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TMI Blog1978 (10) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... t year. The fact that the appellant had produced some evidence in pursuance notice received under s. 16(2) in relation to its earlier returns or inspection of the records of the assessing authority cannot and does not amount to acquiescence or waiver of its right to file a declaration indicating its option afresh along with the return validly filed in response served under s. 15(3) of the Act The scheme of s. 16(4) clearly shows that in regard to the best judgment assessment there is nothing sacrosanct about the option exercised by the assessee under s 6(1) of the Act ; equally it can be said that in regard to assessments other than best judgment assessments under the scheme of s. 15, there is nothing sacrosanct about the particular option previously exercised by the assessee and he need not be held bound by it provided he changes the option by filing a subsequent or a fresh or a revised return in accordance with the applicable provisions contained in s. 15, the object being to determine his true agricultural income for the relevant previous year,--though so far as the assessing authority is concerned such option, whether original or subsequent, would indisputably be binding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laining that the difference was due to certain further deductions that were claimed on account of expenses, and while filing such revised return the option under s. 6(2)(b) was adhered to. However, notwithstanding the filing of the aforesaid two returns, one on November 27, 1954, and the revised return on April 4, 1955, on April 7, 1955, the assessing authority served upon the appellant-assessee a notice under s. 15(3) requiring the latter to furnish within the period specified in the notice a return in the prescribed form and verified in the prescribed manner setting forth its total agricultural income in the previous year relevant to the assessment year 1954-55, and along with such notice a provisional estimate of the assessee's agricultural income for the previous year (i.e., 1361 Fasli) computed under s. 6(2)(a) was also furnished as required by s. 15(3-B) of the Act ; the provisional estimate made in accordance with s. 6(2)(a) of the Act showed the income of the assessee at Rs. 2,07,923-9-0. It appears that neither the original return filed on November 27, 1954, nor the revised return filed on April 4, 1955, was found to be correct or complete by the assessing authority and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed it was entitled to have and then make the assessment in accordance with law after allowing the appellant an opportunity to lead evidence in support of its return. The assessing authority thereupon went into the question of change of option and by its order dated November 17, 1959, held that the appellant had no right to change its option and that the assessment had to be made in accordance with s. 6(2)(b) of the Act. The appellant went in revision before the Agricultural Income-tax Revision Board challenging the said order of the assessing authority but the Revision Board by its order dated January 27, 1960, upheld the decision of the assessing authority. The Board took the view that an assessee having exercised the option once in Form No. A.I.T.-2 filed along with the original return could not change that option subsequently while filing another return or revised return under the Act. By a writ petition, being Civil Misc. Writ No. 1382 of 1960, filed in the Allahabad High Court the appellant challenged the validity of the two orders, one of the assessing authority and the other of the Revision Board and sought a mandamus directing the assessing authority to assess the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by the appellant in this court. However, in both the appeals the principal question raised is whether an assessee who has once exercised his option in regard to the method of computation of his agricultural income by filing the requisite declaration in the prescribed Form No. A.I.T.-2 along with his first or initial return can change the option under the Act ? It may be stated at the outset that after the judgment was delivered by the learned single judge of the Allahabad High Court on October 13, 1961, answering the point in favour of the assessee, the assessing authority, since no stay was obtained during the pendency of Special Appeal No. 95 of 1962, proceeded with the assessment of the appellant on the basis of that judgment and completed the assessment on December 19, 1962, in accordance with s. 6(2)(a) of the Act and we are informed at the Bar that the appellant has paid the tax according to that assessment order. But after the reversal of the judgment of the learned single judge by the Division Bench that assessment order became ineffective and a fresh assessment order was made on July 30, 1969, in accordance with the judgment of the Division Bench by adopting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing declaration in Form No. A.I.T.-2 the option for computation in accordance with s. 6(2)(a) of the Act and, therefore, the assessing authority had to make the assessment in accordance with s. 6(2)(a) of the Act. Thirdly, he contended that in any event since the assessing authority after the issuance of the notice under s. 16(2) had proceeded to make a best judgment assessment under s. 16(4) it had no option but to make the assessment with due regard to the statement of provisional estimate served under s. 15(3-B) notwithstanding any option exercised under s. 6(1) of the Act. On the other hand, counsel for the respondents supported the view taken by the Division Bench of the High Court by contending that the option conferred upon an assessee by s. 6 is to be exercised in accordance with the provisions of the Act and the Rules and the only provision is that contained in r. 5 which speaks of a declaration indicating the option being filed along with " his return of income " which could only be when the assessee filed his first or initial return and there is no provision for filing such a declaration along with any subsequent return or revised return. He urged that only s. 15(4) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 2 shall, at the option of the assessee, be computed in accordance with clause (a) or clause (b) of sub-section (2) : Provided that an assessee who has once exercised his option shall not be entitled to vary the method of computation except with the permission of the Board of Revenue. (2)(a) Subject to such deduction in respect of agricultural calamities as may be prescribed, the income shall be deemed to be such multiple, not exceeding 7 1/2 per cent. of the rent of the land calculated at the latest sanctioned rent-rates applicable to hereditary tenants of similar class of soil, as the Board of Revenue may fix for each district or portion thereof : Provided that the Board of Revenue may direct that the multiple for calculating income from land newly brought under cultivation shall for the specified number of years be such lower figure as may be specified, or (b) the income shall be the gross proceeds of sale of all the produce of the land subject to the following deductions : (Here followed sub-clauses (i) to (xiii) specifying the deductions). (3) If the assessing authority is satisfied that the proceeds of sale have not been correctly shown by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the option was substituted. By a Notification No. 2590/ I-C-289-C-53 dated August 29, 1953, the word " first " occurring between the words " his " and " return " was deleted from r. 5 with effect from the date of the notification. Rules 6 and 7 were totally deleted. The amended s 6 as it stands today runs thus : " 6. Computation of agricultural income.--(1) The agricultural income mentioned in sub-clauses (i), (ii) and (iii) of clause (b) of sub-section (1) of section 2 shall, at the option of the assessee, be computed in accordance with clause (a) or clause (b) of sub-section (2) : Provided that the agricultural income as aforesaid for tea gardens shall be computed in accordance with clause (b) of sub-section (2). (2) (a) Subject to such deductions in respect of agricultural calamities as may be prescribed, the income from the land shall be deemed to be an amount equal to its rent multiplied by such multiple not exceeding 12 1/2 as the Land Reforms Commissioner may fix, and different multiples may be fixed for different districts or portions of district and for different classes of groves and orchards : Provided that the Land Reforms Commissioner may direct that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the amended s. 6 read with the amended r. 5, it would be clear that there is no restriction on the assessee's right to change the option and it would be open to an assessee not merely to change his option every year but even to change his option during the year by filing a fresh return or a revised return for the same year indicating the change in the declaration accompanying such fresh return or revised return provided, of course, it is done before the assessment is completed by the assessing authority. In our view, there is considerable force in this contention for the reason that whatever restrictions had been imposed on the change of option by the original proviso to s. 6(1) have been removed and the concept of " first return " is deleted from r. 5. That being so, the expression " his return of income " occurring in r. 5 would apply to any of the returns contemplated under s. 15 of the Act, namely, (1) a return filed in pursuance of the general notice issued and published by the Collector under s. 15(1) ; (2) a return filed by the principal officer of a company under s. 15(2) read with r. 21 ; (3) a return filed in pursuance of individual notice served upon an assessee by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the earlier returns does not mean selection of a wrong option by the assessee ; in other words, the assessee does get the right to file a revised return under s. 15(4) merely because he wishes to change the option. Counsel for the appellant, however, contended that the fresh return filed by the appellant on November 8, 1959, was not a revised return under s. 15(4) at all but was a return filed in response to the notice that was served upon it by the assessing authority on April 7, 1955, under s. 15(3) of the Act. In this behalf, counsel for the respondent did make a grievance before us that there was no material on record to show whether, in fact, the return filed on November 8, 1958, was in response to the notice served under s. 15(3) and, if so, whether the same was filed within time or the extended time, if any, granted by the assessing authority. The hearing of the appeal was, therefore, adjourned to enable both the parties particularly the revenue which will be possessing the records to produce material in that behalf and at the resumed hearing, though no material by way of assessment records or files in the custody of the assessing authority was produced by the revenue, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... response served under s. 15(3) of the Act. Apart from the aforesaid position there is yet one more aspect to which we would like to refer in relation to the question raised before us in these appeals and that arises in view of the provisions of s. 16(4) of the Act under which the assessing authority makes its best judgment assessment. In this connection ss. 15(3), 15(3B) and 16(4) of the Act will have to be considered together. Section 15(3) runs thus : " 15. (3) In the case of any person whose total agricultural income is, in the opinion of the assessing authority, such amount as to render such person liable to payment of agricultural income-tax in any year, he may serve 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 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 the assessing authority may in his discretion extend the date for delivery of the return." Section 15(3B) runs t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to make the assessment to the best of its judgment the same is required to be made " with due regard to the statement, if any, sent under sub-s. (3B) of s. 15 notwithstanding any option exercised under sub-s. (1) of s. 6 ". It is thus clear that irrespective of whatever option might have been exercised by the assessee the best judgment assessment has to be made by the assessing authority by having due regard to the statement of provisional estimate of agricultural income made in accordance with s. 6(2)(a) of the Act. The non-obstante clause leaves it open to the assessing authority to select whatever basis it considers appropriate for computing and determining the true agricultural income of the assessee ; it may adopt any one of the bases in respect of the entire agricultural area or adopt one basis in respect of one part of agricultural area and the other basis in respect of another part, the only obligation being to have " due regard " to the statement under s. 15(3B). The scheme of s. 16(4) clearly shows that in regard to the best judgment assessment there is nothing sacrosanct about the option exercised by the assessee under s 6(1) of the Act ; equally it can be said that i ..... 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