DAYALAN RAJES Vs. STATE OF KERALA

JUDGEMENT

(1.) THIS is a reference sent up by the Agricultural Income Tax Appellate Tribunal,Trichur under S.60(1)of the Agricultural Income Tax Act.The question of law which has been referred for our opinion is: "Whether on the facts and in the circumstances of the case,the Agricultural Income Tax Appellate Tribunal was right in holding that the assessment was not barred by limitation? " The Karapara Estate is owned by four persons viz .,M/s M.S.P.Rajas,Dayalan Rajas,Mohan Rajas and Smt.Thankammal.The last named person is the assessee with whom we are concerned in the present Reference.The assessment in question was for the year 1965 -66,and was completed on 15th December 1965 on the basis that the four persons concerned were tenants in common.A return had been filed by M.S.P.Rajah on the basis that the Estate was an 'association of persons ' ;.On appeal to the Agricultural Income Tax Appellate Tribunal the Tribunal allowed the appeal and held that the four persons should be considered as an 'association of persons ' ;.It set aside the assessment order.Thereafter,the Inspecting Assistant Commissioner issued notice,dated 21st March 1969 to M.S.P.Rajah and to the Assessee under S.35 of the Agricultural Income Tax Act.O.P.No.2306 of 1969 was moved in the court to quash the above said notice as barred by limitation.The same was allowed(vide M.S.P.Rajah and another v.Inspecting Assistant Commissioner of Agricultural Income Tax and Sales Tax,Special(83 ITR 46 ).The decision was confirmed on appeal by a Division Bench of this Court in W.A.No.267 of 1971.The matter is now stated to be pending in the Supreme Court.In W.A.No.267 of 1971 it was observed: "By the time Ext.P -1 and P -1(a )(these were notices)were issued on 21st March 1969,it was more than three years from the close of the assessment year 1962 -63.It is clear that the assessment is barred under S.35(2 );it is equally clear that the 2nd proviso to the sub -section cannot apply to the case."

(2.) FOR the year 1965 -66,an assessment was then made on 26th March 1970.Notices were served on the major partners on 2nd April 1969 and 10th April 1969 and order under S.35(2)of the Act was passed on 26th March 1970.An appeal to the Deputy Commissioner was dismissed.That officer took the view that as the matter had been remanded to it by the Appellate Tribunal,there was no question of limitation.The Tribunal also dismissed the assessee's appeal on a ground different from that given by the Appellate Assistant Commissioner.The Tribunal found that the last day for the issue of the notice was 31st March 1969 and the notices issued on 29th March 1969 were in time.Notices were served on 2nd April 1969 and 10th April 1969 and the assessment completed on 26th March 1970 was within time from date of service.This was the reasoning of the Tribunal.This tax revision has been filed against the order of the Tribunal.

(3.) COUNSEL for the Revenue realised the force and weight of the authorities cited and the principle of law laid down;but he contended that the decision in W.A.No.267 of 1971 is now pending in appeal before the Supreme Court,and the matter cannot be said to have been finally decided.But we are afraid as far as this Court is concerned,the pronouncement in W.A.No.267 of 1971 is binding on us,and must be followed.Regarding the applicability of clause(b)of the second proviso to sub section(2)of S.35,on which Counsel for the Revenue would place reliance alternatively,to support the assessment order,the question was directly dealt with in M.S.P.Rajah's case(83 ITR 46 ),confirmed in W.A.267 of 1971.The learned Single Judge referred to the second proviso to S.35(2)at page 49 and held,following the Allahabad High Court's judgment in Jawahar Lal Mani Ram v.Commissioner of Income Tax(72 ITR 78)that clause(b)of the second proviso had no application as the assessee became first assessable as tenants in common by the finding of the Appellate Tribunal which resulted in the remand,and the impugned assessment was therefore beyond the prescribed period of limitation.Such a contention was held to be unsustainable in view of the Supreme Court decision in S.C.Prashar v.Vasantsen Dwarkadas(49 ITR 1 ),and it was ruled that the second proviso can apply only to a person who is a party to the proceeding which resulted in the remand.The learned Judge recorded agreement with this view.