1970 (1) TMI 5 - HC - Income Tax

Mysore Agricultural Income Tax Act - notice of demand of the same date issued by the Agricultural Income-tax Officer - petitioner s application u/s 67 for composition of the agricultural income-tax was granted - previous order of composition had been set aside - petitioner is exempt from regular assessment to tax by virtue of the provisions of sub-s. (6) of s. 67 - notice of demand are quashed

Summary

Issues:
1. Jurisdiction of the Agricultural Income-tax Officer to make a regular assessment while a composition order is in force.

The judgment delivered by the High Court of Karnataka addressed a writ petition filed under Article 226 of the Constitution of India against an assessment order and notice of demand issued by the Agricultural Income-tax Officer. The petitioner, an agriculturist owning areca and coconut gardens, had applied for composition of tax under section 67 of the Mysore Agricultural Income-tax Act, 1957. The composition was granted by the respondent, and the petitioner paid the compounding fee as per the order. Subsequently, the Agricultural Income-tax Officer issued a notice stating the petitioner was not entitled to composition due to exceeding land acreage, requesting a return for the assessment year 1963-64. The petitioner, unable to provide accounts, requested assessment to be made to the best of judgment. Despite the composition order, the respondent made a regular assessment, levied tax, and issued a demand notice. The petitioner challenged this action before the High Court.

The key argument presented was that as long as the composition order remained valid and unrevoked, the respondent had no authority to conduct a regular assessment. Section 67 of the Act allows for compounding of agricultural income tax for land not exceeding 150 acres, granting exemption from regular assessment. The court noted that the petitioner's application for composition was approved, and the fee was paid, with no subsequent valid revocation of the composition order. Therefore, as per section 67(6), the petitioner was exempt from regular assessment. The assessment order claimed a mistake in the composition grant but failed to show any revocation of the composition order. Without a valid revocation, the court held that the respondent lacked jurisdiction to conduct a regular assessment while the composition order was in force.

In conclusion, the High Court allowed the writ petition, quashing the assessment order and demand notice. The court ruled in favor of the petitioner, emphasizing that in the absence of a revoked composition order, the respondent could not proceed with a regular assessment, thereby upholding the petitioner's exemption from tax assessment under section 67 of the Act.