T. Lakshmikutty Amma vs Addl. Agrl. Income Tax Officer

K.S. Paripoornan, J.—The petitioner in the original petition is one of the legal heirs of late M. A. Chandu Nair, an assessee under the Agricultural Income Tax Act, 1950. Chandu Nair was assessed to agricultural Income Tax by respondent No. 1 for the years 1969-70 and 1970-71. The total tax assessed for the two years was Rs. 22,038.23. Aggrieved by the assessments, the assessee filed appeals before the Appellate Assistant Commissioner and thereafter filed second appeals before the Agricultural Income Tax Appellate Tribunal. By exhibit P-1 order dated July 22, 1975, the Appellate Tribunal ordered some modifications. There was dispute with regard to the details of double crop and single crop paddy lands actually in the possession and enjoyment of late Chandu Nair during the two years in question. The Appellate Tribunal directed the assessee to produce certificate from the Village officer concerned showing the correct details relating thereto within a month of the receipt of the appellate order (vide para 3 of exhibit P-1). It was also specified that if the assessee failed to produce the certificate mentioned within the time specified, the assessment will stand confirmed. It is common ground that the appellate order was received by the assessee on November 6, 1975. The last date for filing the certificate directed by the Tribunal in para 3 of exhibit P-1 was December 6, 1975. The assessee did not comply with the direction. So, respondent No. 1 informed the petitioner by communication dated October 20, 1982 (exhibit P-4) that the original assessments for the years 1969-70 and 1970-71 stand confirmed and the tax due for the period should be paid within 10 days of the receipt of the intimation. There is also a prayer for the issue of a writ of mandamus to respondent No. 1 not to demand the arrears of tax due as per assessments on late M. A. Chandu Nair for the years 1969-70 and 1970-71. On behalf of respondent No. 1, a detailed counter-affidavit has been filed dated March 27, 1974.

Counsel for the petitioner contended that the recovery proceedings are barred by limitation. Reliance was placed on Section 40(1) and the proviso and Section 41(4) of the Act. It was contended that the recovery proceeding now taken as evidenced by exhibit P-4 dated December 20, 1982, more than 7 years after the assessments stood confirmed by exhibit P-1 order of the Tribunal with effect from December 6, 1975, is barred under the 1st limb of Section 41 (4) of the Act. In addition thereto, it was contended that during the pendency of the appeal, the statute declares under the proviso to Section 40(1) that the assessee is not in default so long as the appeal is undisposed of. The appeals were disposed of only by exhibit P-1 order dated July 22", 1975, and the recovery proceeding taken in this case more than 3 years after the order was rendered in the appeal exhibit P-l is incompetent in view of the second limb of Section 4-1(4) of the Act.

Section 40(1) and the proviso thereto as also Section 41(4) of the Act on which much reliance was placed may be quoted :

"40. Recovery of tax and penalties.-- (1) Any amount specified as pay able in a notice of demand u/s 30 or an order under sections 31, 32 or 33 shall be paid in such number of instalments, within such time, at such place and to such person, as may be specified in the notice or order, or if a time is not so specified, then on or before the first day of the second month following the date of the service of the notice or order and any assessee failing so to pay shall be deemed to be in default:

Provided that, when an assessee has presented an appeal u/s 31, the Agricultural Income Tax Officer may in his discretion treat the assessee as not being in default so long as such appeal is undisposed of.

Mode and time of recovery.--(4) No proceeding for the recovery of any sum payable under this Act shall be commenced after the expiration of three years from the latest day fixed for payment in the notice of demand served u/s 30 or where the assessee has been treated as not being in default under the proviso to Sub-section (1) of Section 40 pending his appeal, after the expiration of three years from the date on which the appeal is decided." It will be evident from a perusal of Section 40(1) and the proviso thereto that if the assessee fails to pay the tax as specified in the notice of demand, and if not so specified, then, on or before the first day of the second month following the date: of the service of the notice or order, he shall be deemed to be an assessee in default: But under the proviso, pending an appeal u/s 31 of the Act, (first appeal) the agricultural Income Tax Officer may, in his discretion, treat the assessee as not in default. The proviso is one enacted for the benefit of the assessee. It is only ah enabling provision. The exercise of discretion under the proviso depends upon evaluation of facts and circumstances in each case. The occasion for the exercise of the discretionary power of jurisdiction vested in the Officer will arise only when the assessee against whom a demand has been made invokes the said jurisdiction. I am unable to accept the submission of petitioner''s counsel that the proviso to Section 40(1) of the Act is a legislative mandate to treat the assessee as not in default pending ah appeal u/s 31 of the Act (first appeal) even without a motion in that behalf by the assessee. The proviso only contains an enabling power vested in the Officer. The jurisdiction should be invoked duly and properly by an assessee who has filed an appeal u/s 31 of the Act. Until then, there is no question of the proviso coming into operation.

As stated, the proviso to Section 40(1) is only an enabling provision. Even then; the said provision will apply only pending an appeal u/s 31 pf the Act (first appeal). It cannot apply in the case of an appeal pending before the Appellate Tribunal u/s 32 of the Act. The petitioner''s contention that the period of three years within which the recovery proceedings should be taken from the date of disposal pf the appeal, mentioned in the second limb of Section 41(4) of the Act, should, in this case, be three years from the date of communication of the order of the Appellate Tribunal, evidenced by exhibit P-1, cannot: stand scrutiny. The second limb of Section 41(4) of the Act can refer only to the period of three years from the date of disposal of an appeal filed u/s 31 of the Act (first appeal). But, it is very important to note in this connection that there is no averment either in the Criminal Procedure Code or any reference in the files to show that the assessee was treated as not being in default under the proviso to Section 40 pending the appeal filed u/s 31 of the Act. There is no such plea or proof available in this case. As to whether the assessee was treated as not being in default under the proviso to Section 40(1) pending his appeal u/s 31 of the Act is a question of fact. That crucial fact is not proved. So there is no question of applicability of the second limb of Section 41(4) of the Act.

The only further question that remains to be considered is with regard to the applicability of the first limb of Section 41(4) of the Act. The language of the section is clear. It only interdicts the commencing of a proceeding for the recovery of any sum payable under the Act, after the expiration of three years from the latest day fixed for the payment in the notice of demand served u/s 30 of the Act. Admittedly, in this case, the Agricultural Income Tax Officer commenced the proceedings for recovery within the period of three years. The order of assessment for the year 1969-70 is dated February 17, 1971, and the order of assessment for the year 1970-71 also is dated February 17, 1971. The notices of demand are also of the same date. They required the assessee to pay the tax assessed. The Agricultural Income Tax Officer as per the office memorandum RRC. No. 13/71-72 dated August 18, 1971, requested or ordered that the amount may be recovered under the Kerala revenue Recovery Act. It is so seen from p. 51 of the files produced before me. It is settled law that by issuing the request or order to realise the tax under the Revenue Recovery Act, proceedings for recovery were set in motion or "commenced" as envisaged by Section 41 (4) of the Act. This view is fortified by the decision of the Supreme Court and also the decisions of various High Courts-- Raja Yuvraj Dutt Singh Vs. The Deputy Commissioner, Kheri and Others, , General Commercial Corporation Private Ltd. Vs. Second Additional Income Tax Officer, First Circle, Madras, and Another, , LAL BHAN PRATAP NARAIN BAHADUR PAL Vs. STATE OF UTTAR PRADESH AND ANOTHER., , Arunadevi Jajodia and Others Vs. The Collector of Madras and Others, , C. M. George Vs. Income Tax Officer, Madras, and Another, , KASHIRAM AGARWALLA Vs. COLLECTOR OF 24-PARGANAS AND OTHERS., , Mohammed v. Collector of Calicut [1966] KLT 224. It is too late in the day to contend to the contrary. Respectfully following the-aforesaid decisions, I hold that the proceedings for recovery were commenced in this case within the period permitted u/s 41 (4) of the Act, There is thus no bar of limitation for recovery in this case. Exhibit P-4 is valid and legal.

No other ground was urged impugning exhibit P-4.

The original petition is without merit. It is dismissed. There shall be no order as to costs.