2006 (2) TMI 146 - HC - Income Tax

Summary

Issues:
Challenge to notices proposing to revise agricultural income-tax assessments under section 41 of the Agricultural Income-tax Act, 1991, based on arbitrary and jurisdictional grounds.

Analysis:
The petitioner, a charitable trust, was initially granted the benefit of paying tax at a compounded rate above 20 hectares under section 13(7) of the Act. However, a Supreme Court judgment in 1998 revoked the charitable trust status due to its formation to promote the interests of a single religious community. Subsequently, the Assessing Officer sought to revise the assessments for the years 1991-92 to 1993-94 under section 41 of the Act, with permission from the Commissioner.

The petitioner argued that assessments under section 13 cannot be reopened under section 41 as there was no income escapement since tax payment under section 13 is based on cultivated land area, not income determination. The Government pleader contended that section 41 applies to income escapement regardless of the assessment method. The court agreed with the Government pleader, stating that section 13 provides an alternate assessment scheme overriding other provisions, including section 3, and thus, assessments under section 13 are subject to section 41 for escaped tax.

The court overruled the petitioner's objection against the proceedings under section 41(1) and allowed the Assessing Officer to proceed with assessments under section 35(2) and (4) read with section 41(1) due to the Commissioner's order. The court also noted that previous decisions cited by the petitioner were not applicable to the current case.

As no other issues were addressed in the impugned notices, the court directed the Assessing Officer to complete the revised assessments for 1991-92 to 1993-94 within two months, considering objections raised by the petitioner. The court left open the petitioner's right to raise issues like status of the assessee and eligibility for compounding before the Assessing Officer during the assessment process. The court disposed of the case upholding the impugned notices but with the mentioned directions for assessment completion.