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TMI Blog1981 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal cost and not on the basis of cost price less depreciation allowable under the Act (that is, the Maharashtra Agricultural Income-tax Act, 1962) or on the written down value disclosed by the books of account maintained by the opponent ? (3) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessment made on the assessee was a valid assessment ?" Before we set out the material facts necessary for understanding the controversy between the parties we may state that the original respondent to this reference, Baijnath Mahadeo Thakur, died pending this reference. He had been assessed to agricultural income-tax on the basis that he was the karta of an HUF, and on his death the members of the said family have been brought on the record of this reference as respondents. We will, therefore, for the sake of convenience hereafter referred to the said Baijnath Mahadeo Thakur as " the assessee ". The assessee owned agricultural lands at Vangaon in Taluka Dahanu in the District of Thane, The assessee was being assessed to income-tax. It appears that the mamlatdar, Dahanu, gave information to the Sales Tax Officer, Palghar, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aluka Dahanu. No. N(URO)-Agrl-I/B-1458 Palghar : Dt. 7-3-67. Sub : Assessment proceedings under section 41 of the Maharashtra Agricultural Income-tax Act,1962, for the year 1961-62. Gentlemen, (1) Whereas you were liable under section 4 of the Act, did not furnish return under section 22 of the Act, showing your agricultural income for the year ended on 31-3-62. (2) You are hereby directed to attend my office on 25-3-67 at Sales Tax Office, Palghar, at 10.30 a.m. with your books of account and to show cause why you should not be assessed under section 41 of the Act for 1961-62 and why penalty under section 29 of the Act should not be imposed. Yours faithfully, Sd. Agricultural Income-tax Officer. N.B: This office notice of 1-3-67, if received by you, be treated as cancelled. You need not attend this office on 23-3-1967. However in terms of this notice you should attend this office on 25-3-67 at 10.30 a.m. with the following information. (1) Your complete books of account for 61-62. (2) Constitution, along with the documentary evidence. (3) Copy of income-tax orders for 61-62 and 62-63. (4) Revenue record. (5) Copy of balance-sheet for 61-62 and documentary evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee attended before the Agrl. ITO, Palghar, with his books of account. Two days later, namely, on March 27, 1967, he filed a return in respect of S.Y. 2017 relating to the assessment year 1962-63. On March 31, 1967, the Agrl. ITO, Palghar, passed an order of assessment. This order of assessment is divided into two parts. The first deals with the notice dated March 7, 1967, which was issued under s. 41 of the said Act, and the second is the other notice dated March 7, 1967, calling upon the assessee to show cause why a penalty should not be levied upon him and at the same time also calling upon him to show cause why he should not be assessed under the said s. 41. The second part of the said order, however, deals only with the levy of penalty under s. 29 of the said Act. The first five paragraphs of the said order are material and are required to be reproduced. They are as follows : " 1. Order of assessment u/s. 41 read with sec. 23 of the Maharashtra Agricultural Income-tax Act, 1962, for the period: Accounting period S.Y. 2017. 2. The assessee is carrying on business of developing agriculture at the above address and he is cultivating agricultural produce, viz., grass, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assistant Commissioner of Agrl. I.T. to decide the question as to what was the original cost of the items in respect of which depreciation was claimed. As mentioned above, both the parties made applications to the Tribunal under s. 39(1) of the said Act, which applications were granted by the Tribunal. It will be convenient to deal first with the third question set out above which has been referred by the Tribunal to this High Court at the instance of the assessee, because if the answer to that question were in favour of the assessee, the other two questions would not arise for determination. It was the submission of Mr. Patil, learned counsel for the respondents, that s. 41 of the said Act corresponds to s. 34 of the old Indian I.T. Act, 1922, and s. 148 of the present I.T. Act, 1961. In Mr. Patil's submission the conditions prescribed by the said s. 41, as in the case of the said ss. 34 and 148, are conditions which go to the validity of the jurisdiction to be exercised under that section, and if any one of these conditions is not complied with, the officer would have no jurisdiction to pass an order under the said s. 41, and the order would, therefore, be invalid and of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Agrl. ITO concerned within such period, not being less than 60 days" as may be specified in the said notice, a return in the prescribed form. Sub-sections (2) and (3) of s. 22 are as follows: "(2) In the case of any person whose total agricultural income is, in the Agricultural Income-tax Officer's opinion, of such an amount as to render such person liable to agricultural income-tax, the Agricultural Income-tax Officer may serve a notice upon him requiring him to furnish, within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth along with such other particulars as may be provided for in the notice, his total agricultural income during the previous year: Provided that, on an application made in the prescribed manner, the Agricultural Income-tax Officer may extend the date for furnishing the return for a period not exceeding ninety days." (3) If any person has not furnished a return within the time allowed by or under sub-section (1) or sub-section (2), or having furnished a return under either of these sub-sections discovers any omission or wrong statement th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the end of that year serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section." Section 22 of the Indian I.T. Act, 1922, corresponds to s. 22 of the said Act. Sub-section (2) of the said s. 22 is in pari materia with sub-s. (2) of the said Act and is as follows : "(2) In the case of any person whose total income is, in the Incometax Officer's opinion, of such an amount as to render such person liable to income-tax, the Income-tax Officer may serve a notice upon him requiring him to furnish, within such period not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) his total income and total world income dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer's jurisdiction to reopen an assessment under section 34 depends upon the issuance of a valid notice. If the notice issued by him is invalid for any reason the entire proceedings taken by him would become void for want of jurisdiction. " The principle enunciated by this High Court has thus received the imprimatur of the Supreme Court. Relying upon these decisions, Mr. Patil submitted that the notice issued in the present case suffered from two jurisdictional infirmities: (1) that it did not require the assessee to file a return, and (2) that it gave to the assessee less than 30 days' time for complying with the notice. We are unable to accept Mr. Patil's submission with respect to the first alleged defect. In our opinion, it is not necessary that a notice, to be given under the said s. 41, must contain all the requirements which can be included in a notice under s. 22(2) of the said Act. The very terms of the said s. 41 itself states that the notice to be served under s. 41 is to contain " all or any of the requirements which may be included in a notice under sub-section (2) of section 22 ". The Bombay decision relied upon by Mr. Patil also does not bear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He has referred to it solely for the purpose of considering whether this filing of the return could be said to be an extenuating circumstance for non-levy of penalty, and he has held that none the less this was a fit case for the levy of penalty but in view of the filing of the return he was taking a lenient view and imposing penalty in the sum of Rs. 3,800 only. Thus the only reason why the return filed by the assessee has featured in the order of assessment is for the purpose of determining whether or not penalty for non-filing of the return should be levied or not and if so in what amount. In support of his submission that because a return had been filed by the assessee, the assessment out of which the present reference arises, was a regular assessment under s. 23 and not an assessment under s. 41. Mr. Jetly, learned counsel for the Department, relied upon three decisions of the Supreme Court. The first of these decisions was State of Assam v. Deva Prasad Barua [1970] 75 ITR 18 (SC).. That was a case under the Assam Agrl. I.T. Act, 1939. Section 19(1) of the said Assam Act was the same as s. 22(1) of the said Act with which we are concerned. Section 20 of the Assam Act was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of penalty that the assessee bad filed the return for the relevant year. The Agrl. ITO also understood the filing of the return by the assessee in the sense we have mentioned earlier, as is clear from that part of his order of assessment which deals with levy of penalty. The second decision relied upon by Mr. Jetly was Boloma Tea Estate v. Asst. Commr. of Taxes [1972] 86 ITR 774 (SC). It is unnecessary to refer to this decision in detail. The facts of that case and the contentions therein were the same as those in Deva Prasad Barua's case [1970] 75 ITR 18 (SC). In that case on facts similar to those in Deva Prasad Barua's case the Supreme Court applied to that case the ratio of its decision in Deva Prasad Barua's case. The third decision relied upon by Mr. Jetly was CIT v. Ranchhoddas Karsondas [1959] 36 ITR 569 (SC). In that case a return showing income below the taxable limit was filed voluntarily by an assessee in answer to a general notice under s. 22(1) of the Indian I.T. Act, 1922. Ignoring this return the ITO issued a notice under s. 34 of that Act and proceeded to make an order under that section. The Supreme Court held that where in respect of any year a return ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y pointed out to the assessee that he had failed to file returns for the relevant year, and called upon him to attend with his books of account to show cause why he should not be assessed under s. 41 and why a penalty under s. 29 should not be levied upon him. It is to show that the above submission on behalf of the applicant is without any foundation that we have been at pains to reproduce in the earlier part of our judgment the two notices in question and the relevant paragraphs of the said order of assessment. The decision which is directly on all fours with the one before us is that of the Kerala High Court in Commr. of Agrl. I.T. v. Amalgamated Coffee Estates Ltd. [1962] 45 ITR 348. In that case it was argued that the prescribed period of 30 days would apply when a return was asked to be filed by the notice but not when no return was asked for, but only particulars were required. This contention was rejected, and the court held that if a notice under s. 35 of the Madras Plantations Agricultural Income-tax Act, 1955, which corresponded to our s. 41, did not give 30 days' time to submit particulars, it was defective, and the reassessment made in pursuance of that notice was ille ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assumption of jurisdiction to reassess prescribed by s. 41 would also apply as conditions precedent to a case where an Agrl. ITO proceeds to assess escaped income. It was lastly submitted by Mr. Jetly that all that s. 41 required is the giving of a reasonable opportunity to the assessee and that if there was any defect in the notice it had been waived or cured by the acquiescence of the assessee. In support of this submission Mr. Jetly relied upon a decision of the Supreme Court in Anandji Haridas and Co. (P.) Ltd. v. S. P. Kushare, STO [1968] 21 STC 326 (SC). In fairness to Mr. Jetly we must state that Mr. Jetly had prefaced his citation of this decision by a statement that it, strictly speaking, did not apply to the facts of the present case and that the section with which the court was concerned in that case was different. We then wonder why this decision was at all cited, but since it has been cited, we will refer to it. That was a case under the old C.P. and the Berar Sales Tax Act, 1947. Section 11A of that Act provided for assessment or reassessment of escaped income. Under that section assessment or reassessment was to be done " after giving the dealer a reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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