THE PROVINCE OF BIHAR vs MAHARAJA MAHADEVASHRAM PRATAP SAHI.

MANOHAR LALL, J. - This reference by the Board of Agricultural Income Tax, Bihar - hereinafter called the Board - u/s 25(1) of the Bihar Agricultural Income Tax Act, 1938 - hereinafter referred to as the Act - is made in peculiar circumstances to ask the opinion of the Court whether the order of the Commissioner of Agricultural Income Tax dated the 27th October, 1942, was illegal.

The assessee, Maharaja Bahadur of Hathwa, was assessed on the 31st August, 1939, by the Agricultural Income Tax Officer for the assessment year 1938-39 on a certain sum which included Rs. 24,475 as representing interest on arrears of rent in the year 1345 fasli being the previous year for that assessment. For the following year 1939-40 the assessee was assessed by the Agricultural Income Tax Officer on the 19th March, 1940, for a certain sum including Rs. 18,441 as representing interest on arrears of rent in the year 1346 fasli. No appeal was preferred against these two orders. An application u/s 27 of the Act was filed by the assessee on the 22nd September, 1941, before the Agricultural Income Tax Officer inviting his attention to the fact that the same amounts of interest on arrears of rent in the years 1345 and 1346 fasli have been assessed both by the Agricultural Income Tax Department and by the Indian Income Tax Department. Attention was also drawn to the fact that in the years in question it was not definitely certain whether the questioned amount was taxable under the Agricultural Income Tax Act or under the Indian Income Tax Act. The assessee accordingly prayed that on principles of equity and justice and even under the provision of Section 27 of the Act, the mistake, which was apparent on the face of it, should be rectified. It was urged that the delay in making the application should be condoned, as the matter was not free from doubt and has been cleared only recently by a decision of the Calcutta High Court. By an order dated the 7th of November, 1941, the Agricultural Income Tax Officer declined to give any relief to the assessee as in his view the Madras High Court ruling, Zemindar of Kirlampudi, was applicable to the case and further, "As assessments for 1938-39 and 1939-40 were made prior to 3rd July, 1940, Calcutta High Court ruling also did not apply. This matter is still sub-judice and the point has been referred to Patna High Court for decision in the case of Maharajadhiraj of Darbhanga. Hence the petition filed cannot come u/s 27."

Against this order an appeal was preferred to the Commissioner of Agricultural Income Tax who on the 27th October, 1942, passed this order :-

"It has been held in the Full Bench ruling of the Patna High Court in Miscellaneous Judicial Case No. 99 of 1940, on 1st April, 1942, that interest on such rents is not part of the rent, and therefore it does not come within the definition of agricultural income for the purpose of the Bihar Agricultural Income Tax Act, 1938.

The appellant is therefore entitled to the exclusion of Rs. 24,475 from his income in the year 1345 fasli and Rs. 18,441 in 1346 fasli.

The appeal is allowed."

It will be noticed that the application u/s 27 of the Act was filed before the Agricultural Income Tax Officer beyond the period prescribed u/s 27(1) and further that no appeal lay to the Commissioner against an order refusing to grant to the assessee any relief u/s 27. Sometime later - the exact date does not appear from the record - the Commissioner of Agricultural Income Tax moved the Board to revise the order u/s 24 of the Act passed on the 27th October, 1942 -the letter or the application by the Commissioner to the Board has not also been produced before us.

The Board on the 17th of June, 1943, took the view that although the Commissioners order was illegal, the Board had no power to review it. It further held that Section 27 of the Act had no application and, therefore, the Agricultural Income Tax Officer was right in rejecting the prayer of the assessee. It also pointed out : "No revision lay as Section 24 only provides for revision of an order passed on appeal u/s 22 and, as already stated, there was no appeal. The Commissioner made a further mistake by adding the words the appeal is allowed. There was no appeal before him. Even if it had been an appeal it was long time-barred u/s 22(2) read with rule 13, but the Commissioner purported to act u/s 24 and under sub-section (3) of that section any order passed in revision is final subject to a reference to the High Court u/s 25."

It will be observed that the reference to this Court has been made by the Board not at the instance of the assessee but on its own motion. u/s 25(1) "if, in the course of any assessment under this Act or any proceeding in connection therewith other than a proceeding under Chapter VI (the proceeding under Chapter VI relates to the offences and penalties), a question of law arises, the Board may, either of its own motion or on reference from any Agricultural Income Tax authority subordinate to it, draw up a statement of the case and refer it with its own opinion thereon to the High court." In the present case the assessment proceedings against the assessee had already terminated and there was no pending proceeding under the Act in the course of which the question of law referred to us could arise. The scheme of the Act indicates clearly that after an assessment has been made or after any proceeding under the Act has terminated, the assessee alone has been given the right under the Act to ask for a reference to the Court u/s 25(2) in cases where an assessment has been made or a revisional order enhancing the assessment has been passed or it is otherwise prejudicial to the assessee or if a decision by a Board of Referees has been made. In these circumstances the assessee and the assessee alone has been given a right under the Act to ask for a reference to the High Court. The assessee can move the Board in other cases u/s 25(1) and in those circumstances the Board may at its discretion make a reference to the High Court or again in the course of any assessment or in course of any proceeding under this Act, any Agricultural Income Tax authority subordinate to the Board may make a reference to the Board for stating the question to the High Court.

The learned Advocate-General argued that there was a proceeding here which was started on the application of the assessee u/s 27 and when the Commissioner purported to exercise an appellate power there was a proceeding before him and even if he had no appellate power but purported to exercise a revisional power, there was still a proceeding before him, and, therefore, the requirements of Section 25(1) have been satisfied. Even assuming that a series of incompetent proceedings could be called proceedings under the Act, the proceedings had terminated and the Board had no power to move u/s 25(1).

It was argued by the learned Advocate-General that if the Commissioner or Collector or the Income Tax Officer under the Act makes a mistake in favour of the assessee on a question of law the result would be that there will be no remedy to correct such a mistake. The short answer of this argument is that no such remedy is provided in the Act to the Agricultural Income Tax authorities unless a reference is made to the High Court on the course of a proceeding which may be pending either before the first officer or before the appellate or revisional officers.

In my opinion the reference is incompetent, and I would decline to answer the question referred to us.

In the circumstances each party will bear his own costs in this Court.

FAZL ALI, C.J. - I agree.

SINHA, J. - I agree.

Reference not answered.