Smt. P.P. Chirutha vs Deputy Commissioner of Agricultural Income Tax and Sales Tax

K.S. Paripoornan, J.—At the instance of an assessee to agricultural Income Tax, the Deputy Commissioner of Agricultural Income Tax and Sales tax, Kozhikode, has, by order dated August 17, 1987, referred the following question of law for the decision of this court :

"Should not the power u/s 34 of the Agricultural Income Tax Act be exercised within a reasonable time and can the proceedings now initiated thereunder be maintained in view of the long lapse of time?"

The applicant is the legal representative of one V.P. Kunhikannan, an assessee to agricultural Income Tax. We are concerned with the assessment years 1959-60 to 1964-65. Shri V.P. Kunhikannan was assessed for the above years as per the assessment orders passed against him. The details are given hereinbelow :

Assessment year Date of order

1959-60 to 1961-62 10-2-1962

1962-63 30-1-1963

30-1-1963 24-3-1965

1964-65 24-3-1965

The Revenue took the view that while settling the self-acquired properties of the assessee to his wife and children, he has transferred 29.93 acres of dry land and 1.19 acres of wet lands to his wife, Chirutha, as per the deed dated July 7, 1958. It was felt that this is hit by Section 9(2) of the Kerala Agricultural Income Tax Act. Stating that this aspect was not noticed for the assessment years 1959-60 to 1964-65 and so the assessment orders aforesaid are erroneous in law, the Deputy Commissioner of Agricultural Income Tax and Sales Tax, Kozhikode, issued a notice dated July 10, 1980, proposing to revise the assessments in exercise of the suo motu powers vested in him u/s 34 of the Act. The assessee objected to the initiation of proceedings by filing a reply dated July 25, 1980. Amongst others, an objection was taken that the proceedings initiated u/s 34 of the Act are unjustified, unreasonable and unwarranted. The Deputy Commissioner of Agricultural Income Tax and Sales Tax, by his order dated September 10, 1980, overruling the objections, set aside the assessments for the years 1959-60 to 1964-65 and remitted the matter to the Agricultural Income Tax Officer, Badagara, for fresh disposal according to law. Thereafter, the assessee filed an application u/s 60(1) of the Act to refer certain questions of law for the decision of this court. That was declined by order dated April 30, 1981. Thereafter, the assessee moved this court in Original Petition No. 3122 of 1981. A Bench of this court, by judgment dated June 1, 1987, directed that the question of law formulated hereinabove should be referred to this court for decision. It is accordingly the matter has come up before us.

The assessee, Shri V.P. Kunhikannan, is dead. Counsel who appeared for the legal representative, Smt. P.P. Chirutha, has filed a memo dated August 17, 1993, stating that the legal representative is also no more and he could not get any reply from the applicant. Since we are exercising an advisory jurisdiction, there is no question of abatement of the proceedings. This court can give its opinion on the question of law referred to this court, even in the absence of the parties.

We heard counsel for the Revenue, Mr. V.C. James, Senior Government Pleader. The assessments were rendered long before the initiation of the suo motu proceedings u/s 34 of the Act. For the assessment years 1959-60 to 1961-62, the order was passed on February 10, 1962, for the year 1962-63, the assessment order was passed on January 30, 1963, and for the years 1963-64 and 1964-65, the assessment orders were passed on March 24, 1965. It is nearly 15 years thereafter that the assessments were sought to be reopened by notice dated July 10, 1980, and the order was passed by the Deputy Commissioner u/s 34 of the Act on September 10, 1980. We are of the view that the proceedings u/s 34 of the Act have not been initiated within a reasonable time, as held by this court in Nelliampathy Tea and Produce Co. Ltd. Vs. Commissioner of Agricultural Income Tax, . In the said case, this Bench had occasion to state the law thus (at page 234) :

". . . . The normal period within which an assessment, once made, can be reopened u/s 35 of the Act, is five years from the end of the assessment year. u/s 36, a mistake could be rectified within three years from the date of the assessment order. Once a final assessment is rendered (after the appeal or revision or reference, as the case may be), the finality attached to the order can be put in peril and the assessment can be reopened normally only in proceedings u/s 35 or Section 36 of the Act. To reopen the final assessment after the said periods, in exercise of the powers u/s 34 of the Act, demands cogent and sufficient reasons. The power vested in the Commissioner of Agricultural Income Tax should be exercised bona fide and within a reasonable period. The Revenue should be able to demonstrate that there were circumstances beyond control or other supervening events or insurmountable difficulties for not setting in motion the proceedings u/s 34 of the Act within the normal period provided in Sections 35 and 36 of the Act. Whether there were exceptional or extenuating circumstances, explaining the reason for not setting in motion the proceedings u/s 34 of the Act within the normal period, to revise or reopen an assessment which will affect the assessee adversely, would depend upon the facts and circumstances of each case."

The Deputy Commissioner of Agricultural Income Tax and Sales Tax held that there is no time-limit for initiating suo motu revisional proceedings u/s 34 of the Act. He has not given any reason or material to show that there were circumstances beyond control or other supervening events or insurmountable difficulties for not setting in motion the proceedings u/s 34 of the Act within the normal period provided in Sections 35 and 36 of the Act. In the absence of a cogent explanation for the delay, we hold that the revisional proceedings were not initiated within a reasonable period. The power vested in the Deputy Commissioner has not been exercised reasonably. The proceedings are barred. They are unauthorised and without jurisdiction. We hold so.

We answer the question in the affirmative and hold that the proceedings initiated by the Deputy Commissioner of Agricultural Income Tax and Sales Tax cannot be sustained in view of the long lapse of time. The order passed by the Deputy Commissioner dated September 10, 1980 is invalid.

The reference is answered as above.

A copy of this judgment, under the seal of this court and the signature of the Registrar, shall be forwarded to the Deputy Commissioner of Agricultural Income Tax and Sales Tax, Kozhikode.