The petitioner was assessed to agricultural income-tax on October 5, 1958, for the assessment year 1955-1956, corresponding to the accounting year 1129 M. E. On November 27, 1958, the Agricultural Income-tax Officer, Palai, issued exhibit P-1, notice, to the petitioner, intimating him that he proposed to reassess his income for the accounting years 1129, 1130 and 1131 M. E. and inviting objections, if any, to be filed within 35 days of the receipt of the notice. This was followed by another notice, exhibit P-2, dated January 30, 1959, which stated that the assessments made on the petitioner for the assessment years 1955-56, 1956-57 and 1957-58 will be reopened and fresh assessments made under section 35 of the Agricultural Income-tax Act, 1950, which may be referred to briefly as the 'Act'. The petitioner took no action pursuant to the notice. The Agricultural Income-tax Office made a reassessment by order, exhibit P-3, on March 10, 1959. A notice of demand, exhibit P-4, was then issued to the petitioner for the payment of tax imposed. This petition is to quash both exhibit P-3 and P-4.
The chief ground on which the petitioner relies is that no notice had been issued to the petitioner under section 35 of the Act and that therefore the Income-tax Officer had no jurisdiction to make the assessment. It was not disputed before me that the issue of the notice under section 35 is a condition precedent to the assumption of jurisdiction by the Income-tax Officer to make a reassessment. The controversy was as to the scope of a notice under section 35. The material part of this section provides :
'If for any reason agricultural income chargeable to tax under this Act has escaped assessment in any financial year ...... Income-tax Officer may....... serve on the person liable to pay the tax..... a notice under sub-section (2) of section 17 and may proceed to assess or reassess such income and the provision of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section.'
Section 17(2) of the Act, to which reference is made in section 35, reads :
'In the case of any person whose total agricultural income is, in the opinion of the Agricultural Income-tax Officer, of such amount as to render such person liable to payment of agricultural income-tax for any financial year, he may serve in that year a notice in the prescribed form requiring such person to furnish within such periods, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) his total agricultural income during the previous year'.
It was common ground that exhibit P-1 was not a notice in terms of section 35 of the Act, but the learned Government Pleader maintained that exhibit P-1 was the notice in compliance with that provision. According to counsel for the petitioner exhibit P-1 was bad in law as not containing 'all or any of the requirements' of a notice under section 17(2) of the Act, viz., the requirements to furnish a return of income in the prescribed form, to verify it in the prescribed manner, and to set forth, along with other particulars as may be provided in the notice the total agricultural income. The learned Government Pleader argued in reply that, once an assessee had made a return of his income under section 17(2) for the original assessment a further return is unnecessary and uncalled for, for making a reassessment under section 35 of the Act, and that the omission to call for a return in the notice under that section is not fatal. If this argument is to prevail, the three requirements of notice under section 17(2), being related to the central requirement as to the return and turning upon it, there need be no requirement of that notice at all in a notice at all in a notice under section 35. Surely, the expression 'all or any of the requirements' cannot mean none. The suggestion that the specification of a time-limit of 35 days, as in exhibit P-1, is such a requirement in the notice under section 17(2) cannot be countenanced, for the period of time has to be related to a specific act or must qualify a specific requirement in the notice. The period, standing by itself, means nothing. Dealing with period of 30 days prescribed by section 22(2) of the Indian Income-tax Act, 1922, Chagla C.J. in Commissioner of Income-tax v. Ramsukh Motilal treated it as but qualifying the three requirements in the notice, which were stated to be the requirements to make a return, to verify and to give particulars. It seems therefore clear that a return of income or particulars as to the total agricultural income is the central requirement in a notice under section 17(2) of the Act, which cannot be dispensed with. It is seen from the Income-tax Manual that the income-tax department had, in prescribing the form of a notice under section 34 of the Indian Income-tax Act, 1922, before it was amended, made the requirement as to the making of a return, an essential ingredient in it. In the Bombay case too, it appears that, though the assessee had furnished a return of his income for the original assessment, he was called upon to make a fresh return for the reassessment, the illegality in the notice complained of in that case being that a period of only six days was given to the assessee instead of a minimum cannot be considered to be meaningless or redundant; it may be that the assessee may have discovered some mistake in the original return he had made or may wish to modify it in the light of fresh circumstances which may have come to his notice and it is only reasonable for the department to give the assessee a last chance, as it were, to make a return of his income before proceeding against him by way of reassessment. In Commissioner of Income-tax v. Mahaliram Ramjidas too the assess had furnished a return of his income under section 22(2) of the Indian Income-tax Act, 1922, for the original assessment and the notice issued under section 34 of that act specifically called on him to make a fresh return of his income. On this, the Privy Council observed as follows :
'The operative part of section 34 empowers the Income-tax Officer to proceed de novo under sub-section (2) of section 22, and that in turn leads, if there should still be a question of the accuracy of the return, to an enquiry under section 23(2) and (3) and in that enquiry the assessee has a statutory right to appear and to produce evidence.'
These observation seem to lend support to the contention of the petitioners counsel that it is not an empty formality to insist upon a return or particulars of the income by a notice under section 35 of the Act. In the present case, exhibit P-1 stated that the petitioners income from coconuts has escaped assessment and it called upon him to file objections to the proposal to reassess the income. This is not in compliance with the notice prescribed by section 35 or section 17(2) of the Act. In this view, the assessment order, exhibit P-3, and the notice, exhibit P-4, have to be quashed; they are accordingly quashed and the petition is allowed in the above manner. No costs.