1978 (1) TMI 68 - HC - Income Tax

Summary

Issues Involved:
1. Interpretation of section 34(2) of the Tamil Nadu Agricultural Income-tax Act, 1955.
2. Whether the three-year limitation period in section 34(2)(c) applies to the initiation or the finalization of revisional proceedings.

Summary:

Issue 1: Interpretation of Section 34(2) of the Tamil Nadu Agricultural Income-tax Act, 1955
The Full Bench was convened due to conflicting views from two Division Benches in N. V. S. Kadirvel Nadar v. State of Madras [1962] 46 ITR 251 (Mad) and M. V. P. C. Ramaswami Naicker v. State of Madras [1968] 69 ITR 420 (Mad) regarding the interpretation of section 34(2) of the Tamil Nadu Agricultural Income-tax Act, 1955. The petitioner, an assessee under the Act, challenged the return of his revision petitions by the first respondent, who claimed that final orders could not be passed within the three-year period prescribed u/s 34(2)(c).

Issue 2: Limitation Period for Initiation or Finalization of Revisional Proceedings
The petitioner argued that the three-year period u/s 34(2)(c) is for invoking the revisional jurisdiction, not for passing final orders. Conversely, the respondents contended that the three-year limitation is for passing final orders. The court examined the language of section 34, which empowers the Commissioner to revise orders either suo motu or on an application by an assessee, provided the order is not more than three years old.

The court reviewed previous judgments, including N. V. S. Kadirvel Nadar v. State of Madras, which held that the limitation period is for initiating revisional proceedings, not for their termination. The court also considered analogous provisions in other tax statutes and concluded that the word "revise" in section 34(2) encompasses the entire revisional process, from calling for records to passing final orders.

The court preferred the view in N. V. S. Kadirvel Nadar v. State of Madras, stating that interpreting the limitation period as applying to the finalization of proceedings would unjustly prejudice the assessee, who could lose the right to revision due to delays beyond their control. The court emphasized that the interpretation should make the machinery of assessment workable and consistent with the scheme of the Act.

Conclusion:
The court held that the three-year limitation period u/s 34(2)(c) applies to the initiation of revisional proceedings, not their finalization. The orders returning the revision petitions were deemed unsustainable, and the writ petitions were allowed. The respondent was directed to entertain and dispose of the revision petitions according to law, with the petitioner given two weeks to re-present the returned petitions. The assessee was awarded costs, with counsel's fee set at Rs. 250.