SUBBAIAH P M Vs. STATE OF KARNATAKA

JUDGEMENT

(1.) THIS is a revision petition under section 55 of the Karnataka Agricultural Income-tax Act, 1957 (hereinafter referred to as the "Act"), preferred by the assessee. The assessee is a coffee planter. He filed the return for the assessment year 1976-77 (accounting period April 1, 1975 to March 31, 1976) disclosing his status as an association of persons. The association in question consisted of the assessee, P.M. Subbaiah, his two brothers and two sisters, all having attained the age of majority, undisputedly, prior to that assessment year, the family was being assessed as a Hindu undivided family. After the death of the karta of the Hindu undivided family which was some years before the assessment year 1976-77, an advocate from Madikeri represented the assessee before the Agricultural Income-tax Officer, Virajpet. The members of the family had entered into an agreement dated April 2, 1975, by which they had severed their status as members of the Hindu undivided family and declared themselves as equal shares in the joint properties of the family. He, therefore, contended that the assessment should be concluded against the association of person under section 3(3) of the Act as tenants-in-common. The assessing authority did not accede though he examined the claim put forward in regard to the disruption of the status of the joint Hindu family and examined the agreement which had been signed by all the members of the family and which was placed before him by the advocate appearing for the assessee (a little later in the course of this order, we shall extract the exact words used by the assessing authority in regard to this aspect of the case, in the light of the arguments advanced by the learned High Court Government Pleader appearing for the respondent-Commissioner.) However, the advocate for the assessee had no objection to the computation of income by the assessing authority where certain allowance was disallowed and the income returned at Rs. 17,302.42 was raised to Rs. 69,287.42 by allowing expenses of Rs. 74,025 on the income of Rs. 1,43,312.42. Aggrieved by that assessment order, the assessee filed an appeal before the Deputy Commissioner of Commercial taxes (Appeals), Mangalore Division, Mangalore, in Appeal No. KATT/ AP-52 of 1978-79. But the appeal was confined not to the assessment quantifying the taxable agricultural income but to the finding recorded in regard to the status of the assessee. The appellate authority, accepting the case put forward by the assessee, Set aside the finding recorded by the Agricultural Income-tax Officer, Virajpet, following the Division Bench decision of this court in P. Cheradappa Pai v. Agrl. ITO (1970) 77 ITR 313, and directed that the assessment be concluded against the assessee and other member of the family as tenants-in-common. That order was passed on October 28, 1978. Thereafter, the Commissioner of Agricultural Income-tax, Karnataka, Bangalore, considered the order of the Deputy Commissioner of Commercial Taxes (Appeals), who was also the Deputy Commissioner of Appeals under the Act, to be an erroneous order prejudicial to the Revenue and, therefore, invoking his suo motu revision powers under section 36 of the Act, issued a show cause notice to the assessee as to why the appellate order should not be set aside and the assessment order passed by the Agricultural Income-tax Officer, Virajpet, restored and affirmed, as a there was clear violation of the mandatory requirement of sub-sections (1) and (2) of section 30 of the Act, resulting in there being a presumption that, in the absence of a an order, after due notice to all the parties under sub-section (1) of section 30, the family continued to be joint in status on account of the legal fiction created by sub-section (3) of section 30 of the Act. The assessee resisted that proposition and contended that once there was disruption of the joint status, what the appellate authority had done was correct and specifically relied upon the decision of Allahabad High Court in the case of CIT v. Purushottam Das Rais (1966) 61 ITR 86 and contended that section 30(3) was not at all attracted, as held by the Allahabad High Court in respect of a similar question arising under the Indian Income-tax Act, 1922, with reference to section 25A of that Act, which is in pari material with section 30 of the Act. That contention was negatived and the Commissioner set aside the appellate order holding that, in view of sub-section (3) of section 30 of the Act which clearly provided for a presumption in favour of the family continuing as a Hindu undivided family, the appellate authority was in error in interfering with the assessing authority's order.

(2.) THEREFORE, the present revision petition by the assessee, inter alia, contending that the respondent-Commissioner had no jurisdiction as there was no order prejudicial to the Revenue and there was no error of law in the order of the Deputy commissioner (Appeals).

(3.) THE learned Government pleader, Shri Dattu, does not dispute that the return was filed before the authority by the petitioner who was the eldest son of late Palekanda Muthanna disclosing the status in the return in the prescribed form as association of persons. THE plea before the Agricultural Income-tax Officer, the assessing authority, was that, on account of the agreement dated April 2, 1975, shares in the properties of the joint family had been determined in equal proportion to all the members of the family and, therefore, that agreement signed by all the members of the family was evidence of disruption of the status of the joint family. Accordingly, the assessing authority has dealt with that contention in the following terms :