Patna High Court
Motipur Zamindari Co. Private Ltd. And ... vs Agricultural Income-Tax Officer on 18 March, 1971
JUDGMENT Untwalia, J.
1. These five writ applications challenging the assessment made against the petitioner under the Bihar Agricultural Income-tax Act, 1948 (Bihar Act 32 of 1948), have been heard together and are being disposed of by this judgment.
2. In respect of the assessment year 1956-57 corresponding to the accounting year 1363 Fasli, Shri N. N. Sarkar, the then Agricultural Income-tax Officer, by his order dated February 22, 1960, a copy of which is annexure "1" in C.W.J.C. No. 858 of 1970, had assessed the taxable agricultural income of the petitioner in that case at Rs. 79,383. The tax assessed on that income was Rs. 24,640'44. The petitioner-company went up in appeal. The Deputy Commissioner of Agricultural Income-tax, Muzaffarpur, by his order dated January 14, 1964 (annexure "2"), set aside the assessment and remanded the case to the Agricultural Income-tax Officer for fresh assessment. On remand a fresh assessment has been made, as it appears, not in the light of the remand order passed by the Deputy Commissioner but entirely on fresh lines. I do not mean to suggest by this observation that when the remand was an open remand, a fresh assessment order on fresh lines could not be made. After remand, Shri S. Das, another Agricultural Income-tax Officer, made an assessment order dated December 1, 1969 (annexure "3"), by which he has assessed the total income of the petitioner-company at Rs. 25,19,994 on which the tax payable is Rs. 14,33,832-47. C.W.J.C. No. 858 of 1970 is to challenge the assessment order dated December 1, 1969.
3. For the assessment year 1957-58 corresponding to the accounting year 1364 Fasli, Shri N. N. Sarkar, by the assessment order dated February 22, 1960, a copy of which is annexure " 1 " in C.W.J.C. No. 741 of 1970, has assessed the income of the petitioner-company at Rs. 71,035, the tax payable being Rs. 20,851.25 A similar order of remand as in the other case was made by the Deputy Commissioner in appeal preferred by the company. The order of the Deputy Commissioner is dated January 14, 1964 (annexure " 2"). Thereafter, more or less on the same lines as in the other case, Shri S. Das, Agricultural Income-tax Officer, had made the order dated December 1, 1969 (annexure " 3 "), by which he has assessed the income at Rs. 26,34,853, the tax payable being Rs. 15,00,234.58. C.W.J.C. 741 of 1970 is to challenge that assessment.
4. For the assessment year 1958-59 corresponding to the accounting year 1365 Fasli, Shri N.N. Sarkar assessed the total income of the petitioner-company at Rs. 72,435, the tax being Rs. 21,556.40. The order of Shri Sarkar is dated February 22, 1960 (annexure " 1 "), in C.W.J.C. No. 742 of 1970. The Deputy Commissioner, by his order dated January 14, 1964 (annexure " 2 ") remanded the case. On remand, Shri S. Das has made the fresh assessment order on December 1, 1969 (annexure " 3 "), by which he has determined the taxable agricultural income of the petitioner-company at Rs. 26,04,601, the amount of tax payable on the said sum being Rs. 14,82,745 15. C.W.J.C. No. 742 of 1970 is to challenge this assessment.
5. In respect of the assessment year 1966-67 corresponding to the accounting year 1374 Fasli, Sri R. Sharma, Agricultural Income-tax Officer, has made the assessment order dated January 16, 1970, a copy of which is annexure " 1 " in C.W.J.C. No. 841 of 1970. He has determined the taxable total of agricultural income of the petitioner-company which is a company different from that in the other three cases, at Rs. 34,38,335. It appears that lands were transferred by Motipur ZamindariCompany Private Ltd., the petitioner in other cases, to Motipur Sugar Factory Private Ltd. the petitioner in C.W.J.C. No. 841 of 1970. The amount of tax is assessed at Rs. 19,69,209.30. In this case the petitioner has preferred an appeal to the Deputy Commissioner. Part of the requisite amount of tax which has to be paid before the appeal is entertained, has been paid but a part still remains to be paid. Dr. Pal, learned advocate for the petitioner-company in this case, has stated before us that the company will make the deposit of 121/2 per cent, of the tax, which has to be paid in the appeal, and will prosecute the appeal in this case. The company, therefore, prays for permission to withdraw this case and to prosecute the appeal. The State has no objection to this course.
6. For the assessment year 1968-69 corresponding to the accounting year 1376 Fasli, Shri S. Das, Agricultural Income-tax Officer, Muzaffarpur, has made the assessment order dated 28th February, 1970, a copy of which is annexure " 1 " in C.W.J.C. No. 840 of 1970. By his order he has determined the total agricultural income which is taxable at the figure of Rs. 27,52,538, the amount of tax on which is Rs. 15,71,447. Motipur Sugar Factory Private Ltd. has challenged this assessment in C.W.J.C. No. 840 of 1970.
7. The three cases, namely, C.W.J.C. Nos. 858, 741 and 742 of 1970 are identical. The main grievance of the petitioner-company, namely, Motipur Zamindari Company Private Ltd., in these three cases is that the assessment orders in all these cases have been made in clear violation of the principles of natural justice on the basis of enquiries made behind the back of the assessee or its agents on materials which were not brought to their notice and they were not given opportunities to explain them and on the basis of many surmises and conjectures which in law could not form the basis of a legal and reasonable assessment. It is not necessary to go into all the alleged defects in the assessment order. For the purposes of allowing these three writ applications, it is sufficient to point out a few glaring defects, in the assessment order in C.W.J.C. No. 858/70; such defects are there in the other two assessment orders also.
8. The Agricultural Income-tax Officer has referred in the assessment order to his separate report dated November 27, 1969, which was prepared as a result of enquiry and investigation made by him. He says that this report was placed in the record, but does not say that the assessee or its representative was shown that report or was given any opportunity to meet the various facts stated in the report. In the counter-affidavit Shri S. Das, Agricultural Income-tax Officer, says that the substance of the local enquiries was told to the petitioner's officers and they were heard on the report on November 27, 1969, and December 1, 1969, and, thereafter, the impugned assessment orders were passed by him. In support of this statement, the order sheet maintained by the Agricultural Income-tax Officer was produced before us. On a proper consideration of the matter, we are not satisfied that the contents of the report dated November 27, 1969, were made known to the company's representative or any adequate opportunity was given to him to meet the allegations in the report. The assessment order which is a sufficiently long one was passed only 3 or 4 days later on December 1, 1969. Neither the order-sheet nor the assessment order states that the contents of the report dated November 27, 1969, were made known to the company representative. Immediately after reference to the report dated November 27, 1969, there is a reference to another report dated November 19, 1968, prepared by Shri B. N. Tiwari, the previous Superintendent of Commercial Taxes, who was probably the Agricultural Income-tax Officer or Assistant Agricultural Income-tax Officer. This report also does not seem to have been shown to the assessee's representative. The report dated November 27, 1969, was produced before us for our perusal. There are many facts stated in that report and to our mind it was a clear violation of the principles of natural justice to base the final assessment order on that report dated November 27, 1969, without bringing it to the notice of the assessee or its representative I may also note one thing here that this report indicates that various enquiries and investigations at the assessee's office or elsewhere were made by Shri Das, under the supervision of some Assistant Commissioner of Agricultural Income-tax. I do not know how the Assistant Commissioner came into the picture in this case because he was not the assessing officer. The assessing officer was Shri Das, and he made the final assessment order. In my opinion, it seems that his association with the enquiry was not proper and legal.
9. Throughout in the assessment order there is reference to local verification, local enquiry and the like, some of which was not made in the presence of the assessee or its representative. It is no doubt true that the assessing authorities are not bound by the technical rules of evidence but if they want to use any material which is adverse to the assessee then the assessee must be given a chance to have his say in regard to that material; otherwise, it is well established by now, it violates the principles of natural justice if an adverse order is made against the assessee on the basis of materials which are not brought to his notice and in regard to which he is not allowed an opportunity to make his submissions. At one place in the assessment order, the Agricultural Income tax Officer says that the local cultivators of Motipur reported that the assessee had several tractors and a large number of bullocks and ploughs and that he was confirmed by local enquiry and in investigation that parti land under old brick kilns and others would not be more than 100 bighas. The claim of the assessee of parti land was about 500 bighas. Justice required that the assessment officer ought to have told the assessee's representative the facts which he had learnt from his enquiry and ought to have asked him to explain them. One of the items of claim by the assessee was illegal occupation of certain lands by the villagers. The claim could be rejected for the assessee's failure to prove the fact. But the Agricultural Income-tax Officer not only did that, he further added in his assessment order that he enquired from local persons and officers of the local revenue office and they did not support the claim of the assessee. On the basis of such confidential enquiries, without bringing them to the notice of the assessee, it was not quite legal and just to base the assessment order on such materials. It is not necessary to repeat all such materials in the long assessment order. Suffice it to say that an assessment order of the kind based upon such materials in violation of the principles of natural justice cannot be sustained and is fit to be quashed in exercise of the powers of this court under Article 226 or 227 of the Constitution of India. The variance in the two figures of assessments, one made before the remand order and the other after it, is so great that the petitioner-company cannot be defeated in these writ cases merely on the ground of their being available an alternative remedy of appeal. It is no doubt true, as it appears, that in all these three cases appeals were filed but because the requisite amount of tax could not be paid, appeals are not fit to be prosecuted. But I must not be understood to express any opinion by any observation of mine in regard to the merits of either of the assessment orders. We have not examined the materials nor will there be any justification for me to say that the first assessment figures were correct or unusually low or the second assessment figures are not correct or unusually high. But what is to be emphasised is that the impugned assessment order and annexure-3 in each of the writ cases, C.W.J.C. Nos. 858, 741 and 742 of 1970, suffers from infirmities which would justify their quashing by this court. I, therefore, in exercise of the power of this court under Article 111 of the Constitution of India, set aside those orders and remit the three cases back to the Agricultural Income-tax Officer for a fresh assessment in accordance with law. There will be no order as to costs in any.
10. As stated above, C.W.J.C. No. 841 of 1970 is allowed to be withdrawn. The petitioner may prosecute its remedy of appeal. There will be no order as to costs.
11. Coming to the facts of C.W.J.C. No. 840 of 1970, it is to be stated that the first argument to attack the assessment order was that after the return was filed by the assessee a best judgment assessment ought not to have been made. There is no substance in this point. The return was filed in time. Opportunity was given to the assessee to produce evidence. Evidence was not produced. On a subsequent date fixed for producing evidence a provisional return was filed. The Agricultural Income-tax Officer was not bound to give any credence to such a return when no evidence was produced by the assessee. The best judgment assessment, therefore, was technically and legally not wrong. But, on reading the assessment order and in the background of the other cases, it is clear that the estimate, of the taxable agricultural income was in consonance with, or in view of, the figures in the revised assessment in the earlier orders. Since those assessment orders have been set aside and a direction has been given to make fresh assessment, it is just and proper that the assessment order in this case also should be set aside and the case should be remitted back for a fresh assessment. In this assessment order also, there are certain matters which indicate violation of principles ol natural justice and it is difficult to sustain this assessment order even on that count. C.W.J.C. No. 840 of 1970 is, therefore, allowed, the assessment order (annexure " 1 ") is set aside in exercise of the power of this court under Article 227 of the Constitution of India and the case is remitted back to the Agricultural Income-tax Officer for a fresh assessment. There would be no order as to costs in this case either, Sarwar Ali J.
12. I agree.