1973 (8) TMI 27 - HC - Income Tax

Kerala Agricultural Income Tax Act, 1950 - 1. Whether, on the facts and circumstances of the case, the Tribunal was correct in holding that the proceedings initiated under section 35 are ab initio void ? 2. Whether, on the facts and circumstances of the case, the Agricultural Income-tax Officer was legally bound to communicate the original order of assessment recording the case ? - We answer the first question in the negative, that is, in favour of the revenue and against the assessee. We answer the second question also in the negative. Since the assessee had not been prejudiced in any manner by the nil proceedings recorded by the Agricultural Income-tax Officer on December 10, 1967, we do not think there was any obligation on the part of the Agricultural Income-tax Officer to have communicated that order to the assessee though even in such cases it is desirable to do so

Summary

Issues:
1. Validity of proceedings initiated under section 35 of the Agricultural Income-tax Act, 1950.
2. Legal obligation of the Agricultural Income-tax Officer to communicate the original order of assessment to the assessee.

Analysis:
The case involved two questions referred to the Kerala High Court by the Kerala Agricultural Income-tax Appellate Tribunal. The first issue was whether the proceedings initiated under section 35 were ab initio void, and the second issue was whether the Agricultural Income-tax Officer was legally bound to communicate the original order of assessment to the assessee. The case revolved around an assessment made for the year 1963-64 by the Income-tax Officer, where the income of the undivided family was estimated at Rs. 5,226, falling below Rs. 6,000. The officer applied the proviso to the Act and recorded a nil assessment without communicating it to the assessee. Subsequently, it was discovered that income had escaped assessment, leading to proceedings under section 35.

The Tribunal held that since the order of nil assessment was not communicated, the notice under section 35 was void, and the assessment was set aside. However, the High Court disagreed with this view, emphasizing that the communication of an assessment order to the assessee was not a statutory requirement under the Act. The Court highlighted that an assessment order, including a nil assessment, is valid even if not communicated, and cannot be altered without following the prescribed procedures. The Court cited previous judgments, including one by the Supreme Court, to support this interpretation.

Therefore, the High Court answered the first question in the negative, favoring the revenue. It also answered the second question in the negative, stating that there was no obligation on the part of the Agricultural Income-tax Officer to communicate the nil assessment order to the assessee. The Court concluded that the proceedings under section 35 were valid, and the reassessment stood. The parties were directed to bear their respective costs, and a copy of the judgment would be forwarded to the Appellate Tribunal as required by law.