1965 (12) TMI 31 - SC - Indian Laws

Whether on the facts and having regard to the provisions of section 25 of the Act, the Board could on the 15th October, 1952, direct a fresh assessment to be made ? Held that - It is to be held that the notice issued by the Sub-Divisional Officer was not only unauthorised, but was also quashed by the Board. The Collector must, before proceeding to assess, issue under section 15(3) a notice when no return was filed pursuant to the notice under section 15(1), and a notice under section 15(3) cannot issue after expiry of the year of assessment to which the notice relates. he Collector has, therefore, under the direction given by the Board, to issue a fresh notice before a proceeding for assessment may be started, and the earlier notice issued under section 25 cannot be relied upon by the Collector. Appeal dismissed.

Issues Involved:
1. Jurisdiction of the Sub-Divisional Officer to assess agricultural income.
2. Validity of reassessment orders by the Collector.
3. Authority of the Agricultural Income-tax Commissioner and the Board of Revision.
4. Applicability of Section 15(3) and Section 25 of the U.P. Agricultural Income-tax Act, 1948.
5. Validity of notices issued under Section 15(3) and Section 25.

Detailed Analysis:

1. Jurisdiction of the Sub-Divisional Officer to Assess Agricultural Income:
The Sub-Divisional Officer assessed the respondent's income under Section 16(3) of the U.P. Agricultural Income-tax Act, 1948. However, it was later found that the Sub-Divisional Officer had no jurisdiction to assess the income as the respondent's gross agricultural income exceeded Rs. 1 lakh. According to Section 14(2), only the Collector has jurisdiction in such cases. The Board of Revision and the Commissioner both agreed that the assessment order by the Sub-Divisional Officer was "illegal and invalid."

2. Validity of Reassessment Orders by the Collector:
The Collector recomputed the tax under Section 25 read with Section 16(4) of the Act, but this order was also set aside. The Commissioner directed that fresh assessment be made by the Collector, but this was challenged. The Board of Revision set aside the reassessment order, stating that the initial assessment by the Sub-Divisional Officer was without jurisdiction, making the reassessment equally invalid. The High Court upheld this view, stating that the reassessment could not stand as it was based on an invalid initial assessment.

3. Authority of the Agricultural Income-tax Commissioner and the Board of Revision:
The Commissioner set aside the orders of the Collector and the Sub-Divisional Officer and directed a fresh assessment. The Board of Revision, however, noted that the Commissioner exceeded his authority by setting aside an order not challenged in appeal before him. The Board took up the matter suo motu and declared the order of the Sub-Divisional Officer illegal. This was referred to the High Court, which confirmed that the Board had no authority to direct a fresh assessment under the given circumstances.

4. Applicability of Section 15(3) and Section 25 of the U.P. Agricultural Income-tax Act, 1948:
Section 15(3) allows the assessing authority to issue a notice requiring a return of income within the assessment year. Section 25 permits reassessment of escaped income within one year of the end of the year in which it escaped assessment. The High Court emphasized that the Sub-Divisional Officer had no jurisdiction to issue a notice under Section 15(3) once it was found that the respondent's income exceeded Rs. 1 lakh. Furthermore, the reassessment under Section 25 was invalid as it was based on an unauthorized initial assessment.

5. Validity of Notices Issued under Section 15(3) and Section 25:
The notice under Section 15(3) issued by the Sub-Divisional Officer was deemed unauthorized as he had no jurisdiction over cases where the gross income exceeded Rs. 1 lakh. The Board's order implicitly quashed this notice. The High Court also dismissed the argument that a general notice under Section 15(1) could validate subsequent proceedings based on an invalid special notice under Section 15(3). Additionally, the notice under Section 25 for reassessment was invalidated as the initial assessment was unauthorized, and a fresh notice was required for any new assessment proceedings.

Conclusion:
The High Court's judgment was affirmed, stating that the Board had no authority to direct a fresh assessment under the circumstances. The appeal was dismissed, and no costs were awarded. The judgment underscores the importance of adhering to jurisdictional limits and procedural requirements under the U.P. Agricultural Income-tax Act, 1948.

← Previous Next →