall be assessed at the average rate applicable to the share of the agricultural income due to five members of the family or to six thousand rupees whichever is higher.
4. In the case of an undivided Hindu family consisting of brothers only or of a brother or brothers and the son or sons of a brother or brothers and whose agricultural income exceeds six thousand rupees, the tax shall be assessed at the average rate applicable to the share of income due to a brother or to six thousand rupees, whichever is higher.
Explanation.-- For the purposes of this sub-section------
(a) the expression 'share of income due to a brother' means the portion of the total agricultural income of the family which would have accrued to a brother, if a partition of the assets had been effected according to law on the day before the assessment is made; and
(b) 'son' includes a son's son'
3. Subsequent to the orders of assessment on 14-3-1962, an Act was passed, Act 12 of 1964, which amended Sub-section (3) and omitted Sub-section (4) with effect from 1-4-1958. The amended Sub-section (3) is in the following terms:
'In the case of a Hindu undivided family consisting of more than five members entitled to claim a share on partition and whose agricultural income exceeds six thousands rupees, the tax shall be assessed at the average rate applicable to the share of the agricultural income due to five members of the family or to six thousand rupees, whichever is higher.'
4. Subsequent to the amendment, an order under Section 36 of the Agricultural Income-tax Act, 1950, was passed by the first respondent assessing the Illom at the rate indicated hi subsection (3) of Section 3. That order is Ext. P-l dated 17-8-1964, and it is the validity of that order that is challenged before us.
5. Sub-section (1) of Section 36 provider that the Agricultural Income-tax Officer may at any time within three years from the date of any assessment order passed by him, of hisown motion, rectify any mistake apparent from the record of the assessment. If this provision can be invoked, then Ext. P-2 is clearly within time as it is within three years of the date of the four assessment orders concerned, namely, 14-3-1962.
6. The contention of the petitioner is that Section 36 is a general section for the rectification of mistakes and that it is Section 35 and not Section 36 that is applicable to the case. Section 35 provides that if for any reason agricultural income chargeable to tax under the Act has escaped assessment in any financial year or has been assessed at too low a rate, the Agricultural Income-tax Officer may, at any time within three years, of the end of that year serve on the person liable to pay the tax a notice containing all or any of the requirements which may be included in a notice under Sub-section (2) of Section 17 and may proceed to assess or re-assess such income and fee provisions of the Act shall so far as may be, apply accordingly as if the notice were a notice issued under that sub-section.
7. We we inclined to take the view that what we have before us is a case of an assessment at too low a rate and that the provision applicable is Section 35 as contended by the assessee and not Section 36 as contended by the Department. The original assessment was of the income of the Illom at the rate indicated in Sub-section (4) of Section 3 of the Act. The present attempt, in consequence of the amendments effected by Act 12 of 1964 with effect from 1-4-1958, is to assess the same income at the rate indicated in Sub-section (3) of Section 3.
8. Sections 35 and 36 of the Agricultural Income-tax Act, 1930, correspond to Sections 34 and 35 of the Indian Income-tax Act, 1922 In Palaniappa Chettiar v. Commissioner of Income-tax, AIR 1930 Mad 126 (SB), the Court referred to Section 34 of the Indian Income-tax Act, 1922, and said :
'Section 34 refers to a specific case, namely, the case where an income chargeable to income-tax has escaped or has been assessed at too low a rate. It may escape assessment leaving the rate unchanged, in which case it is only the amount of the assessment that will have bo be raised owing to the rise in the taxable income, or it may escape assessment in such a way that, if rectified, it would take the income beyond a certain rate; for example, it may give the figure to be over Rs. 40,000 in which case it will be assessed at 0-1-6 instead of 0-1-0 and the rate wilt therefore be higher'.
9. In In re, Chotay Lal, AIR 1932 All 88, the Income-tax Officer thought that the assessee was a Hindu undivided family and for that reason did not charge super-tax on the first Rs. 25,000 above the first Rs. 50,000 in accordance with the provisions of the Indian Finance Act, 1929. It was later discovered that the assessee should have been assessed as an individual and not as a Hindu undivided family and that consequently he should have been charged to super-tax tinder the Act on the first Rs. 25,000 above the first Rs. 50,000 as well.
The Court said:
'In properly calculating the super-tax the officer concerned will take, in the case of a Hindu undivided family, the first Rs. 25,000 in excess of the first Rs. 50,000 of the income, and calculate the rato of tax at the rate 'nil'. Then he will take the next Rs. 25,000 and will calculate the tax at one anna in the rupee and beyond the lots of Rs. 50,000 at the rate of l 1/2 annas in the rupee'.
Thus calculating the amount of the income-tax, the rate to be applied to the first Rs. 25,000 over the first Rs. 50,000 of the income-tax was 'nil'. In this view we can easfly say that, not only within the spirit but within the letter of the words of Section 34, Income-tax Act, a sum of Rs. 25,000 has been assessed 'at toe low a rate'.'
10. Ext. P-2, in so far as it relates to the assessment years 1958-59, 1959-60 and 1960-61, was passed beyond three years of the end of those financial years. It follows that even if we are inclined to treat Ext. P-2 as an order passed under Section 35 of the Agricultural Income-tax Act, 1950, it cannot be sustained in respect of those three years and has to be quashed to that extent. We do so.
11. Ext. P-2, in so far as it relates to the assessment year 1961-62, was passed within three years of that financial year; and the petitioner agrees that the said order in so far as it relates to that assessment year may be treated as an order under Section 35 of the Agricultural Income-tax Act. 1950, and sustained to that extent. Ext. P-2 will, therefore, stand as far as the assessment year 1961-62 is concerned.
12. The petition is allowed as above. No costs.