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K. Bhuvanendran and ors. Vs. Commissioner of Agricultural Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberIncome-tax Referred Case Nos. 126 to 131 of 1970
Judge
Reported in[1974]94ITR139(Ker)
ActsKerala Agricultural Income-tax Act, 1950 - Sections 32(5); Income Tax (Appellate Tribunal) Rules, 1963 - Rule 11; Code of Civil Procedure (CPC) - Order 31, Rule 2
AppellantK. Bhuvanendran and ors.
RespondentCommissioner of Agricultural Income-tax
Appellant Advocate T.L. Viswanatha Iyer and; E.R. Venkiteswaran, Advs.
Respondent AdvocateGovernment Pleader
Excerpt:
- - 1. this is a reference by the kerala agricultural income-tax appellate tribunal pertaining to the assessment of six individuals for the year 1967-68 under the agricultural income-tax act, 1950. the question referred is :whether, on the facts and circumstances of the case, the tribunal was right in adjudicating upon a question not raised in the grounds of appeal ?' 2. by the assessment orders against the six individuals who were at one time members of a joint hindu undivided family which had become partitioned the accounts of the assessees were rejected and a best judgment assessment was made on the basis of an estimated income per acre in the cardamom estate consisting of 70 acres and the value of the cardamom per kilogram had also been estimated. but his finding that certain..........that no leave was sought or granted. ground no. 1 which we have already read is too wide and vague to be relied on in relation to a specific matter that has been decided by the tribunal with reference to the yield from the 16 acres. the memorandum of appeal must concisely and specifically state pointedly the grounds of objection taken in the appeal. ground no. 1 will not cover the point discussed. 7. in the light of the above, the question referred to us has to be answered in the negative, that is, in favour of the assessee and against the department. we do so. 8. a copy of this judgment under the seal of the high court and the signature of the registrar will be forwarded to the kerala agricultural income-tax appellate tribunal, trivandrum.
Judgment:

Govindan Nair, J.

1. This is a reference by the Kerala Agricultural Income-tax Appellate Tribunal pertaining to the assessment of six individuals for the year 1967-68 under the Agricultural Income-tax Act, 1950. The question referred is :

' Whether, on the facts and circumstances of the case, the Tribunal was right in adjudicating upon a question not raised in the grounds of appeal ?'

2. By the assessment orders against the six individuals who were at one time members of a joint Hindu undivided family which had become partitioned the accounts of the assessees were rejected and a best judgment assessment was made on the basis of an estimated income per acre in the cardamom estate consisting of 70 acres and the value of the cardamom per kilogram had also been estimated. The assessees appealed before the Appellate Assistant Commissioner and one of the points raised before the Appellate Assistant Commissioner was that the Agricultural Income-tax Officer erred in applying a uniform rate of 75 kgs. of cardamom per acre in relation to the entire estate. It was elaborated that the cardamom in 16 out of 70 acres had only started bearing in the year previous to the accounting period pertaining to the assessment year 1967-68 and that the yield from those 16 acres was very much below 75 kgs. per acre. Apart from this the fixation of yield at 75 kgs. per acre for the rest of the estate was also challenged. Both these contentions were accepted by the Appellate Assistant Commissioner. There was a departmental appeal before theTribunal and the grounds taken are three extracted in the statement of the case at page 22 of the paper book which we may reproduce:

' 1. that the order of the Appellate Assistant Commissioner to the extent to which it is against the State is contrary to law and facts;

2. that the Appellate Assistant Commissioner has gone wrong in. reducing the estimate of yield to 60 kgs. per acre ignoring the results of the inspection conducted in the year; and

3. that the Appellate Assistant Commissioner has gone wrong in valuing the estimated quantity of cardamom at the average rate disclosed by a few bills produced by the assessee when the average market rate was much higher than that and there were no indications that the crop of the assessee in general was below average in quality. '

3. The Tribunal, admittedly, in the absence of a specific ground in the memorandum of appeal, purported to deal with the question as to what should be the yield from the 16 acres consisting of young plants and stated thus:

' But his finding that certain portion of the estate contained plants which yielded for the first time in the accounting year in question is clearly unacceptable in view of the definite finding of the Agricultural Income-tax Officer that the entire estate contained plants of the same age as they were planted in the same year 1960 on the virgin soil. So the order of the Appellate Assistant Commissioner refixing the yield at 12 kgs. for the few acres in the estate of each assessee is set aside. The 65 kgs. per acre will be adopted for the entire yielding acres. '

4. The assessees objected to this procedure and sought reference which has been made by the Tribunal under Section 60(1) of the Agricultural Income-tax Act, 1950.

5. It is implicit and evident from the question referred that the Tribunal had adjudicated upon a question not raised in the grounds of appeal. It is not seen from either the order of the Tribunal or from the statement of the case that any leave was sought for raising an additional ground relating to the question of the yield from the 16 acres and whether such leave was granted after the Appellate Tribunal applied its mind to the question whether such leave should be granted.

6. Unlike Rule 8 of the Income-tax (Appellate Tribunal) Rules, 1963, insisting that every memorandum of appeal shall set forth concisely and under distinct heads the grounds of appeal, there is no such provision in the Agricultural Income-tax Rules, 1951, and there is none in the Kerala Agricultural Income-tax Appellate Tribunal Regulations, 1965, insisting that the memorandum of appeal shall set forth under different and distinct heads the grounds of appeal. The only provision that we could discern regarding this matter is the provision in Rule 26 of the AgriculturalIncome-tax Rules, 1951, requiring that an appeal under section 32 shall in the case of an appeal against an order under Sub-section (5) of section 31 be in Form B(T). This is the provision that was applicable to the appeal taken before the Tribunal. Form B(T) merely provides at the end of it that grounds of appeal should be stated. But, even in the absence of specific provision that the appeal memorandum shall distinctly under different heads specify the grounds of appeal we think it is implicit that it should be so as this is a procedure which is normally adopted in all cases of appeals. We also think that normally an appellate court or Tribunal or authority will only deal with grounds that are so specified in the grounds of appeal. This is so, we think, even in the absence of provisions such as those contained in Rule 11 of the Income-tax (Appellate Tribunal) Rules, 1963, enjoining that the appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal. There is a similar provision in Rule 2 of Order XLI of the Code of Civil Procedure. This provision also enables the appellate court to grant leave to raise grounds which are not specifically set forth in the memorandum of appeal. In exercising this power of granting leave, it is well-established that various factors, such as whether the new ground sought to be raised would defeat any provisions of the law of limitation or whether such ground would involve the consideration of complicated questions of fact and whether the permitting of obtaining such ground would take the opponent by surprise and generally whether it would be unfair to the respondent to allow such ground being taken, would arise for consideration. After a sound exercise of judicial discretion leave can be granted in given cases and this is so provided in the provisions under the Income-tax (Appellate Tribunal) Rules, 1963, and under Rule 2 of Order XLI of the Code of Civil Procedure. In the case before us, the matter is a little more complicated because there is no provision either in the Agricultural Income-tax Act, 1960, or the Rules framed thereunder or for that matter in the Kerala Agricultural Income-tax Appellate Tribunal Regulations, 1965, enabling the Agricultural Income-tax Tribunal to grant leave to raise grounds at the hearing which had not been mentioned in the grounds of appeal. It is clear from Section 32(5) of the Agricultural Income-tax Act, 1950, that the power of the appellate authority is only to 'pass such orders thereon'. Similar provisions have been the subject-matter of judicial scrutiny and it may now be taken to be well-established that ' thereon ' must refer to the subject-matter of the appeal. In other words, it must refer to the grounds in the appellate memorandum. It is, therefore, clear that the Agricultural Income-tax Appellate Tribunal should only deal with the subject-matter of the appeal, namely, the grounds of appeal. Assuming without deciding that these grounds stated in the memorandumof appeal can be enlarged by leave being granted to the appellant to raise additional grounds in given cases on the Appellate Tribunal being satisfied that the case is one where such leave should be granted even when there are no specific provisions in the Rules or Regulations permitting such a procedure the question arises whether such a procedure had been adopted in this case. There is nothing in the order of the Appellate Tribunal, which is annexure ' C ' to the statement of the case, which indicates that leave was sought and leave was granted nor is there anything to indicate in the statement of the case that this was the position. The question referred to us poses a problem in the abstract as to whether a ground which had not been taken in the grounds of appeal can be urged before the Appellate Tribunal, of course, on the facts and circumstances of this case. On the facts and circumstances of this case we have to take it that a ground had been allowed to be urged before the Appellate Tribunal without leave being sought or granted. Such a procedure is distinctly against all norms of procedure and is certainly violative of the principles of natural justice. So, on the facts as disclosed in the statement of the case and the order of the Tribunal in appeal we have to come to the conclusion that what has been done by the Tribunal is unjustifiable. There is some indication in the statement of the case that the Tribunal proceeded on the basis that the point was covered by ground No. 1 raised before the Appellate Tribunal. This also indicates that no leave was sought or granted. Ground No. 1 which we have already read is too wide and vague to be relied on in relation to a specific matter that has been decided by the Tribunal with reference to the yield from the 16 acres. The memorandum of appeal must concisely and specifically state pointedly the grounds of objection taken in the appeal. Ground No. 1 will not cover the point discussed.

7. In the light of the above, the question referred to us has to be answered in the negative, that is, in favour of the assessee and against the department. We do so.

8. A copy of this judgment under the seal of the High Court and the signature of the Registrar will be forwarded to the Kerala Agricultural Income-tax Appellate Tribunal, Trivandrum.


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