SANKARAN NAIR Vs. COMMISSIONER OF AGRICULTURAL INCOME- TAX

JUDGEMENT

(1.) THIS is a petition under section 60(3)of the Agricultural Income -tax Act,1950.Sri Thathunni Nair,the last Mannarghat Mooppil Nair Sthani was an assessee under the Agricultural Income -tax Act.He died on 3rd January 1960.At that time a suit was pending for the partition of the Mannarghat Mooppil Nair Sthanam pro­perties.A Receiver was appointed to manage these pro­perties on the death of this Sthani Thathunni Nair.On 17th November 1962 the Agricultural Income -tax Officer,Perinthalmanna served a notice on the Receiver calling upon him to pay a sum of Rs.32,329.40 as agricultural income -tax due by the Mooppil Sthanam estate for the assessment years 1958 -59,1959 -60 and 1960 -61.On the request of the Receiver a copy of the assessment order was furnished to him on 30th January 1963.The assessment order showed that the assessment was under section 18(4)of the Act on Sri Kunjunni Mooppil Nair and 36 others representing the late Thathunni Nair and that the status of the assessee had been fixed as an individual.As per the directions of the court the Receiver filed revision petitions under section 34 of the Act challenging the validity of the assessment order before the Commissioner of Agricultural Income -tax,Trivandrum.On an examination of the file,the Commissioner found that the assessment for 1958 -59 was liable to be set aside for want of proof of service of pre -assessment notice and so remanded the matter to the Agri­cultural Income -tax Officer.The assessment for 1959 -60 was also cancelled for another reason.In respect of the assessment year 1960 -61 the Commissioner found that a notice under section 17(2)had been served on Kunjunni Mooppil Nair on 20th July 1960.The Commissioner found that even though notices under section 17(2)have to be normally served on all the legal heirs,the service on Kunjunni Mooppil Nair alone would be sufficient com­pliance with the law in view of section 5(2)of the Sthanam Properties(Assumption of Temporary Management and Control)Act and the Hindu Succession(Amendment)Act,1958.The Commissioner took the view that in view of the said section a service of notice under section 17(2)of the Act on Kunjunni Nair is legal and valid and the assessment proceedings are therefore valid in law.On this view,the contention of the Receiver that the assessment proceedings for the year 1960 -61 are ultra vires and illegal for want of proper notice under section 17(2)was found against.How­ever,the assessment was set aside for the purpose of serving a pre -assessment notice on Kunjunni Nair alone.The Receiver filed an application for reference to this court.By order dated 26th May 1970 the Commissioner rejected that application and hence this application has been filed under section 60(3)of the Agricultural Income -tax Act.

(2.) THE reference application was dismissed by the Commissioner on the ground that the application is not maintainable because the Commissioner has not passed any order 'enhancing the assessment 'or 'otherwise prejudicial 'to the assessee and therefore,an application under sec­tion 60(2)is not maintainable.It is true that no order enhancing the assessment has been passed by the Commis­sioner.So,the only question is whether an order otherwise prejudicial to the assessee within the meaning of section 60(2)has been passed.Revision Petitions are entertained and decided by the Commissioner as per the provisions of section 34of the Act.That provides that the Commissioner may,on his own motion or on the applica­tion of the assessee,call for the record of any proceeding which has been taken by any authority subordinate to him and may make such enquiry or cause such enquiry to be made and pass such orders thereon as he thinks fit.The first proviso makes it obligatory on the Commissioner to give the assessee a reasonable opportunity of being heard before any order prejudicial to him is passed;and the second proviso states that an order passed declining to inter­fere shall not be deemed to be an order prejudicial to the assessee.It is contended on behalf of the Revenue that in this case no order prejudicial to the assessee has been passed in revision and therefore the reference application is not maintainable.The meaning of the words 'an order pre­judicial to the assessee 'had been the subject matter of a decision by the Privy Council on an analogous provision for revision contained in section 33 -B of the Indian Income -tax Act,1922. in Commissioner of Income -tax v.Tribune Trust,Lahore(XVI I.T.R.214 ) the Privy Council observed thus: It appears to them that an order made by the Commissioner under section 33 can only be said to be prejudicial to the assessee when he is,as a result of it,in a different and worse position than that in which he was placed by the order under review.If the assessee has a complaint against any assessment or order 'made by a subordinate officer,he has the appropriate and specific remedy which the Act pro­vides.The Commissioner may act under section 33 with or without the invitation of the assessee;if he does so without invitation,it is clear that,if he does nothing to worsen the position of the assessee,the latter can acquire no right;the review may be a purely depart­mental matter of which the assessee knows nothing.If,on the other hand,the Commissioner acts at the invitation of the assessee and again does nothing to worsen his position,there is no justification for giving him a new right of appeal.He has a specific right of appeal against the assessment or order of the subordinate officer,which is subject to its own time limit.That he cannot enlarge by taking a course which is on his part purely voluntary.This view of the section is confirmed by the exception.For it is proper that,where the Com­missioner does make an order which worsens the position of the assessee,the latter should have a right of appeal,since against that order he has no other right. Again,towards the close of that judgment Their Lordships observed thus: For these reasons Their Lordships are of opinion that a reference does not lie from an order under section 33 unless that order is pre­judicial to the assessee in the sense that he is in a worse position than before the order was made. This was followed by the Kerala High Court in Parvathi Sankaran v.Commissioner of Income -tax(XL I.T.R 586 ),a case arising under section 33 -B of the Cochin Income -tax Act,and by the Madras High Court in N. S.Kantan v.Agricultural Income -tax Officer(LVIII I.T.R.53 ), N.N .Seshadrinathan v.State of Madras(LX I.T.R.482)and also in M.V.S.Kathirvelu Nadar v.Com­missioner of Agricultural Income -tax(LXVIII I.T.R.786 ),all cases arising under the Madras Agricultural Income -tax Act.In all these cases it was stated that the order in revision declining to interfere will not be deemed to be an order prejudicial to the assessee and further to constitute prejudice by the order the assessee must be in a different or worse position than he was before revision.In this case,the Commissioner has interfered with the assessment order,by setting aside the assessment and remanding the case.So it is not a case of declining to interfere within the meaning of section 34,proviso 2.The bar of section 34,proviso 2 cannot be relied on to hold against the maintainability of the application under sec­tion 60(2)of the Act.So,we have only to consider whether the order in revision is otherwise prejudicial to the assessee within the meaning of the provision of section 60(2 ).

(3.) BUT in this Original Petition a number of questions are stated to arise from the order of the Commissioner in revision.We consider that really only two questions arise and they are question Nos.3 and 4 mentioned in the petition,viz ., 3.Whether on the facts and in the circumstances of the case,the Commissioner of Agricultural Income -tax was correct in holding that the Estate of the deceased Thathunni Mooppil Nair could be properly and validly represented by Kunjunni Nair by himself and alone? 4.Whether on the facts and in the circumstances of the case,the Commissioner of Agricultural Income -tax was correct in holding that the service of notice under section 17 (2)of the Act on Kunjunni Nair on 20th July 1960 was proper,legal and valid? In the result,we allow the original petition and direct the Commissioner of Agricultural Income -tax to refer question mentioned above for the opinion of this court.There will be no order as to costs.