Kerala High Court
K. Joseph Jacob vs Agricultural Income-Tax Officer And ... on 22 November, 1990
Equivalent citations: [1991]190ITR464(KER)
ORDER--Is not the date of making the order, but when it is communicated HELD: An order of assessment comes into force only when it is communicated. This is not only by reason of s. 30, but also for a more fundamental reason, namely, that a party against whom an order is made must be put on notice of that order. The date of making or signing the order is not dterminative of its effect. At that stage, the order is only unilateral in s sense and not irrevocable, it becomes bilateral or binding only on communication. AGRICULTURAL INCOME TAX Assessment--LIMITATION--Issue of demand notice beyond five years from end of the assessment year in which income was first assessable HELD: Exhibit P-1 order of assessment came alive only with exhibit P-1(a) and that was beyond the period of five years. There is no question of the order becoming effective by reason of the bar of limitation under s. 35(2). JUDGMENT Chettur Sankaran Nair, J.
1. When does an order of assessment breathe into life ? is the question for consideration. According to counsel for the petitioner, it is when the order is communicated, and according to the Government Pleader, it is when the order is made.
2. Exhibit P-1, order of assessment, for the assessment year 1979-80, dated March 1, 1985, is challenged as time barred. Pursuant to the assess-ment, a notice of demand, exhibit P-1(a) dated June 3, 1985, was issued under Section 30 of the Kerala Agricultural Income-tax Act. Section 35(2) of the Act, incorporating a rule of limitation, reads :
"no order of assessment under Section 18 or of assessment or reassessment under Sub-section (1) of this section shall be made after the expiry of five years from the end of the year in which the agricultural income was first assessable".
3. The assessment year is 1979-80. The income became "first assessable" on April 1, 1979. The end of the year in which the agricultural income "was first assessable is March 31, 1980". The end of five years therefrom would be on March 31, 1985. Exhibit P-1 dated March 1, 1985, is thus within five years. Exhibit P-1 (a) notice of demand was on June 3, 1985, and beyond five years. Thus arises the question when the order of assessment came into force ?
4. According to counsel for the petitioner, it came into effect, when communicated, in the form of a demand under Section 30. He relies on precedent to support this contention. A Division Bench of this court, in T. R. C. Nos. 15 and 16 of 1981, held that "communication is essential for the order to become final and effective". The Supreme Court, in B. J. Shelat v. State of Gujarat, AIR 1978 SC 1109, held that an order takes effect only on communication. Communication could be actual or constructive. The date when communication is made is the date of communication, and not the date on which the communication is received. Sabyasachi Mukharji J. (as His Lordship then was) in Mohendra J. Thacker and Co. v. CIT [1983] 139 ITR 793 (Cal) took the view that communication is a condition precedent to an order of assessment becoming effective. Another Division Bench of this court in Bhaskaran v. Addl. ITO [1963] 47 ITR 334, after noticing the decisions on the point, observed (at p. 336) ;
"... where the rights of a person are affected by an order and limitation is prescribed for the enforcement of the remedy . . . the making of the order must mean either actual or constructive communication of the said order to the party concerned." (emphasis* supplied).
5. Counsel for the petitioner submitted that communication of the order was only on June 3, 1985, by exhibit P-1(a), beyond five years, thus attracting the bar under Section 35(2).
6. In answer, the learned Government Pleader submitted that the need for communication is not postulated by Section 35 of the Act and that except where communication is made obligatory by the statute, the order comes into force when it is signed. He relied on the decision in STO v. Sudarsanam Iyengar and Sons [1970] 25 STC 252 (SC) to support this contention. The question considered in that case was whether proceedings initiated during the course of a year, would be enough compliance with Rule 33 of the Tra-vancore-Cochin General Sales Tax Rules, 1950. The rule permitted initiation of proceedings during any part of the year and the court held that if proceedings were initiated within that span of time, they would be valid. In the instant case, there is a point which comes into sharp focus, from which limitation runs ; and that point is the last day of the year in which the income was "first assessable". The last day is March 31, 1980, and limitation would run out after March 31, 1985. That apart, Section 30 itself postulates communication.
7. An order of assessment comes into force only when it is communicated. This is not only by reason of Section 30, but also for a more fundamental reason, namely, that a party against whom an order is made must be put on notice of that order. The date of making or signing the order is not determinative of its effect. At that stage, the order is only unilateral in a sense and not irrevocable ; it becomes bilateral or binding only on communication.
8. Exhibit P-1 order of assessment came alive only with exhibit P-1(a) and that was beyond the period of five years. There is no question of the order becoming effective by reason of the bar of limitation under Section 35(2).
9. The writ petition is allowed and exhibit P-1 and all proceedings pursuant thereto are quashed. No costs.