B.B. Biddappa vs Deputy Commissioner of Agricultural Income Tax, Mysore and Another

Govinda Bhat, J.—This matter arises under the Mysore Agricultural Income Tax Act 1957, hereinafter called "the Act". The petitioner, B.B. Biddappa, and his two brothers, viz., B.B. Appaiah and B.B. Somayya, derived agricultural income from lands in Coorg District in the State of Mysore. For the assessment year 1964-65 the petitioner filed a return on behalf of himself and his two brothers giving his status as "tenants-in-common". The Agricultural Income Tax Officer, Coorg (respondent No. 2), assessed the petitioner and his brothers treating them as "tenants-in-common" by his order dated August 8, 1965. The name of the assessee as shown therein is "Sri B.B. Biddappa and others" and the status of the assessee is "tenants-in-common". The operative portion of the said assessment order read thus :

"A common demand notice will be issued showing the income determined and the tax demanded from each of the members of the ''tenants-in-common'' but demanding payment from Sri B.B. Biddappa as the other two members are non-residents of this State."

The said order was revised u/s 36 by order dated January 19, 1967. The total agricultural income as revised was allocated between the petitioner and his two brothers and tax demanded.

On April 7, 1969, the second respondent issued a notice to the petitioner proposing to amend the order dated January 19, 1967, by showing the status of the assessee as Hindu undivided family. The petitioner opposed the rectification in the manner proposed. Overruling the objection the impugned order dated September 24, 1969, was passed by which the assessment was made on the assessee "Sri B.B. Biddappa and others, Mercara" in the status of Hindu undivided family. Appeal preferred against the said order before the first respondent was rejected as not maintainanable. Hence, the petitioner has approached this court for relief under article 226 of the Constitution of India.

It is undisputed that the assessee "Sri B.B. Biddappa and others" was not assessed for the assessment year 1964-65 in the status of Hindu undivided family. The question is when no assessment was made on a Hindu undivided family in the original assessment order, the Hindu undivided family could be substituted as the assessee for an association of persons which had been originally assessed.

Section 3 of the Act which is the charging section levies tax on the total agricultural income of the previous year of every person. The word "person" has been defined u/s 2(1)(p) to mean any individual or association of individuals and includes as Hindu undivided family. The units of assessments u/s 3 are : (1) the individual, (2) the Hindu undivided family, (3) the company, (4) the firm, and (5) an association of individuals. A firm and an association of individuals, which are not juridical entities, are yet regarded by the Act as assessable entities. It is relevant to state that there is no unit of assessment as "tenants-in-common", but, on a reading of the assessment order and the revised assessment order, it is clear the that the petitioner and his brothers were assessed as an association of individuals holding property as tenants-in-common and deriving agricultural income. Section 3(3) of the Act provides that in the case of persons holding property as tenant-in-common and deriving agricultural income, the tax shall be assessed at the rate applicable to the agricultural income of each tenant-in-common.

Under the scheme of the Act which is similar to the Indian Income Tax Act, the individual, the Hindu undivided family, the association of individuals, etc., are treated as separate units of assessments. In Commissioner of Income Tax Andhra Pradesh Vs. K. Adinarayan Murty, , the Supreme Court held that if a notice u/s 34 of the Indian Income Tax Act, 1922, is wrongly issued to the assessee in the status of an individual, the assessment made in the correct status of a Hindu undivided family is illegal and without jurisdiction. Once we bear in mind that the Hindu undivided family is a distinct unit of assessment and it is distinct from the individuals who constitute that family, it is clear that under the guise of rectification, the Hindu undivided family cannot be substituted as the assessee for a different assessee and the power conferred u/s 37 to amend any order of assessment with a view to rectifying any mistake apparent from the record cannot be utilised for substituting the Hindu undivided family which was never the assessee before, for the association of individuals which was the assessee.

If in the opinion of the second respondent the Hindu undivided family ought to have been assessed and that has not been assessed, the case is one of escape of income from assessment and the remedy was to have recourse to section 36 of the Act. The impugned order dated September 24, 1969, made by the second respondent marked as exhibit D in this writ petition is clearly without jurisdiction and consequently liable to be quashed.

For the above reasons, this writ petition succeeds and the impugned order, exhibit D, is hereby quashed. No costs.