SUPPAN CHETTIAR Vs. COMMISSIONER OF AGRL. INCOME-TAX

JUDGEMENT

(1.) This is a reference made by the Commissioner of Agricultural Income Tax (Board of Revenue), Kerala, under S.60 of the Travancore Cochin Agricultural Income Tax Act, 22 of 1950, and it relates to the assessment of one A. S. Suppan Chettiar, Pankajam House, Bodinayakanoor, for the years 1951-52 and 1952-53 under the said Act. For the four years 1951- 52, 1952-53, 1953-54 and 1954-55 he was assessed to agricultural income tax by an order of the Inspecting Assistant Commissioner, Kottayam, dtd. 31/1/1955. Out of the four assessments made by that order, two, namely, the assessments for 1951-52 and 1952-53, were interfered with in revision under S.34 of the Act by the Commissioner of Agricultural Income Tax in 1957, and that interference has caused the application for this reference.

(2.) The accounting period for the assessments of 1951-52 and 1952-53 were the years ending 31/3/1951 and 31/3/1952. Prior to these accounting periods Suppan Chettiar had transferred some properties belonging to him in favour of two of his sons, Natarajan and Mohan, who were minors on the date of the transfer and also during the accounting periods for the four assessments. On account of the said transfers the income from the transferred properties was not included in Suppan Chettiar's assessment for the four years 1951-52, 1952-53, 1953-54 and 1954-55, made by the order of 31/1/1955, and he was assessed by that order only on the income from his remaining properties. For each of these four years the Agricultural Income Tax Officer made three assessments, one in respect of properties standing in Suppan Chettiar's name, another in respect of properties transferred to Natarajan, and the third in respect of the properties transferred to Mohan -- the first of these assessments being made on Suppan Chettiar in his individual capacity and the second and third being made in respect of Natarajan and Mohan respectively with Suppan Chettiar as their guardian after the service of the demand notices in their guardian. After the service of the demand notices in pursuance of these assessments and the realisation of the taxes thereunder the Agricultural Income Tax authorities took the view that three separate assessments should not have been made on Suppan Chettiar and his minor sons and that Suppan Chettiar should have been assessed for each year not merely on the income from the properties standing in his name but also on the income from the properties transferred to his sons a course which would have led to the realisation of a larger amount by way of tax, since the rate of taxation would be higher if all the three incomes were clubbed together and taxed by one assessment than when they were assessed separately. The Agricultural Income Tax Officer therefore took steps under S.35 of the Travancore Cochin Agricultural Income Tax Act to reopen Suppan Chettiar's assessments for the four years and make re-assessments on him including in his assessments the income from the properties transferred to his sons. But, as by then the time limit prescribed by S.35 for taking action thereunder had expired so far as the assessments of 1951-52 and 1952-53 were concerned, the Agricultural Income Tax Officer reopened Suppan Chettiar's assessments and made re-assessments on him only for the years 1953-54 and 1954-55, and in respect of the years 1951-52 and 1952-53 the Inspecting Assistant Commissioner of Agricultural Income Tax and Sales Tax, Kottayam, moved the Commissioner of Agricultural Income Tax (Board of Revenue) to revise the assessments suo moto under S.34 (1) of the Act and include in his assessments the income from the properties transferred to his sons. The motion was made by way of a letter dtd. 9/1/1957 from the Inspecting Assistant Commissioner of Agricultural Income Tax and Sales Tax to the Secretary, Board of Revenue (Agricultural Income Tax and Sales Tax). The material portion of that letter reads as follows :

(3.) S.34, 35 and 36 of the Travancore Cochin Agricultural Income Tax Act, 22 of 1950, read as follows :