Karnataka High Court
Kalasa Tea And Produce Co. Ltd. vs State Of Karnataka on 28 January, 1998
Equivalent citations: ILR1998KAR1370, [1999]235ITR112(KAR), [1999]235ITR112(KARN)
Author: S.R. Bannurmath
Bench: S.R. Bannurmath
JUDGMENT Y. Bhaskar Rao, J.
1. The petitioner is an owner of tea and coffee plantations and an assessee under the Karnataka Agricultural Income-tax Act, 1957 (hereinafter referred to as the "Act"). For the assessment years 1967-68, 1968-69 and 1970-71, the petitioner filed its returns under the Act. After due enquiries, the assessments came to be completed. The orders are passed on November 5, 1973. The petitioner claimed before the assessing authority that he is entitled for special allowance to be granted to the industrial undertaking as per Section 80-I of the Central Income-tax Act. That was negatived by the assessing authority. Therefore, the petitioner filed an appeal before the Deputy Commissioner of Agricultural Income-tax (Appeals), Mysore. The appellate authority, vide its order dated November 28, 1977, granted certain reliefs. The Deputy Commissioner of the Agricultural Income-tax (Appeals) has also held that the Agricultural Income-tax Officer has to allow the deduction at 8 per cent. under Section 80-I of the Income-tax Act before determining the taxable agricultural income for the relevant assessment years and remanded the matter to the assessing authority to quantify the deduction as per his direction. Thereafter, the assessing authority in accordance with the direction of the Deputy Commissioner passed an order in the petitioner's case for the assessment years by order dated December 15, 1980.
2. Subsequently, the Joint Commissioner of Agricultural Income-tax, Bangalore, issued show-cause notice under Section 35 of the State Act for the above assessment years proposing to revise the orders passed by the Deputy Commissioner of Agricultural Income-tax (Appeals) on the ground that the same are erroneous and prejudicial to the interests of the Revenue, vide notice dated March 27, 1984. The Joint Commissioner passed an order on May 25, 1984, under Section 35 of the Act setting aside the orders dated December 15, 1980, in pursuance of the appellate order of the Deputy Commissioner. The Joint Commissioner of Agricultural Income-tax directed the Agricultural Income-tax Officer to redo the assessment for the said years by disallowing the claim of the petitioner for deduction under Section 80-I of the Central Income-tax Act. The said order is challenged in this petition.
3. Learned counsel for the petitioner contended that the Joint Commissioner of Agricultural Income-tax has no jurisdiction to exercise the powers under Section 35 of the Act after the period of limitation has expired. Therefore, the order is without jurisdiction and liable to be set aside.
4. On the other hand, learned counsel appearing for the Revenue contended that the Joint Commissioner reviewed the order of the assessing authority dated December 15, 1980, which is the order giving effect to the relief granted by the Deputy Commissioner. Therefore, that order can be revised by the Joint Commissioner by virtue of the power under Section 35 of the Karnataka Agricultural Income-tax Act, 1957.
5. In view of the above contentions, the important question of law that arises for our consideration is :
Whether the revisional authority can exercise jurisdiction to revise the consequential order passed in pursuance of the order of the appellate authority when the order passed by the appellate authority is not revised or not altered and the date of revisional power exercised under Section 35 of the Act by the revisional authorities beyond the period of four years ?
6. To appreciate the above contention it is relevant to extract Section 35, Sub-sections (1) and (2), of the Karnataka Agricultural Income-tax Act, 1957, which is as under :
"Section 35. (1) The Commissioner or Additional Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by any authority subordinate to him is erroneous in so far as it is prejudicial to the interests of the Revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.
(2) No power shall be exercisable under Sub-section (1} after the expiry of four years from the date of the order sought to be revised."
A reading of Sub-section (1) of Section 35 makes it clear that the revi-sional authority has got power to call for and examine the records in proceedings under the Act if he considers that any order passed by the authority subordinate to him is erroneous in so far as it is prejudicial to the interests of the Revenue. Sub-section (2) provides that the power under Sub-section (1) shall not be exercisable after the expiry of four years from the date of the order sought to be revised. Therefore, the limitation to exercise the power to revise the order is four years as prescribed under Sub-section (2) of Section 35. The required grounds to exercise power of revision are that orders to be revised passed by the authority subordinate to the revisional authority. Secondly, it is erroneous in so far as it is prejudicial to the interests of the Revenue. Thirdly, an opportunity to the assessee before revising the order. Fourthly, as in Sub-section (2), the said power has to be exercised within four years from the date of the order sought to be revised. Sub-section (2) of Section 35 of the Karnataka Agricultural Income-tax Act prescribes a ban stating that after expiry of fours years' time from the date of the order sought to be revised, the power shall not be exercised. Therefore, no order sought to be revised can be set aside after a lapse of four years.
7. The next question is what is the order sought to be revised in the present case. There is no dispute that the appeal filed by the petitioner against the order of the assessing authority refusing to give relief as claimed by them under Section 80-I of the Income-tax Act was allowed by the Deputy Commissioner (Appeals) by order dated November 28, 1977. The Deputy Commissioner while allowing the contention of the petitioner directed the assessing authority to redetermine the assessment in accordance with the direction given in the order. Accordingly, the assessing authority passed an order dated December 15, 1980, implementing the order of the Deputy Commissioner (Appeals) dated November 28, 1977. Therefore, in this case the order even if taken as erroneous and prejudicial to the interests of the Revenue, is the order of the Deputy Commissioner (Appeals) which has reversed the order of the assessing authority in regard to the granting of relief under Section 80-I of the Act and allowed the contention of the assessee. The order passed by the assessing authority in pursuance of the direction of the above appellate authority is only a consequential order. So to decide which is the order prejudicial to the interests of the Revenue, the revisional authority ought to have held that the order passed by the Deputy Commissioner (Appeals) is prejudicial and is against the interest of the Revenue, for the purposes of exercising the revisional power particularly in regard to considering whether the exercise of power is within the limitation prescribed under Sub-section (2) or not. The order passed by the assessing authority carrying out the directions given by the appellate authority is only consequential. Therefore, the period of limitation has to be counted from the date of the order of the Deputy Commissioner (Appeals), i.e., November 28, 1977. Therefore, the exercise of power by the revisional authority under Section 35 of the Act is beyond the period of four years. So the bar prescribed under Section 35(2) that the revisional authority shall not exercise the power after the period of four years ousts the jurisdiction of the revisional authority to exercise the power.
8. In view of the circumstances, the impugned order passed by the revisional authority is beyond the period of limitation prescribed under Section 35(2) of the Karnataka Agricultural Income-tax Act, and is, therefore, without jurisdiction. Accordingly, the revision is allowed.