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N. Khader Sheriff Saheb Vs. Commissioner of Agricultural Income-tax, and Another. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberWrit Petition Nos. 1569 to 1575 of 1973 and 1590 to 1593 of 1973
Reported in[1978]113ITR50(Mad)
AppellantN. Khader Sheriff Saheb
RespondentCommissioner of Agricultural Income-tax, and Another.
Excerpt:
- .....of composition and the petitioner has been directed to pay agricultural income-tax as per the revised orders of composition. the petitioner has challenged these revised orders of composition, in revision, before the commissioner for agricultural income-tax, to quash the revised order of composition passed by the agricultural income-tax officer for the nine assessment years, i.e., from 1963-64 to 1971-72, as confirmed in revision by the commissioner. the petitioner has challenged the revised orders of composition mainly on two grounds.one is that they have been passed under section 35 of the act as an escaped assessment without complying with the statutory requirement of giving a prior notice to the petitioner. according to the petitioner though an order of composition has been made.....
Judgment:

RAMANUJAM J. - The petitioner, who is the same in all the writ petitions, is one Khader Sheriff Saheb. He was an assessee under the Agricultural Income-tax Act, 1955, on the file of the Agricultural Income-tax Officer,Arcot. Orders of composition had been passed year after year under section 65 of the Act in respect of part of the lands held by him on the basis of the return filed by him. It has been mentioned in the composition application filed by the petitioner for all the years 1963-64 to 1971-72, that the exact extent of the land held by him in Mukundarayapuram village could not be given in his return as the settlement proceedings are pending in respect thereof, and that he had no objection for revision of the assessment after the completion of the said settlement proceedings and after the exact extent of land belonging to the petitioner is clearly ascertained. Based on the said statement of the petitioner in his composition applications, composition orders had been passed by the Agricultural Income-tax Officer reserving his right to reopen and revise the same as and when the extent of land held by the petitioner in Mukundarayapuram village is ascertained in completion of the settlement proceedings.

It appears that Mukundarayapuram village was an inam estate and the survey and settlement proceedings were pending in relation to the lands in that village when the orders of composition were passed. Subsequently after the completion of the survey and settlement proceedings in relation to the lands that village, the order of composition have been revised by the Agricultural Income-tax Officer based on the reservation made by him in the original orders of composition and the petitioner has been directed to pay agricultural income-tax as per the revised orders of composition. The petitioner has challenged these revised orders of composition, in revision, before the Commissioner for Agricultural Income-tax, to quash the revised order of composition passed by the Agricultural Income-tax Officer for the nine assessment years, i.e., from 1963-64 to 1971-72, as confirmed in revision by the Commissioner. The petitioner has challenged the revised orders of composition mainly on two grounds.

One is that they have been passed under section 35 of the Act as an escaped assessment without complying with the statutory requirement of giving a prior notice to the petitioner. According to the petitioner though an order of composition has been made under section 65 of the Act, it virtually amounts to an order of assessment under section 17 of the Act and therefore, any revision of the composition order can be only be done by invoking section 35 of the Act which provides for the manner of assessing an escaped income, and no notice proposing assessment of escaped income as contemplated under section 35 of the Act has been given to him for any of the years in this case. As against this contention, the learned counsel for the respondents contends that an order of composition cannot be taken as an order of assessment under section 17 of the Act, that, therefore, revised order of composition cannot be treated as orders passed under section 35 of the Act and that the original orders of composition having made a reservation of the right of the Agricultural Income-tax Officer to include the extent of the lands held by the petitioner in Mukundarayapuram village, after the settlement of that village is completed, the power of the Agricultural Income-tax Officer to revise the order has to be traced only to the original composition order and not to section 35 of the Act. This is in fact the view taken by the Commissioner while disposing of the revision petitions. The question is whether the submission of the learned counsel for the respondents as well as the view taken by the Commissioner can be accepted as correct.

It is true that in all the composition application filed by the petitioner, he has clearly stated that he has no objection for the inclusion of his hands for the purpose of determining his ultimate tax liability and that in the original orders of composition, reservation has been made to the effect that as and when the settlement is completed as regards the lands in Mukundarayapuram village, separate action will be taken for including those lands in the petitioners holding for the purpose of determining the tax. But it cannot be disputed that even without any such statement by the petitioner in his return or the reservation by the Agricultural Income-tax Officer in the order of composition, the original order of composition can be revised under section 35 of the Act, if the income has escaped assessment for any reason. The income will escape assessment if some of the lands held by the petitioner had been omitted to be assessed. Notwithstanding the original orders of composition, the assessing authority will be entitled to proceed to revise the assessment by invoking section 35 of the Act if it is found that certain lands belonging to the petitioner have not been included in his aggregate holding for any reason. Here the reason why the lands at Mukundarayapuram village was not included in the holding of the petitioner at the time when the original order of composition was made was that the settlement proceedings were not complete and it is not known clearly as to what is the actual extent held by the petitioner in his application for composition or the reservation made in the original orders of composition by the officer is not quite material for determining the jurisdiction of the Agricultural Income-tax Officer to revise the assessment. I am not inclined to agree with the learned counsel for the respondents that the revised orders of composition should be treated as the original orders of assessment, for the Act contemplates only one order of assessment in relation to one individual and does not contemplate piecemeal orders of assessment at various stages in respect of the same individual. There cannot be an assessment in relation to a portion of the income of the petitioner and further assessment in relation to the same person in respect of his some other income. The Act in no way contemplates the passing of two assessment orders in relation to the same person. Therefore, once an assessment is made against the person, that assessment could be revised only by invoking section 35 if it is found that the income has escaped assessment for any reason in the original assessment for any reason in the original assessment and under section 36. Therefore, revised order of composition passed by the Agricultural Income-tax Officer in these cases can only be treated as orders passed under section 35 of the Act.

On this basis, we have to deal with the petitioners objection that the revised orders of composition are bad for the reason that prior notice proposing revision as contemplated under section 35 of the Act had not been issued. The petitioner has made this complaint even before the Commissioner at the stage of revision and also in the affidavit filed in support of the writ petition. In the counter-affidavit filed by the respondents, it has been stated that section 35 of the Act had not been invoked in all these cases and, therefore, there is no necessity to issue the notice proposing revision as contemplated under section 35 of the Act and that, in any event, notice as contemplated under section 35 of the Act had been in fact given in respect of five assessment years 1966-67 to 1970-71. In the reply affidavit filed to the petitioner, the petitioner has denied the service of any notice on him under section 35 of the Act for any of the years. But the assessment file produced before the court would show that a combined notice for the five years, 1966-67 to 1970-71, has in fact been served on the petitioner. The acknowledgment signed by the deponent of the reply affidavit is found assessing authority in the proceedings for revision of assessment under section 35 of the Act. Therefore, it has to be taken that there was service of notice as contemplated under section 35 of the Act in respect of five assessment years 1966-67 to 1970-71. The file does not contain any such notice for the four assessment years 1963-64 to 1965-66 and 1971-72. Even the counter-affidavit does not proceed on the basis that any such notice was given in respect of these four assessment years. It only proceeds on the basis that no such notice is necessary since the revised order of composition are not made under section 35 of the Act. It can, therefore, be safely taken that in fact there was no notice as contemplated under section 35 of the Act in respect of the assessment years 1963-64, 1964-65, 1965-66 and 1971-72.

Now that it has been held that all the revised orders of composition had been made only under section 35 of the Act, the procedure contemplated therein should strictly be followed. Section 35 makes it a pre-condition that a notice containing all the particulars as contemplated in section 16(2) of the Act should be served on the assessee before the authority proceeds to assess or reassess the escaped income, under section 35 of the Act. Since this statutory procedure has not been followed in respect of the assessment years 1963-64, 1964-65, 1965-66 and 1971-72 the revised orders of composition cannot be upheld. The revised orders in respect of these years have, therefore, to be quashed. The assessing officer is, however, given liberty to proceed with the revision of the assessment under section 35 of the Act, after giving due notice to the petitioner and after giving him a reasonable opportunity to put forward his case against the proposed revision of the original orders of composition.

The second ground of attack made by the petitioner against the revised orders of composition is that the extent held by him in Mukundarayapuram village has not been correctly fixed by the assessing authority and that some of the lands not belonging to him had also been included in his holding. For the five assessment years 1966-67 to 1970-71, the petitioner was given notice prior to the passing of the revised orders of composition and he had an opportunity to put forward his case. Though the petitioner was served with notice he had not availed of that opportunity to file his objections. Further, in the revisional proceedings before the Commissioner of Agricultural Income-tax, he had a further opportunity to establish his case that the larger extent of land had been included in his holding. In the revisional orders passed by the Commissioner, it has been mentioned that the petitioner did not substantiate his claim by producing any concrete materials. Even before this court, no material has been referred to by the petitioner to show as to what is the actual extent of land held by him in that village. It is not, therefore, possible to go into that question. However, now that for the assessment years 1963-64, 1964-65 and 1965-66 and 1971-72, the assessing authority has been directed to proceed with the revision of assessment after giving due opportunity to the petitioner, the petitioner can substantiate his claim as to the actual extent of land in Mukundarayapuram village. In this view the Writ Petitions Nos. 1569, 1571, 1573, 1592 and 1593 of 1973 are dismissed. W.P. Nos. 1570, 1572, 1590 and 1591 are allowed. There will, however, be no orders as to costs in all these writ petitions.


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