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Jacob Vs. Additional Deputy Commissioner of Agricultural Income-tax and Another. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberOriginal petition No. 3517 of 1979-B
Reported in(1986)49CTR(Ker)146; [1986]158ITR596(Ker)
AppellantJacob
RespondentAdditional Deputy Commissioner of Agricultural Income-tax and Another.
Cases ReferredSankaran Nair v. Commr. of Agrl. I.T.
Excerpt:
.....section 34 and not as explaining similar words occurring in section 60(2) of the act is that had the assessee taken up the order of assessment in appeal under section 31 and in a second appeal under section 32 without success, he could have taken up the same questions in reference under section 60(1), and there is no reason why a similar order passed in revision under section 34 declining to interfere with the assessment shall not be treated as capable of being the subject-matter of a reference under section 60(2) of the act. this reasoning cannot hold good since section 60(1) enables the assessee or the commissioner by application to require the appellate tribunal to refer to the high court any question of law arising out of any order passed under sub-section (5) of section 32, whereas..........34 declining to interfere with the assessment shall not be treated as capable of being the subject-matter of a reference under section 60(2) of the act. this reasoning cannot hold good since section 60(1) enables the assessee or the commissioner by application to require the appellate tribunal to refer to the high court any question of law arising out of any order passed under sub-section (5) of section 32, whereas under section 60(2) of the act, only restricted categories of orders under section 34 of the act. viz., an order enhancing the assessment or an order under otherwise prejudicial to the assessee are meant to be taken up in reference. the only question which therefore, arises for consideration is whether we shall read almost similar phrases used in section 34 and section 60(2).....
Judgment:

SIVARAMAN NAIR J. - This petition comes up on a reference by Subramonian Poti C.J., and Paripoornan J. The two questions referred are :

'(1) Whether the provision in the second proviso to section 34 that an order passed declining to interfere shall not be deemed to be an order prejudicial to the assessee should not be read as applicable to the main part of section 34 alone or whether it should be read as explaining the term prejudicial to the assessee in section 60(2) of the Act ?

(2) Where a statute provides a right of revision to an assessee by enabling him to seek such revision by an application and he gets no relief in the revision, is it a case in which the order is prejudicial to the assessee ?'

Under section 60(2) of the Kerala Agricultural Income-tax Act, hereinafter referred to as 'the Act', an assessee is entitled to require the Commissioner to refer to the High Court any question arising out of an order under section 34 enhancing an assessment or which is 'otherwise prejudicial to him'. Section 34 of the Act enables the Commissioner to call for and revise any proceeding of an authority subordinate to him. This may be done either suo motu or on application of an assessee. There are two provision limiting the exercise of that power. The first proviso enjoins that an order prejudicial to an assessee shall not be passed without hearing him or giving him a reasonable opportunity of being heard. The latter proviso is to the effect that 'an order passed declining to interfere shall not be deemed to be an order prejudicial to the assessee'. It is the scope of this latter proviso that is the subject-matter of the original petition.

To answer the questions in favour of the assessee, we should assume that the words 'an order prejudicial to the assessee' in the proviso to section 34 and 'an order......... otherwise prejudicial to him' in section 60(2) of the Act are capable of different meanings. This course is definitely out of the ordinary in the matter of interpretation of statues; not that such a construction is impermissible. We should, therefore, see whether there is any justification for assuming that almost the same set of words in two provisions of the same statute should be given different meanings. No such reasons are pleaded by the petitioner, nor are we referred to any decision which compel such a course to be adopted by us.

The only reason which can be mentioned in support of the position that the words 'an order prejudicial to the assessee' occurring in the second proviso to section 34 of the Act as referring only to the main part of section 34 and not as explaining similar words occurring in section 60(2) of the Act is that had the assessee taken up the order of assessment in appeal under section 31 and in a second appeal under section 32 without success, he could have taken up the same questions in reference under section 60(1), and there is no reason why a similar order passed in revision under section 34 declining to interfere with the assessment shall not be treated as capable of being the subject-matter of a reference under section 60(2) of the Act. This reasoning cannot hold good since section 60(1) enables the assessee or the Commissioner by application to require the Appellate Tribunal to refer to the High Court any question of law arising out of any order passed under sub-section (5) of section 32, whereas under section 60(2) of the Act, only restricted categories of orders under section 34 of the Act. viz., an order enhancing the assessment or an order under otherwise prejudicial to the assessee are meant to be taken up in reference. The only question which therefore, arises for consideration is whether we shall read almost similar phrases used in section 34 and section 60(2) differently.

The leading case on this points is CIT v. Tribune Trust [1948] 16 ITR 214, which considered the effect of similar words in sections 33 and 66 of the Income-tax Act, 1922. It was held (p. 226) :

'An order made by the Commissioner under section 33 can only be said to be prejudicial to the assessee when he is, as a result of it, in a under review. If the assessee has a complaint against any assessment or order made by a subordinate officer, he has the appropriate and specific remedy which the Act provides. The Commissioner may act under section 33 with or without the invitation of the assessee; if he does so without invitation, it is clear that if he does nothing to worsen the position of the assessee, the latter can acquire no right; the review may be a purely departmental matter of which the assessee knows nothing. If, on the other hand, the Commissioner acts at the invitation of the assessee and again does nothing to worsen his position, there is no justification for giving him a new right of appeal........ Thus reference does not lie from an order under section 33 unless that order is prejudicial to the assessee in the sense that he is in a worse position than before the order was made.'

That decision was followed by the Madras High Court in N. N. Seshadrinathan v. State of Madras : [1966]60ITR482(Mad) . N. S. Kantan v. Agrl. ITO : [1965]58ITR53(Mad) and Kathirvelu Nadar v. Commr. of Agrl. I.T. : [1968]68ITR786(Mad) . A contrary view was taken by the Madras High Court earlier in the decision in Voora Sreeramulu Chetty v. CIT : [1939]7ITR263(Mad) , which was to the effect (p. 268) :

'An order which dismisses an application asking for the revision of a prejudicial order must be deemed to be prejudicial within the meaning of section 66(2).'

In Seshadrinathan v. State of Madras : [1966]60ITR482(Mad) , a Full Bench of the Madras High Court, dealing with the same question, observed as follows (p. 485) :

'It is true that a Full Bench of this court, consisting of five judges, interpreted this proviso in a different way in Voora Sreeramulu Chetty v. CIT : [1939]7ITR263(Mad) . But that is no longer good law having regard to the authoritative pronouncement of their Lordships of the Judicial Committee in CIT v. Tribune Trust, Lahore [1948] 16 ITR 214.'

In Parvathi Sankaran v. CIT : [1960]40ITR586(Ker) , a Division Bench of this court, dealing with similar provisions in section 43 and 109(2) of the Cochin Income-tax Act, had held that no order of the Commissioner dismissing the revision petition filed before him can be said to be prejudicial to the assessee, however wrong may be the reason given by him for the dismissal. Counsel for the Revenue also relied upon the decision [1984] KLT (SN) 74, rendered by Paripoornan J. and Krishna Bhat v. Agrl. ITO [1979] KLT 518, rendered by one of us (Bhaskaran C.J.) in support of this submission.

Counsel for the petitioner, however, submitted that the second proviso to section 34(1) qualifies only the first proviso, in that the requirement of notice and reasonable opportunity of being heard may not be applicable to an order of the Commissioner declining to revise the order of assessment. It is also submitted that this aspect of the matter was not covered by any of the decisions referred to above. He, therefore, submits that in the light of the reference by the Division Bench, this aspect of the matter may also be considered.

Apart from the fact that this aspect is not covered by the order of reference, we also find that the counsel is not correct in his submission that this aspect was not considered by any of the decisions referred to above. One of the specific pleas raised by counsel for the assessee unsuccessfully in N. S. Kantan v. Agrl. ITO : [1965]58ITR53(Mad) was :

'In other words, it was contended on behalf of the petitioner that if a revision petition is filed under section 34 and the Commissioner dismissed the same, it would certainly bean order prejudicial to the assessee within the meaning of section 54 as the Commissioner has declined to entertain the same. It was further contended that the second proviso to section 34 has only a limited operation on the first proviso to section 34 and apart from that, it has no other purpose, and cannot be used as a guide for determining the ambit of the right of revision provided under section 54 of the Act. We see no substance in this contention.'

A decision of a Division Bench of this court in Sankaran Nair v. Commr. of Agrl. I.T. ILR [1973] 1 Ker 428, requires to be noticed. It was held therein, that if an order under section 34 declining to interfere in revision contained observations against the assessee, and which observations were capable of being used against the assessee in the course of assessment proceedings, that may be an order 'otherwise prejudicial to the assessee', within the meaning of section 60(2) of the Act. The petitioner has no case that apart from the rejection of his application for revision, the order of the revisional authority contained any observation which was otherwise prejudicial to the assessee. It is, of course, true that even an order declining to revise an order of assessment may be otherwise prejudicial to the assessee. But, no such plea having been specifically raised in this original petition, it is not necessary for us to deal with that aspect of the matter.

On the basis of the above discussion, we have to hold that an order passed under section 34 of the Act, by the revisional authority, declining to interfere, shall not ordinarily be treated as an order prejudicial to the assessee under section 60(2) of the Act except in cases where it is pleaded and proved that prejudice is caused otherwise than by the mere rejection of the application for revision.

In the result, the original petition is dismissed. There will be no order as to costs.


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