1971 (11) TMI 29 - HC - Income Tax

Mysore Agricultural Income Tax Act - failure to file Return - best judgment assessment - assessee does not file his return and does not avail of the opportunity to be heard - assessee had not raised any objection to the proposition notice, assessment was valid held that, during pendency of application for cancellation of assessment, penalty for non-payment of tax could not be levied - order of penalty is invalid

Summary

Issues:
1. Validity of penalty under section 42 of the Mysore Agricultural Income-tax Act, 1957.
2. Legality of the assessment order made under section 19(4) and the opportunity of being heard provided to the petitioner.

Analysis:

1. Validity of Penalty under Section 42:
The petitioner challenged the penalty imposed under section 42 of the Act. The court observed that the Agricultural Income-tax Officer has the discretion to levy a penalty when an assessee defaults in paying the agricultural income-tax. However, in this case, the petitioner had filed an application under section 21 for cancellation of the assessment, which was pending when the penalty was imposed. The court held that it would not be appropriate to impose a penalty while an application for cancellation of assessment is pending. Therefore, the court quashed the penalty order dated July 21, 1969, and directed the assessing authority to refund the penalty amount if already paid.

2. Legality of Assessment Order under Section 19(4):
The petitioner contended that the assessment order made under section 19(4) was arbitrary and that he was not given a reasonable opportunity to be heard. The court examined the facts of the case and found no merit in these contentions. The petitioner had not challenged the accuracy of the acreage of crops or the computation of gross income based on the proposition notice. The court noted that the yield and commodity rates were calculated based on the average yield and prices notified under the Mysore Land Reforms Act. The petitioner did not demonstrate that the calculations were incorrect or excessive. Therefore, the court upheld the assessment order and dismissed the challenge against it.

In conclusion, the court quashed the penalty order but upheld the assessment order. The petitioner's challenge against the penalty was successful, leading to a refund if already paid, while the challenge against the assessment order failed. The court found no other issues raised in the writ petition. The judgment provides a detailed analysis of the legal provisions under the Mysore Agricultural Income-tax Act, emphasizing the importance of procedural fairness and proper exercise of discretion by the assessing authority.