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Judgment
P.S. Gopinathan, J.—As per Section 72 of the Wakf Act, 1995, the Mutawalli of every Wakf, the net annual income of which is not less
than five thousand rupees, shall pay annually, out of the net annual income derived by the Wakf, such contributions, not exceeding seven per cent
of such annual income, as may be prescribed, to the Wakf Board for the services rendered by the Board to the Wakf. The revision
petitioner/Wakf, according to them, did not pay the contribution for the reason that their annual net income is less than Rs. 5,000/-. Sub-s.8 of
Section 72 authorises the Chief Executive Officer of the Wakf Board, whenever there is failure to pay the contribution as stipulated u/s 72 or to file
annual return, to serve upon the Mutawalli a notice demanding payment thereof within 30 days from the date of service of such notice within a
period of 5 years from the last date of the year to which such escaped assessment relates.
Alleging that the revision petitioner Wakf failed to file return and to remit the contribution from 1976 to 1996 a notice dated 20.09.1997 was
served upon the revision petitioner calling upon to file return and remit due contribution. Despite the notice, the revision petitioner did not file the
return. Neither remitted the contribution. Consequently, the Chief Executive Officer passed three assessment orders on 30.10.98, one for the
period of 10 years from 1976-77 to 85-86, the second one for the following period of ten years from 1986-87 to 95-96 and the third one for two
years-1996-97 and 1997-98. As per the order dated 30.10.98 for the first decade, Rs. 31,020/- was assessed and the revision petitioners were
directed to remit the same. For the following decade also, the same amount was assessed and demanded. For the last 2 years Rs. 8,143/- was
demanded. Assailing the above three assessment orders, three appeal petitions were filed before the Wakf Board as Appeal Petition Nos. 12/00,
13/00 and 14/00.
The contention advanced is that the net income of the Wakf is less than Rs. 5,000/-and that the assessment beyond a period of five years is
barred by limitation and hence, no demand can be made u/s 72(8) of the Wakf Act. The Wakf Board overruled the contentions and dismissed the
appeal petitions.
Assailing the orders of the Wakf Board, three applications as O.P. Nos. 1/01, 2/01 and 3/01 were preferred before the Wakf Tribunal,
Kozhikode. The Wakf Tribunal also overruled the contention that assessment beyond a period of five years is barred by limitation. But, it was held
that escaped assessment mentioned in Section 72(8) pertains only to a case where a portion of the income is omitted from the assessment and not
in a case where there is no assessment at all. According to the Tribunal, in the disputed cases, since there is no filing of return at all, there is no
limitation in passing an assessment u/s 72(6) read with Section 72(8). It was further found that there was no data available on record to fix the net
income. Therefore, the Wakf Tribunal remanded the matter for giving an opportunity to both parties to adduce evidence regarding the net income
of the Wakf. Assailing the above orders these revision petitions were filed.
The question that arises for consideration in these revision petitions is:
Whether the escaped assessment mentioned in Section 72(8) relates only when there is a partial escape of the assessment or whether it relates to
total escape of assessment also.
For correct appraisal, a reading of Section 72 of the Wakf Act would be relevant.
Section 72: Annual contribution payable to Board-
(1) The mutawalli of every Wakf, the net annual income of which is not less than five thousand rupees, shall pay annually, out of the net annual
income derived by the Wakf, such contributions, not exceeding seven per cent of such annual income, as may be prescribed, to the Board for the
services rendered by such Board to the Wakf. (Explanations omitted as not relevant)
(2) The Board may in the case of any mosque or orphanage or any particular Wakf reduce or remit such contribution for such time as it drinks fit.
(3) The mutawalli of a Wakf may realise the contributions payable by him under Sub-section (1) from the various persons entitled to receive any
pecuniary or other material benefit from the Wakf, but the sum realisable from any one of such persons shall not exceed such amount as shall bear
to the total contribution payable, the same proportion, as the value of the benefits receivable by such person bears to the entire net annual income
of the Wakf:
Provided that if mere is any income of the Wakf available in excess of the amount payable as dues under this Act, other than as the contribution
under Sub-section (1), and in excess of the amount payable under the Wakf deed, the contribution shall be paid out of such income.
(4) The contribution payable under Sub-section (1) in respect of a Wakf shall, subject to the prior payment of any dues to the Government or any
local authority or of any other statutory first charge on the Wakf property or the income thereof, be a first charge on the income of the Wakf and
shall be recoverable, on a certificate issued by the Board after giving the mutawalli concerned an opportunity of being heard, as an arrear of land
revenue.
(5) If a mutawalli realises the income of the Wakf and refuses to pay or does not pay such contribution, he shall also be personally liable for such
contribution which may be realised from his person or property in the manner aforesaid.
(6) Where, after the commencement of this Act, the mutawalli of a Wakf fails to submit a return of the net annual income of the Wakf within the
time specified therefore or submits a return which, in the opinion of the Chief Executive Officer is incorrect of false in any material particular, or
which does not comply with the provisions of this Act or any rule or order made thereunder, the Chief Executive Officer may assess the net annual
income of the Wakf to the best of his judgment or revise the net annual income as shown in the return submitted by the mutawalli and the net annual
income as so assessed or revised shall be deemed to be the net annual income of the Wakf for the purposes of this section:
Provided that no assessment of net annual income or revision of return submitted by mutawalli shall be made except after giving a notice to the
mutawalli calling upon him to show cause, within the time specified in the notice, as to why such assessment or revision of the return shall not be
made and every assessment or revision shall be made after considering the reply if any, given by the mutawalli.
(7) Any mutawalli who is aggrieved by the assessment or revision made by the Chief Executive Officer, under Sub-section (6), may prefer an
appeal to the Board within thirty days from the date of the receipt of the assessment or revision of return and the Board may, after giving the
appellant a reasonable opportunity of being heard, confirm, reverse or modify the assessment or revision or the return and the decision of the
Board thereon shall be final.
(8) If, for any reason, the contribution or any portion thereof leviable under this section has escaped assessment in any year, whether before or
after the commencement of this Act, the Chief Executive Officer may, within five years from the last date of the year to which such escaped
assessment relates, serve upon the mutawalli a notice assessing him with the contribution or portion thereof which had escaped assessment, and
demanding payment thereof within thirty days from the date of service of such notice, and the provisions of this Act and the rules made thereunder,
shall, as far as may be, apply as if the assessments were made under this Act, in the first instance.
Going by the above provision, especially Sub-clause (8), we find that the escaped assessment mentioned in Section 72(8) pertains to
assessment escaped in part as well as full. We are unable to agree with the view adopted by the Tribunal that in case a portion of the income is
escaped from assessment, there is limitation and in case the whole income is escaped from assessment, there is no limitation. It did not appear that
the Legislature so intended. On the other hand, the words ""contribution or any portion thereof leviable under this section has escaped assessment in
any year"" occurring in Sub-clause 8 clearly expresses the intention of the Legislature that the escaped assessment covers full escape as well as
partial escape. The purpose of limitation is to avoid reopening of matters settled for long. In other way it is to avoid de-settlement of matters settled
beyond a prescribed period. Here the Legislature had fixed a time limit of five years in reopening the accounts settled irrespective of the quantum.
Whether it is partial escape of income or full escape is immaterial. Therefore, we find that escaped assessment mentioned in Section 72(8) would
include full escape as well as partial escape.
An identical dispute was the consideration of the Apex Court under the Sales Tax in Ghanshyam Das Vs. Regional Assistant Commissioner of
Sales Tax, Nagpur, . The Apex Court held that the expression ""escaped assessment"" in S. 11(a) includes that of a turnover which has not been
assessed at all because of one reason or the other and no assessment proceedings were initiated and therefore, no assessment was made in respect
thereof. We find that the ratio of the above decision is squarely applicable to the case on hand. Sri. A.A. Abul Hassan, the learned Standing
Counsel for the Wakf Board fairly conceded that the law laid down by the Apex Court in the decision (supra) is squarely applicable to this case
also and that the Executive Officer would get power to issue notice and make assessment only in respect of escaped assessment within a period of
5 years. It was further conceded by the learned Counsel that applying the above principle, the notice and assessment in respect of the income
beyond the period of 5 years from the date of assessment is barred by limitation. We find that for reasons stated above, the assessment order
dated 30.10.98 is bad in respect of the income beyond 1.1.93. The question raised is answered accordingly.
In the result, C.R.P. No. 1489/03 is allowed and the assessment pertaining to the period from 1976-1977 to 1985-1986 is set aside. C.R.P.
No. 1490/03 is allowed in part. The assessment made in that case up to 31.12.92 is set aside. In respect of the assessment subsequent to 1.1.93,
the Chief Executive Officer of the Board is entitled to assess and demand due contribution. But the assessment should be based on reliable
materials. The finding of the Tribunal that the assessment made by the Board is without reliable materials and the order of remand for fresh
assessment in respect of income subsequent to 1.1.93 is perfectly sustainable and requires no interference. The impugned order in C.R.P. No.
1490/03 in respect of assessment subsequent to 1.1.93 is therefore, perfectly sustainable. C.R.P. 1491/03 is devoid of merit and is accordingly
dismissed. No costs.