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TMI Blog1963 (11) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural income-tax in any year, he may be served in that year a notice in the prescribed form requiring such person to furnish within such period, not being less than thirty days as may be specified in the notice, a return in the prescribed form..............setting forth............his total agricultural income during the previous year. If the assessing authority is satisfied that a return made under section 15 is correct and complete it is to assess the agricultural income of the assessee and determine the tax payable by the person. If it finds the return to be incorrect or incomplete it should serve on the person a notice requiring him to attend its office or to produce evidence on a certain date and then it should pass an assessment order assessing the agricultural income and determining the tax payable by the person. If the person fails to make a return or fails to comply with the notice issued under sub-section (2) or to produce evidence under sub-section (3) of section 16 it is required to make the assessment to the best of its judgment. This is the gist of section 16. There is some difficulty in giving effect to the provisions of section 16(3) and 14(2). Who is an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order passed by the Sub-Divisional Officer on May 14, 1949, and that since it was without jurisdiction and the fact that it was so was brought to its notice, it should in exercise of its revisional jurisdiction set it aside, while maintaining the order passed by the Commissioner, itself set aside the Sub-Divisional Officer's assessment order as being without jurisdiction and directed that fresh assessment will be made according to law. Since the Board passed the order more than six years after the end of the assessment year the question arose whether it could be passed at all or not. In the connected case three questions have been referred to this court by the Revision Board, they being: 1. Whether having regard to the provisions of section 25 of the Agricultural Income-tax Act, 1948, the Revision Board was entitled in law to entertain a revision application and direct a fresh assessment thereon after the lapse of more than one year from the end of the assessment year (1356 Fasli which corresponds to the period July 1, 1948, to June 30, 1949)? 2. Whether the applicant is entitled to set off losses determined under section 6(2)(b) against income arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and whether which assessing authority is competent to issue a notice under section 25 depends on the amount of the escaped income or on the aggregate of the amounts of the income already assessed, if at all, and the escaped income. The original assessment order was passed by a Sub-Divisional Officer but the notice under section 25 was issued not by him but by the Collector. The Collector issued notice under section 25 on the ground that a net income of ₹ 7,000 and odd had escaped assessment; i? the amount of the escaped income alone was to be considered in determining who can issue a notice under section 25, the Sub-Divisional Officer, and not the Collector, could issue it. Further, if once an assessment order was passed by an assessing authority only, it can issue a notice under section 25; again the notice in this case could have been issued only by the Sub-Divisional Officer. But if the law is that if an assessment order is passed by a Sub-Divisional Officer wrongly, i.e., without jurisdiction, a notice under section 25 can be issued by the Collector notwithstanding the fact that the amount of the escaped income is of less than one lakh of rupees, the notice was rightly is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er when issued, it was to be acted on as if it were a notice issued under section 15 and an assessment order could be made at any time. No order passed by the Collector taxing the escaped income under section 25 could be challenged on the ground that it was made after the expiry of a certain time. It has not been contended before us that the order passed by the Sub Divisional Officer was within his jurisdiction. The gross income found by him was of more than one lakh of rupees and, therefore, he lacked the jurisdiction to pass it even though he assessed tax on a smaller sum. Section 15(3B) requires an assessing authority to send along with a notice referred to in sub-section (3) a statement showing a provisional estimate of the assessee's agricultural income. The statement of the case does not mention what income was mentioned by the Sub-Divisional Officer in the statement which he ought to have sent to the assessee along with the notice. If it itself showed a provisional estimate of more than one lakh of rupees, it was a clear case of his having no jurisdiction to issue the notice and to assessee the assessee. If on the other hand it showed a provisional estimate of less th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, he seems to have ignored the notice issued by the Sub-Divisional Officer. He ordered that the whole case should be sent back for fresh assessment after compliance with the provisions of law ; this suggests that he did not intend to save the notice given by the Sub-Divisional Officer under section 15(3). If he had intended that the Collector should proceed to assess on the basis of the notice given by the Sub-Divisional Officer under section 15(3), he would have said so clearly. If he had upheld the notice he would not have called upon the Collector to give another ?notice to the assessee. If one has regard to the provisions of sections 15 and 16 the only answer to the question is that the Board could not on October 15, 1952, direct a fresh assessment to be made by the Collector after issuing a fresh notice. But it was contended before us that the Board's powers under section 22 are wide and are not circumscribed by any conditions. Section 22 simply provided that the Board may call for the record of any proceeding under this Act...and after such inquiry as they deem necessary, may pass such orders as they think fit. Though the words such orders as they think fit ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Act. If an order can be passed only within a certain period according to a statutory provision and is passed within that period but an appellate or revisional court sets it aside, a question will arise whether if it sets it aside and remands the case for a fresh order before the expiry of the prescribed period, the inferior court acquires jurisdiction to pass it even after the expiry of the period. In such a case it can be argued that the inferior court is governed by the remand order which was valid when it was passed and that it must comply with it and when complying with it is not subject to the limit within which it was required to pass the order under the statutory provision.? It can be argued that in such a case the inferior court acquires jurisdiction from the remand order passed by the appellate or revisional court and not from the particular provision of the statute imposing the time-limit. No such argument is open to the State in the instant case because the Commissioner and the Board both called upon the Collector to issue a notice, which could not then (i.e., on the date of the Board's order) be issued by him without infringing the provisions of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the period of limitation within which the fresh assessment is to be made. The limitation of time is with respect to the assessment by the Sales Tax Officer in the first instance...and is not on any reassessment or fresh assessment under the directions of the appellate authority. The facts in the instant case are however quite different; the time limit under consideration is not on the passing of an assessment order but on the issue of a notice. While the legislature can be said to have contemplated that an appellate or revisional assessment order can be passed even after the expiry of the period fixed for an original order, it cannot be said to have contemplated that a notice referred to in section 15(3) or section 25 can be issued after the expiry of the period prescribed therefor in pursuance of an order passed by an appellate or revisional authority. Provision prescribing a period within which a notice can be issued to commence a proceeding is not governed by the considerations which govern a provision prescribing a period within which an assessment order subject to an appeal and then to a revision and a reference can be passed. The view that I take finds support fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other of income from cultivation. He arrived at the figure of taxable income by deducting the losses under the two heads from the aggregate of the incomes under the other two heads and assessed the assessee on the balance. In other words in calculating the taxable income he set off losses under sole heads against positive income under other heads. The Board held that the taxable income was the aggregate of the incomes from the two heads of rental income and building income without deduction therefrom of the losses suffered under the remaining two heads of tea estates and cultivation. It is the total agricultural income of every person that is to be charged with agricultural income-tax: vide section 3. Total agricultural income is defined in section 2(16) to mean the aggregate of the amounts of agricultural income of the different classes specified in sections 5 and 6.... and includes all receipts of the description specified in clauses (a), (b) and (c) of sub-section (1) of section 2 . There is no provision in the Act or the Rules for the loss under one head being set off against income from another head. One can arrive at the total agricultural income only by adding inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ruler of the State of Sirmur which merged in the State of Himachal Pradesh on 15th April, 1948, that is, during the previous year. There were certain tea gardens belonging to Sirmur State and after the merger they were treated as the private property of the assessee with effect from April 15, 1948. Up to 14th April, 1948, they? were the property of Sirmur State according to the decision of the Government of India. The assessee realised in the previous year income of ₹ 51,000 and odd from the trees out of which income of ₹ 862-5-6 only was realised during the period April 15, 1948, to June 30, 1948. The Collector did not include any income from the trees in computing the total agricultural income of the assessee. The Board held that 60% of it was liable to assessment under the Agricultural Income-tax Act, the remaining 40% being liable under the Indian Income-tax Act. The question framed, however, is only in respect of the income for the period from April 15, 1948, to June 30, 1948. It has not been shown that the income for this period is not liable to be included in the total income of the assessee; it is his income and it is agricultural income and the answer to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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