1990 (11) TMI 42 - HC - Income Tax

Summary

Issues:
Jurisdiction of assessing authority under section 36 of the Karnataka Agricultural Income-tax Act, 1957.
Validity of reassessment made by the assessing authority beyond the prescribed period of limitation under section 36.

Analysis:
The revision petitions before the High Court of Karnataka challenged the common order passed by the Karnataka Appellate Tribunal in Agricultural Income-tax Appeals. The petitioner, a Coffee Planter, had filed returns declaring losses for multiple assessment years, which were not accepted by the assessing authority. Subsequently, the assessing authority made best judgment assessments for those years. The petitioner later filed revised returns in 1983, which were acted upon by the assessing authority without calling for fresh returns as required under section 36 of the Act.

The High Court analyzed the provisions of section 36 of the Act, which empowers the assessing authority to assess income that has escaped assessment. Referring to previous court decisions, the High Court emphasized that the assessing authority must call for fresh returns if it concludes that income has escaped assessment. In this case, the assessing authority did not form an opinion that income had escaped assessment, as the original returns were rejected and best judgment assessments were made.

The High Court highlighted that the assessing authority lacked jurisdiction to reassess the petitioner based on the fresh returns filed in 1983 without issuing a notice intimating escapement of income. The Court rejected the argument that the assessing authority could rely on the Supreme Court judgment in a different case, emphasizing that the circumstances in the present case did not warrant reassessment without proper jurisdiction.

Furthermore, the High Court found that the Tribunal and the first appellate authority overlooked the jurisdictional issue and confirmed the orders without addressing the irregularity committed by the assessing authority. The Court set aside the orders and emphasized that the assessments done in 1983 were beyond the three-year limitation period prescribed by the Act, rendering them time-barred.

In conclusion, the High Court allowed the revision petitions, setting aside the orders of the Tribunal and other authorities. The Court noted that the assessing authority could not have initiated action beyond the prescribed period of limitation, even if there was jurisdiction, and ruled that there would be no order as to costs in the circumstances of the case.