Kerala High Court
Smt. Susan Varghese vs Deputy Commissioner Of Agricultural ... on 28 March, 1994
JUDGMENT T.L. Viswanatha Iyer, J.
1. The question involved in this batch of writ petitions turns on the interpretation of Section 99 of the Kerala Agricultural Income-tax Act, 1991 ("the 1991 Act"), which repealed and replaced the Agricultural Income-tax Act, 1950 ("the 1950 Act"), with effect from April 1, 1991. The petitioners in these writ petitions are trustees of two different trusts. They had been assessed to tax under the 1950 Act on the income received by them as trustees of the two trusts. These assessments were completed on March 12, 1991, and communicated on March 16, 1991. But the Deputy Commissioner, who exercises the powers of revision under Section 34 of the 1950 Act, was of the opinion that the orders of assessment were prejudicial to the Revenue, and initiated suo motu proceedings under Section 34 aforesaid to revise the assessments. Notices dated March 21, 1991, were served on the petitioners on April 4, 1991, to which the petitioners objected by their statement dated April 9, 1991. But the Deputy Commissioner did not accept the objections; he set aside the assessments by the order, exhibit P-1, dated May 27, 1991, in each of these cases which were served on the petitioners on July 23, 1991, and remitted the matter to the assessing authority for fresh consideration.
2. In the interregnum, and on April 1, 1991, the 1991 Act had been brought into force repealing the 1950 Act. The 1991 Act by its Section 77 provided a remedy of revision to the Commissioner of Agricultural Income-tax at the instance of an assessee, aggrieved by any order of the Deputy Commissioner passed under Section 75 of the Act. In the bona fide belief that such a revision lies, the petitioners challenged the order, exhibit P-1, in revision under Section 77 before the Commissioner. The Commissioner, however, took the view that the revisions were not maintainable having regard to the fact that the proceedings were commenced under Section 34 of the 1950 Act. According to him, the proper course for the petitioners was to pursue their remedies under the 1950 Act, namely, to seek reference to this court under Section 60 of the 1950 Act of questions of law arising out of the orders of the Deputy Commissioner. He passed the order, exhibit P-5, rejecting the revision petitions as not maintainable. The petitioners have filed these writ petitions under Article 226 of the Constitution challenging the orders, exhibit P-5, in each of these cases. The question is whether the revision petitions were not maintainable as held by the Commissioner. The answer to it turns on the interpretation of the repealing provision, namely, Section 99 of the 1991 Act.
3. The scheme of the 1950 Act was that the Commissioner of Agricultural Income-tax, who was a statutory functionary, was vested with the power to revise any order passed by a subordinate authority, if he was of the opinion that the order was prejudicial to the interests of the Revenue. "Commissioner" was defined in Section 2(g) as meaning a person appointed to be a Commissioner of Agricultural Income-tax under Section 15. There was no authority named in the Act as Deputy Commissioner, though in practice, there were functionaries designated as Deputy Commissioners. The Government had issued a notification under Section 15 conferring the revisional powers of the Commissioner on these functionaries known as Deputy Commissioners, in respect of assessments, the income assessed in which did not exceed Rs. 75,000. It was accordingly that the Deputy Commissioner purported to invoke the power under Section 34 of the 1950 Act and issued notice to the petitioners on March 21, 1991, proposing to revise the assessments made on them.
4. An assessee aggrieved by an order of the Commissioner/Deputy Commissioner under Section 34, which was prejudicial to him, could under Sub-section (2) of Section 60, require the Commissioner/Deputy Commissioner to refer to this court for its opinion any question of law arising out of such order. This was the normal remedy available to the assessee under the 1950 Act.
5. The scheme of the 1991 Act is different. Section 24 of this Act specifies both the Commissioner of Agricultural Income-tax and the Deputy Commissioners of Agricultural Income-tax as agricultural income-tax authorities for the purposes of the Act. Both these authorities are vested by Sections 75 and 76, respectively, with suo motu powers of revision over orders passed or proceedings recorded by any officer or authority subordinate to them which are prejudicial to the Revenue, the power of the Commissioner being wider embracing within it orders and proceedings of the Appellate Assistant Commissioner and Deputy Commissioner as well. The Commissioner is also vested under Section 77 with the power to revise any order of the Deputy Commissioner under Section 75 on an application made in that behalf by the assessee. Any order of the Commissioner passed under Section 76 or 77 is subject to challenge in this court in revision under Section 78 on the ground that the Commissioner had either erroneously decided or failed to decide any question of law. Thus the position under the 1991 Act is that an assessee who is aggrieved by an order of the Deputy Commissioner in suo motu revision under Section 75 can challenge it in revision before the Commissioner under Section 77 and then approach this court in revision under Section 78 if he does not get the expected relief from the Commissioner. A Departmental remedy is thus provided to him, apart from substituting the cumbersome procedure of reference with a revision to this court, albeit on limited grounds.
6. Section 99 of the 1991 Act is the repealing provision. It repeals the 1950 Act and makes detailed provision as to how pending proceedings and others are to be dealt with. We are concerned with Sub-sections (1) to (4). Sub-section (1) repeals the 1950 Act. The proviso thereto states that the repeal shall not affect the previous operation of the 1950 Act or any right, title, obligation or liability already acquired, accrued or incurred thereunder and that subject thereto, anything done or any action taken (including any notice), in the exercise of any power conferred by or under the said Act, shall be deemed to have been done or taken in the exercise of the powers conferred by or under the 1991 Act, as if that Act were in force on the date on which such thing was done or action was taken, and any reference in the said Act to an officer or authority shall be construed as reference to the corresponding officer or authority under the 1991 Act, and if any doubt arises as to who is such corresponding officer or authority, the decision of the Government thereon shall be final. I shall extract Subsections (2) to (4) in full as much debate centred on their construction :
"(2) Notwithstanding anything contained in Sub-section (1), any application, appeal, revision or other proceeding made or preferred to any officer or authority under the said Act, and pending at the commencement of this Act, shall, after such commencement, stand transferred to and be disposed of by the officer or authority who would have had jurisdiction to entertain such application, appeal, revision or other proceeding under this Act, as if it had been in force on the date on which such application, appeal or revision or other proceeding was made or preferred.
(3) Nothing contained in Sub-section (1) shall affect the right to initiate and complete any proceedings pending on the commencement of this Act regarding the assessment, levy, collection and recovery of the tax chargeable under the said Act including that of escaped agricultural income or affect the liability of any person to pay any sum due from him or any existing right of refund under the said Act.
(4) Notwithstanding such repeal of the Agricultural Income-tax Act, 1950 (Act XXII of 1950), any proceedings pending before any agricultural income-tax authority, Appellate Tribunal or High Court at the commencement of this Act, shall be continued and finally decided or determined under the provisions of that Act."
7. I may at once note here that the proviso to Sub-section (1) deals with things or actions taken or done by the Revenue, while Sub-section (2) deals with matters initiated by the assessee. I say so with reference to Subsection (2) because it speaks of any application, etc., made or preferred to any officer or authority and not made by or preferred to such officer or authority. Sub-section (2) is, therefore, intended to cover action taken by the assessee, action at the instance of the Revenue being completely covered by the proviso to Sub-section (1).
8. The effect of these provisions is as follows so far as proceedings pending as on April 1, 1991, are concerned :
(a) Any right, title, obligation or liability acquired, accrued or incurred under the 1950 Act is not affected, It is preserved. This is the first part of the proviso to Sub-section (1).
(b) Subject to the above, anything done or any action taken by the authorities functioning under the 1950 Act in exercise of the powers conferred thereunder (including any notice) is fictionally treated as done or taken under the 1991 Act. This is as per the middle part of the proviso.
(It is under this that the proceedings in revision initiated by the Deputy Commissioner continued in his seisin and were dealt with by him, culminating in exhibit P-1).
(c) All arrears of tax and other amounts due are, for purposes of recovery, treated as having accrued under the 1991 Act.
(d) All proceedings initiated by the assessee like applications, appeals, revisions and others under the 1950 Act stand transferred to the officers under the 1991 Act who would have had jurisdiction in the matter had the 1991 Act been in force at the time the said applications, etc., were made or preferred.
(e) Sub-section (3) is one ex abundanti cautela, as in my opinion, it is covered by the proviso to Sub-section (1) itself, to declare that the right to initiate and complete pending proceedings for assessment, levy, collection or recovery of any tax, including that of escaped income, and the liability of the assessee to pay amounts due from him under the 1950 Act and his right to get refunds thereunder are not affected by the repeal.
(f) Sub-section (4) specifies the content and nature of the power to be exercised in pending proceedings by declaring that they will be continued and finally decided or determined under the provisions of the 1950 Act, i.e., as if they were being dealt with under that Act itself without the intervention of the 1991 Act. According to me, this is all the purport of this Sub-section, as the question as to who should deal with the proceedings is already covered by the proviso to Sub-section (1) and Sub-section (2). This means that any diminution or increase in the corresponding powers under the 1991 Act shall not affect the pending proceedings which will have to be disposed of with the same amplitude of powers as under the 1950 Act. Secondly, proceedings under the 1950 Act have to be dealt with thereunder even though there is no corresponding provision in the 1991 Act. To cite an example, a petition to cancel an assessment under Section 18(4) of the 1950 Act may be dealt with as such under Section 19 of that Act itself even though there is no corresponding provision under the 1991 Act. A reference made to this court under Section 60 of the 1950 Act is another example.
9. I have attempted to analyse Section 99 because of the difficulties that appear to have been faced in interpreting it as seen from a number of cases that have come up. I shall now deal with these cases in the light of the above principles.
10. The proceedings in revision in these cases continued to be in the seisin of the Deputy Commissioner who had issued the notices under Section 34. No doubt, as pointed out by the Government Pleader, the Deputy Commissioner was exercising the powers of the Commissioner under the 1950 Act, there being no statutory authority as the Deputy Commissioner under that Act. The Government Pleader's logic was that the order, exhibit P-1, must be deemed to be one passed by the Commissioner himself under Section 76 in which event, it was not revisable afresh under Section 77 on an application by the assessee. The argument proceeds on a fallacy and is, in fact, destructive of the order, exhibit P-1, itself. If the proceedings under Section 34 could be continued only by the Commissioner as contended, necessarily the order, exhibit P-1, becomes forthwith invalid as one passed by an authority without jurisdiction, namely, the Deputy Commissioner. But none understood it that way and everybody--the assessee as well as the Deputy Commissioner--proceeded on the basis that the matter had to be dealt with by the Deputy Commissioner himself after April 1, 1991. I think this was right because the proviso to Sub-section (1) which, as I had mentioned earlier, deals with departmental action, deems the notice issued as one under the 1991 Act as if it had been in force on the date on which it was issued and enables it to be proceeded with as such. It is true the Deputy Commissioner issued the notice in his capacity as Commissioner under the 1950 Act; but the fiction created by the proviso deems it an action taken under the 1991 Act, and the Deputy Commissioner did have such a power under Section 75 of the 1991 Act. The fiction so created has to be given its full effect. The disposal of the proceedings by the order, exhibit P-1, was thus under Section 75 of the 1991 Act, the power of the Commissioner who is a different statutory functionary being under Section 76. An order of the Deputy Commissioner under Section 75 is revisable by the Commissioner suo motu under Section 76 or on application by the assessee under Section 77 and that is what precisely the assessees sought in these cases. The revision petitions filed by the petitioners were, therefore, maintainable under Section 77 and the Commissioner went wrong in rejecting the petitions by the order, exhibit P-5, and relegating the parties to the remedy under Section 60 of the 1950 Act. This goes against the terms of the proviso to Sub-section (1) and the fiction created thereby. Sub-section (4) does not run counter to this conclusion as it delineates only the scope and nature of the power to be exercised in dealing with pending proceedings.
11. This is sufficient to dispose of the writ petitions. But Sri Vijayan Nair, the Senior Government Pleader, raised a plea that the petitioners should have approached this court in revision under Section 78 of the Act instead of challenging the orders under Article 226 of the Constitution. I agree with him in his submission and would normally have left the parties to the revisional remedy. But I do not intend to do so in these cases for more reasons than one. The proper interpretation of Section 99 has been a matter of frequent occurrence in this court and I feel that it will be advantageous to the Revenue as well as the assessees to have an authoritative opinion in the matter at an early date. Secondly, even if in the revisions which the petitioners may file, the same relief as that in these writ petitions will have to be afforded, namely, to direct the Commissioner to entertain the revision petitions and to deal with them on the merits. A disposal of the matter at this stage will save both parties the unnecessary time lag by pursuing the revisional remedy afresh. I am, therefore, entertaining the writ petitions on the merits despite the correctness of the Government Pleader's stand though I do so on the special facts and circumstances of these cases, without its being treated as a precedent.
12.The writ petitions are, therefore, allowed. Exhibit P-5 in each of these cases is quashed. The Commissioner of Agricultural Income-tax is directed to entertain the revision petitions under Section 77 of the 1991 Act and pass orders afresh on the merits. No costs.