Benoy Kurian vs Agricultural Income Tax Officer and Others

G. Sivarajan, J.—The matter arises under the Kerala Agricultural Income Tax Act, 1991. The petitioner, his brother and Mrs. Tcesa Kurian had purchased 9.81 acres of land from one Mr. Benjamin Dominic. Out of the said 9.81 acres of land 3.17 acres was purchased by the petitioner as per sale deed No. 2052 dated October 15, 1992, evidenced by exhibit P-l. Mr. Benjamin Dominic, the transferor of the petitioner, was assessed to agricultural Income Tax for the years 1992-93 and 1995-1994 at Rs. 19,958 and Rs. 39,765, respectively, evidenced by exhibit P-2. For recovery of the tax due as per exhibit P-2 assessment order 1 acre out of the total extent of 3.17 acres purchased by the petitioner as per exhibit P-l was attached on February 24, 1997, as per exhibit P-3. It is stated that though the said Benjamin Dominic had received the assessment orders, he did not file any appeal or intimate the same to the petitioner and that the petitioner came to know of exhibit P-2 order only after notice of attachment of immovable property dated February 24, 1997, served on the said Benjamin Dominic which was subsequently intimated to him. It is also stated that the petitioner came to know of the assessment order and the attachment effected on the property only on June 21, 1997, from Mr. Benjamin Dominic. It is further stated that the petitioner had filed appeals against exhibit P-2 assessment order for the years 1992-93 and 1993-94 before the third respondent on June 25, 1997, evidenced by exhibits P-4 and P-5. It is stated that in order to entertain the appeals the prescribed fee had to be paid and for that purpose challans have to be issued by the second respondent and, therefore, the petitioner made a request to the said authority for issue of challans to pay the appeal fees. It is further stated that a cheque was also tendered towards appeal fees along with exhibit P-6 application. The second respondent issued exhibit P-7 communication stating that since the petitioner is not an assessee of that office his request for challan along with the cheques are not enter-tainable and the same was returned. In the covering letter forwarding the appeals to the third respondent the petitioner had stated that he is not in a position to submit the challan receipt since the Agricultural Income Tax Officer has refused to issue the challan for the payment of the fees in spite of specific request made therefore and he also enclosed a copy of exhibit P-7 communication issued by the second respondent. Pointing out the provisions of Section 72(3) of the Act, the petitioner enclosed a cheque for Rs. 100 towards appeal fee. It is also stated that the fourth respondent--Tahsildar, Revenue Recovery, Kanjirappally--issued exhibit P-9 notice of sale of immovable property dated July 19, 1997, as provided under Sub-section (2) of Section 49 of the Kerala Revenue Recovery Act for an extent of 40.47 acres of land in Sy. No. 277/1-Block No. 22, Erumely South Village, T. P. Account No. 2197 and all improvements in the land for realisation of a sum of Rs. 77,930 plus interest and costs as per File No. AIT. 40/90, AIT 33/95/B2. In this original petition, the petitioner has sought for quashing exhibits P-3 and P-9 revenue recovery notices and also for an order directing the second respondent to accept the appeal fee and issue challan receipts for the assessment years 1992-93 and 1995-94 and for a direction to the third respondent to post exhibits P-4 and P-5 appeals for hearing and dispose of the appeals or to grant a stay of recovery of the disputed tax till final disposal of the appeals.

As per interim order dated August 20, 1997, passed by this court in C.M.P. No. 26028 of 1997, the sale of properties pursuant to exhibit P-9 notice was stayed on condition the petitioner pays a sum of Rs. 25,000 before August 26, 1997. Sri M. Pathros Mathai, learned counsel appearing for the petitioner, submitted that the interim order passed by this court has been complied with. Learned counsel submitted that though an appeal against an order passed by the Agricultural Income Tax Officer is provided u/s 72 of the Act only at the instance of an assessed aggrieved by the said order, under Rule 76 of the Kerala Agricultural Income Tax Rules, 1991, any person aggrieved by the order of the Agricultural Income Tax Officer may file an appeal before the Appellate Assistant Commissioner. He further submitted that since the amount duo as per exhibit P-2 order is sought to be recovered by sale of the properties purchased by the petitioner as per exhibit P-l sale deed from the said Benjamin Dominic, the petitioner is a person aggrieved by the said assessment order and, therefore, he is entitled to file appeal against exhibit P-2 order as provided under Rule 76 of the Kerala Agricultural Income Tax Rules, 1991. Learned counsel also submitted that the provisions regarding appeals have to be construed very liberally as laid down by the Supreme Court and construing the provisions of Section 72 of the Act along with Rule 76 of the Rules it has to be held that any person aggrieved by an order passed by the Agricultural Income Tax Officer can file appeal against the said order as provided therein and, therefore, the second respondent was not justified in saying that he will not issue challan for payment of the appeal fee and further the third respondent appellate authority was not justified in refusing to entertain the appeal especially when the petitioner had enclosed a cheque for the fees prescribed under the Act along with the appeal memorandum. Learned counsel also relied on a decision of the Calcutta High Court in Commissioner of Income Tax Vs. N. Ch. R. Row and Co., and submitted that the petitioner is entitled to the reliefs sought for in the original petition. I have also heard the learned Government Pleader appearing for the respondent. He submitted that under the provisions of Section 72 of the Act only an assessee aggrieved by an order passed by the Agricultural Income Tax Officer can file appeal and that the petitioner is not an assessee and, therefore, the second respondent was justified in rejecting the application for issue of challan and the third respondent also was justified in not entertaining the appeals filed by the petitioner. He accordingly submitted that there is no merit in this original petition,

I have considered the matter. Section 72 of the Kerala Agricultural Income Tax Act, 1991, providing for appeal against orders passed by the Agricultural Income Tax Officer, Sub-sections (1) to (5) of which are relevant for the purpose of this case reads as follows :

"72. Appeal against orders passed by the, Agricultural Income Tax Officer.--(1) Any assessee aggrieved by any order passed by the Agricultural Income Tax Officer may appeal to the Appellate Assistant Commissioner against such order.

(2) Any assessee aggrieved by any order passed by the Inspecting Assistant Commissioner may appeal to the Deputy Commissioner against such order.

(3) Every appeal under this Section shall be in the prescribed form and shall be verified in the prescribed manner and shall be accompanied by a fee of one hundred rupees.

(4) The appeal shall be presented within a period of thirty days from the date of service of the order sought to be appealed against :

Provided that the Appellate Assistant Commissioner or the Deputy Commissioner, as the case may be, may admit an appeal after the expiration of the said period, if he is satisfied that the appellant had sufficient cause for not presenting it within that period.

(5) No appeal under this Section shall be admitted unless at the time of presenting the appeal, the assessee has paid the tax due on the agricultural income admitted by him."

Rule 76 of the Kerala Agricultural Income Tax Rules, 1991, reads as follows :

"76. Appeals and revisions.--(a) Any person aggrieved by the order of the Agricultural Income Tax Officer may file an appeal before the Appellate Assistant Commissioner.

(b) Any assessee aggrieved by any order passed by the Inspecting Assistant Commissioner may appeal to the Deputy Commissioner."

The word "assessee" is defined in Section 2 of the Act to mean a person by whom any tax or any other sum of money is payable under this Act and includes various other persons referred to in Clauses (i) to (iv) thereof. As per Clauses (iii) and (iv) of Section 2(7), even persons, who are proceeded against for recovery of amounts due under any of the provisions of the Act, will come under the definition of "assessee". That apart, under the provisions of Section 57 of the Act where a person in receipt of agricultural income from any land is found to have transferred his interest in such land to another person, the transferor and the transferee shall each be assessed in respect of his actual share of such agricultural income and when the transferor cannot be found, the assessment of such agricultural income of the previous year in which the transfer took place up to the date of the transfer and for the years preceding that year shall be made on the transferee in like manner and to the same amount, as it would have been made on the transferor. Similarly, when the tax in respect of the assessment made before or after the transfer for any or all of such years, assessed on the transferor cannot be recovered from him, it shall be payable by and recoverable from the transferee subject to the right of the transferee to recover from the transferor the amount of any tax so paid. So, by virtue of the provisions of Section 57 of the Act, a transferee can be made liable for payment of agricultural Income Tax due from the transferor-defaulter in respect of the tax due in relation to the property transferred if the circumstances stated therein are satisfied. As already stated, assessee means a person by whom any tax or any other sum of money is payable under this Act. A person who is made liable to pay tax u/s 57 of the Act is, therefore, an assessee who satisfies the definition of "assessee". In the instant case, there is nothing to show that the transferor, Mr. Benjamin Dominic, had informed the fact of transfer of the property from which agricultural income is derived to the assessing authority as provided under Sub-section (3) of Section 57 of the Act. Therefore, the assessing authority proceeded against the property as if the property belonged to the said Benjamin Dominic. If as a matter of fact the assessing authority had come to know of the transfer of the property under attachment in favour of the petitioner, certainly the assessing authority would have proceeded against Mr. Benjamin Dominic and his other properties and only after it was found that the amount cannot be recovered from the said Benjamin Dominic the assessing authority would have resorted to the provisions of Section 57 of the Act. I have referred to the provisions of Section 57 of the Act and the definition of "assessee" only to see whether the petitioner can be treated as an assessee for the purpose of Section 72 of the Act ; for, under the provisions of Section 72 of the Act, an appeal against an assessment order can be filed only by an assessee aggrieved. If the definition of "assessee" contained in Section 2(7) of the Act is understood in the light of the provisions of Section 57 of the Act, it has to be said that the petitioner, whose property is sought to be proceeded against for recovery of the amount due from Mr. Benjamin Dominic as per exhibit P-2 order, is an assessee for the purpose of Section 72 of the Act. The petitioner is certainly aggrieved by the action taken for recovery of the amount due as per exhibit P-2 by sale of the properties purchased by him as per exhibit P-l from Mr. Benjamin Dominic. That apart, as already stated, Rule 76 of the Rules provides that any person aggrieved by an order passed by the Agricultural Income Tax Officer can file appeal against the said order before the Appellate Assistant Commissioner. In Rule 76, the expression used is "person aggrieved" as against the expression used in Section 72 of the Act, "assessee aggrieved".

The question whether a stranger to an assessment proceedings can be considered as an "assessee aggrieved" by an assessee within the meaning of Sections 246 and 253 of the Income Tax Act, 1961, providing for appeals before the Appellate Assistant Commissioner and to the Tribunal, came up for consideration before the Calcutta High Court in Commissioner of Income Tax Vs. N. Ch. R. Row and Co., . That was a case where the assessee-firm registered under the Income Tax Act was carrying on business at Calcutta. The partners of the firm as per the partnership deed were N. Ch. R. Rao and P. Jagannathan. The return of the firm for the assessment year 1963-64 was filed in December 1963, by N. Ch. R. Rao as a partner. In the said return N. Ch. R, Rao and P. Jagannathan were shown as the two partners of the assessee-firm. The application for registration was also signed by the said two persons. The assessment was completed by the Income Tax Officer and by an order passed u/s 158 of the Act, the Income Tax Officer, allocated the assessed income in equal shares between the said two partners. The total income assessed included a sum of Rs. 50,000 added as income from undisclosed sources for which deduction was claimed by the assessee but disallowed by the Income Tax Officer, The said addition was challenged in appeal by the firm. The same was sustained by the Appellate Assistant Commissioner. Aggrieved by the order of the Appellate Assistant Commissioner, P. Jagannathan as partner of the assessee-firm filed appeal before the Tribunal. During the pendency of the appeal both the partners died. Their legal representative did not respond to the notices issued to them and one P. Bhaskara Rao claiming to be a partner of the assessee-firm, filed an application seeking to intervene in the appeal. He also filed a separate appeal as a partner of the assessee-firm against the order of the Appellate Assistant Commissioner. The contention taken by the said Bhaskara Rao was that he was the real partner and N. Ch. R. Rao was merely a benamidar. The Tribunal held that Sri Bhaskara Rao could be permitted to come on record and prosecute the appeals at least as a person affected by the assessment under appeal, though not qua partner. The Tribunal also held that the right to appeal to the Tribunal from an order passed by the Appellate Assistant Commissioner was not confined technically to the party who was a party to the appeal but was a much wider right which could be exercised by any person who became liable to pay tax by any order against which the appeal was preferred. The Tribunal also stated that since Sri Bhaskara Rao became liable to pay tax assessed on the assessee-firm he had locus standi to intervene in the appeal filed on behalf of the firm and prosecute it, especially when the two partners of the firm died and their legal representatives were not showing any interest in prosecuting these appeals. It is in these contexts, the Calcutta High Court considered the question as to whether Sri Bhaskara Rao had locus standi to intervene in the appeal. The High Court considered the definition of "assessee" contained in Section 2(7) of the Income Tax Act which is similar to the provisions of Section 2(7) of the Agricultural Income Tax Act, 1991. The Supreme Court in the case of Adi Pherozshah Gandhi Vs. H.M. Seervai, Advocate General of Maharashtra, Bombay, , considered the meaning of the phrase "person aggrieved" and Hidayatullah C. J. pointed out as follows (page 387) :

"The expression a ''person aggrieved'' is not new, nor has it occurred for the first time in the Advocates'' Act. In fact it occurs in several Indian Acts and in British statutes for more than a hundred years. In the latter a right of appeal to a ''person aggrieved'' is conferred in diverse contexts. It occurs in the Ale House Act, the Bankruptcy Acts, Copyright Act, Highway Act, Licensing Acts, Milk and Dairies (Amendment) Act, Rating and Valuation Act, Summary Jurisdiction Act, Union Committee Act, Local Acts, in certiorari proceedings and the Defence of Realm Regulations to mention only a few. The list of Indian Acts is equally long."

After a review of a long line of cases it was further observed by the Supreme Court (page 389) :

"From these cases it is apparent that any person who feels disappointed with the result of the case is not a ''person aggrieved''. He must be disappointed of a benefit which he would have received if the order had gone the other way. The order must cause him a legal grievance by wrongfully depriving him of something."

The Calcutta High Court after referring to the said observations held that the assessment order caused Bhaskara Rao a legal grievance by ''imposing a tax which, according to him, was not lawfully payable. The Calcutta High Court also relied on a decision of the Bombay High Court in Kikabhai Abdulali Vs. Income Tax Appellate Tribunal, Bombay and Others, , which held that the right to appeal to the Appellate Tribunal from an order passed by the Appellate Assistant Commissioner was not confined technically to the party who was a party to the appeal but was a much wider right which might be exercised by any person who was liable to pay tax by any order against which the appeal was preferred.

Again the question regarding the right of appeal in the context of Section 246 of the Income Tax Act came up before a Division Bench of the Calcutta High Court in Commissioner of Income Tax Vs. Hindusthan Steel Ltd., . That was a case where one Mr. L. Nemethy was a Canadian technician who came to India on May 5, 1965, to work with Hindusthan Steel Ltd., Durgapur, whose services were initially approved for a period of three years and later extended up to May 4, 1969. For the extended period, exemption was not granted but the tax was to be paid by Hindusthan Steel Ltd., at the time of departure. Hindusthan Steel Ltd., gave a guarantee that if any tax is found to be payable by Mr. Nemethy, it would be paid by them. An assessment on the income of Mr. Nemethy had been made on the basis of the return filed for the assessment year 1969-70 and the salary received up to March 31, 1969, was assessed to tax. In order to regularise the assessment made by including certain amounts paid by way of salary to Mr. Nemethy, the Income Tax Officer issued a notice u/s 148 for bringing the additional salary to tax. Pursuant to the said notice, Hindusthan Steel Ltd., filed a return on behalf of Mr. Nemethy by their Deputy Financial Officer. Holding that the return was not signed by the assessee, the Income Tax Officer made an assessment u/s 144 of the Act. Aggrieved by the order of the Income Tax Officer, Hindusthan Steel Ltd., filed an appeal before the Commissioner of Income Tax (Appeals) who set aside the assessment on the ground that the Income Tax Officer has not served the notice on the real assessee and that Hindustan Steel Ltd., was not authorised to receive the statutory notice on behalf of the said assessee. The Department went up in appeal before the Tribunal, inter alia, contending that Hindusthan Steel Ltd., could not file an appeal in the matter. The Tribunal dismissed the appeal holding that the appeal filed by Hindusthan Steel Ltd., was competent. In that context, the Calcutta High Court considered the provisions of Section 246 of the Income Tax Act which provides for appeal by an "assessee aggrieved" by any of the orders specified therein passed by the Income Tax Officer and the provisions of Section 2(7) of the Act defining "assessee" and observed that in this case, ultimately, the amount of tax will be paid by Hindusthan Steel Ltd., and that it is also the person a gainst whom a proceeding has been taken for assessment of the income of Mr. Nemethy. It was also observed that although the liability to pay the assessed tax is of the assessee and Hindusthan Steel Ltd., has no liability under the Income Tax Act, the facts of the case are such that it is Hindusthan Steel Ltd., who will have to pay the tax and, therefore, it was held that u/s 246 any person who really is aggrieved by the assessment order and on whom the burden of tax will fall will be entitled to prefer an appeal, so that the tax burden can be entirely reduced. or lessened and that a person who will not have to bear the burden of the tax will never appeal. The Calcutta High Court also relied on its earlier decision in Commissioner of Income Tax Vs. N. Ch. R. Row and Co., .

Apart from all the above, in the instant case, though Section 72 of the Act refers to "assessee aggrieved", Rule 76 refers to "person aggrieved". On a harmonious reading of the provisions of Section 72 and Rule 76 particularly in the context that it deals with the right to file appeal it has to be held that any person aggrieved by an order passed by the Agricultural Income Tax Officer can file an appeal to the Appellate Assistant Commissioner. What is required to be established is that the person is aggrieved by the order passed by the Agricultural Income Tax Officer. In the instant case, the fact that the property belonging to the petitioner is proceeded against for recovery of the amount due as per exhibit P-2 assessment order and the further fact that the transferor-assessee had not filed any appeal against the said orders, are sufficient to hold that the petitioner is a person aggrieved by exhibit P-2 assessment order passed for the years 1992-93 and 1993-94. In such circumstances, it has to be held that the petitioner is entitled to file appeal against exhibit P-2 assessment order and, therefore, exhibits P-4 and P-5 appeals have to be entertained by the third respondent subject to satisfying the other conditions provided in Section 72 of the Act read with Rule 76 of the Rules. In this view of the matter, the second respondent assessing authority is bound to issue challan for payment of the fees for the appeal as provided u/s 72 of the Act. Accordingly, if the petitioner makes an application for issue of challan for payment of the prescribed fees for filing the appeal within a period of 10 days from today, the second respondent will issue the challan forthwith and the petitioner will produce the challan receipt to the third respondent within a week thereafter. If the appeals, exhibits P-4 and P-5, filed by the petitioner are otherwise in order, the third respondent is directed to consider the same in accordance with law. It is for the petitioner to file stay petitions before the third respondent in the appeals. If the petitioner files application for stay within a period of two weeks from today, the third respondent will dispose of the same in accordance with law within a month thereafter. Since the petitioner has remitted a sum of Rs. 25,000 towards the demand made pursuant to exhibit P-2 assessment order, further proceedings for recovery of the balance amount pursuant to exhibit P-9 will be kept in abeyance till the disposal of the stay petition, if any, that may be filed as directed above.

The original petition is disposed of as above.