STATE OF KERALA Vs. UNION TIMBER TRADERS

JUDGEMENT

(1.) These tax revision cases are filed by the State under S.78(1) of the Agricultural Income Tax Act, 1991 against orders of the Tribunal cancelling the income escaped assessments as time barred. We have heard Government Pleader appearing for the petitioner and the Senior Counsel Dr. Mohammedkutty appearing for the respondent. The question raised is whether reassessments completed in the case of the respondent for the assessment years 1988-89 and 1990-91 are time barred. The Agricultural Income Tax Act, 1991 came into force on 01/04/1991 and the assessments involved pertain to the assessment years prior to the commencement of the new Act. The original assessment of the respondent for the assessment year 1988-89 was completed on 05/01/1993. After appeal and remand, the assessment was revised by the Assessing Officer on 31/10/1995 against which assessee filed another round of appeal. While this appeal was pending, assessment was reopened and the income escaping assessment was made on 30/11/1996 on the ground that income from substantial area cultivated by the assessee was not included in the original assessment. For the assessment year 1990-91, respondent - assessee did not file any return. Therefore, the Assessing Officer issued notice on 27/11/1995 and made income escaping assessment on 30/05/1997. The impugned revised assessments were made under S.41(1) and (2) read with S.39(6) of the Act, 1991. The Tribunal cancelled the assessments for the reason that notice issued under S.41(1) was without prior approval of the Commissioner in terms of S.41(2) of the Act.

(2.) The question to be considered is the Act, the provisions of which are applicable for the purpose of computation of limitation for the assessment completed. S.99(3) of the Agricultural Income Tax Act, 1991 specifically states that notwithstanding the repeal of the AIT Act, 1950, the provisions of the said Act will apply for initiation and completion of any proceeding including assessment of agricultural income. This Section makes it clear that for reopening any assessment prior to the year in which the 1991 Act came into force, the provisions of the old repealed Act are applicable. Under S.35(2) of the 1950 Act, assessment shall be completed within five years from the end of the year for which the agricultural income was first assessable. Admittedly the escaped income for the years 1988-89 and 1990-91 were assessed beyond five years from the end of the relevant previous year.