1975 (11) TMI 6 - HC - Income Tax

Summary

Issues Involved:
The issues involved in the judgment are whether the Appellate Tribunal was justified in holding that selling paddy at prices higher than those fixed under the Kerala Paddy (Maximum Prices) Order can only be cognizant by a specific authority, and whether the Tribunal was justified in fixing the maximum prices as the price at which the excess paddy was sold in the open market.

First Issue:
The assessee filed returns under the Kerala Agrl. I.T. Act, and the assessments were finalized by the Agrl. ITO on a best judgment basis. The net assessable income was determined for various assessment years. The AAC made modifications in regard to yield and expenses under paddy, but did not interfere with the valuation of paddy. The matter was taken up in second appeal before the Kerala Agricultural Income-tax Appellate Tribunal, where the main point raised was the calculation of paddy price exceeding the nirak rate or the rate prescribed under the Kerala Paddy (Maximum Prices) Order. The Tribunal directed the assessing authorities to calculate the value of paddy at the nirak rates and the prices fixed by the rules for the relevant periods, emphasizing the mandatory nature of these rules and the consequences of violating them.

Second Issue:
The Commissioner of Agricultural Income-tax made Reference Applications requiring the Tribunal to refer certain questions of law to the court. The revenue contended that the decision of the Tribunal regarding the Maximum Prices Control Orders was erroneous, citing a Supreme Court case. However, the Tribunal's mistake in stating that illegal transactions cannot be cognizant by an authority constituted by the statute does not help the revenue in this case. The Agrl. ITO did not find that the assessee sold paddy at rates exceeding the legally fixed rates, and fixing prices higher than the Maximum Prices Order in a best judgment assessment would be based on conjectures. The judgment highlighted the unlawfulness of selling paddy at rates higher than those fixed by the Maximum Prices Order, emphasizing the legal consequences and the need for evidence to prove any illegality in transactions.

Conclusion:
The judgment addressed the issues related to the valuation of paddy and the legality of selling paddy at prices exceeding the Maximum Prices Order. It emphasized the mandatory nature of the rules and the need for evidence to prove any violation. The Tribunal's direction to calculate paddy value based on the legally fixed rates was upheld, and the judgment provided a detailed analysis of the legal framework governing the pricing of essential commodities like paddy.