1970 (6) TMI 8 - HC - Income Tax

Mysore Agricultural Income Tax Act - best judgment assessment - assessee had not complied with a notice u/s 18(2) to file the returns served after the expiry of the assessment year - order of assessment challenged on grounds that the Act did not levy any charge on the income derived prior to November 1, 1956, from lands that were situated In the former State of Bombaly but included in the new State of Mysore

Summary

Issues:
1. Challenge against the order of assessment under the Mysore Agricultural Income-tax Act, 1957.
2. Interpretation of the power of the Agricultural Income-tax Officer under section 19(4) of the Act.
3. Validity of the notice issued under sub-section (2) of section 18 for the assessment year 1957-58.

Analysis:

1. The petitioner challenged the order of assessment for the assessment year 1957-58 under the Mysore Agricultural Income-tax Act, 1957. The main contention was that the Act did not levy any charge on income derived prior to November 1, 1956, from lands in the former State of Bombay but included in the new State of Mysore. The High Court initially allowed the writ petition based on this ground, following a previous decision. However, the Supreme Court later set aside this decision, stating that the Act indeed imposed a charge on income from lands for the entire previous year relevant to the assessment year 1957-58. The matters were remanded for fresh disposal.

2. The judgment further delves into the interpretation of the power of the Agricultural Income-tax Officer under section 19(4) of the Act. It was highlighted that the Officer can make an assessment to the best of his judgment only when a person fails to submit a return under specific subsections of section 18. In this case, the power under section 19(4) could not be exercised as the relevant subsections of section 18 were not applicable to the assessment year 1957-58. The court emphasized the timeline and requirements for issuing notices under section 18, concluding that the Officer had exceeded his jurisdiction in making the assessment for that assessment year.

3. The validity of the notice served under sub-section (2) of section 18 for the assessment year 1957-58 was also scrutinized. It was noted that the notice was served after the deadline of March 31, 1958, making it illegal and without jurisdiction. As a result, the petitioner was justified in not filing a return. Since the petitioner was not in default, the Officer did not have the authority to proceed with the assessment under section 19(4). Consequently, the High Court quashed the impugned order of assessment and directed a refund if any tax had been collected from the petitioner.

In conclusion, the judgment addressed the challenges against the assessment order, clarified the powers of the Agricultural Income-tax Officer, and emphasized the importance of adhering to statutory timelines and procedures in tax assessments.