BENOY KURIAN vs AGRICULTURAL INCOME TAX OFFICER and Others

G. SIVARAJAN, J. :

The matter arises under the Kerala Agrl. IT Act, 1991. The petitioner, his brother and Mrs. Teesa 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. 2032, dt. 15th October, 1992, evidenced by Ext. P-1. Mr. Benjamin Dominic, the transferor of the petitioner, was assessed to agricultural Income Tax for the years 1992-93 and 1993-94 at Rs. 19,958 and Rs. 39,765 respectively, evidenced by Ext. P-2. For recovery of the tax due as per Ext. P-2 assessment order, 1 acre out of the total extent of 3.17 acres purchased by the petitioner as per Ext. P-1 was attached on 24th February, 1997 as per Ext. P-3. It is stated that though the said Benjamin Dominic had received assessment orders, he did not file any appeal or intimate the same to the petitioner and that the petitioner came to know of Ext. P-2 order only after notice of attachment of immovable property dt. 24th February, 1997, served on the said Benjamin Dominic 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 21st June, 1997, from Mr. Benjamin Dominic. It is further stated that the petitioner had filed appeals against Ext. P-2 assessment order for the years 1992-93 and 1993-94 before the third respondent on 25th June, 1997, evidenced by Exts. 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 Ext. P-6 application. The second respondent issued Ext. 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 entertainable 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 Agrl. ITO 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 Ext. P-7 communication issued by the second respondent. Pointing out the provisions of s. 72(3) of the Act, the petitioner enclosed a cheque for Rs. 100 towards appeal fee. It is also stated that the fourth respondent-Tehsildar, Revenue Recovery, Kanjirappally -issued Ext. P-9 notice of sale of immovable property dt. 19th July, 1997, as provided under sub-s. (2) of s. 49 of the Kerala Revenue Recovery Act for an extent of 40.47 acre of land in Sy. No. 277/1. Block No. 22, Erumaly 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, ATT 33/95/B2. In this original petition, the petitioner has sought for quashing Exts. 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 asst. yrs. 1992-93 and 1993-94 and for a direction to the third respondent to post Exts. 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 dt. 20th August, 1997, passed by this Court in CMP No. 26028 of 1997, the sale of properties pursuant to Ext. P-9 notice was stayed on condition the petitioner pays a sum of Rs. 25,000 before 26th August, 1997. Sri M. Pathros Matthai, learned counsel appearing for the petitioner, submitted that the interim order passed by this Court has been complied with. The learned counsel submitted that though an appeal against an order passed by the Agrl. ITO is provided under s. 72 of the Act only at the instance of an assessee aggrieved by the said order, under r. 76 of the Kerala Agrl. IT Rules, 1991, any person aggrieved by the order of the Agrl. ITO may file an appeal before the AAC. He further submitted that since the amount due as per Ext. P-2 order is sought to be recovered by sale of the properties purchased by the petitioner as per Ext. P-1 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 Ext. P-2 order as provided under r. 76 of the Kerala Agrl. IT Rules, 1991. The 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 s. 72 of the Act along with r. 76 of the Rules it has to be held that any person aggrieved by an order passed by the Agrl. ITO 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 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 s. 72 of the Act only an assessee aggrieved by an order passed by the Agrl. ITO 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. Sec. 72 of the Kerala Agrl. IT Act, 1991, providing for appeal against orders passed by the Agrl. ITO, sub-ss. (1) to (5) which are relevant for the purpose of this case reads as follows :

"72. Appeal against orders passed by the Agrl. ITO. - (1) Any assessee aggrieved by any order passed by the Agrl. ITO may appeal to the AAC against such order.

(2) Any assessee aggrieved by any order passed by the IAC may appeal to the Dy. CIT 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 AAC or the Dy. Commr., 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 Agrl. IT Rules, 1991, reads as follows :

"76. Appeals and Revisions. - (a) Any person aggrieved by the order of the Agrl. ITO may file an appeal before the AAC.

(b) Any assessee aggrieved by any order passed by the IAC may appeal to the Dy. Commr."

The word assessee is defined in s. 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 cls. (i) to (iv) thereof. As per cls. (iii) and (iv) of s. 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 s. 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 upto the date of the transfer and for the years proceeding 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 year 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 s. 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, the 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 under 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-s. (3) of s. 57 of the Act. Therefore, the assessing authority proceeded against the property as if the property belonged to 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 s. 57 of the Act. I have referred to the provisions of s. 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 s. 72 of the Act, for, under the provisions of s. 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 s. 2(7) of the Act is understood in the light of the provisions of s. 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 Ext. P-2 order, is an assessee for the purpose of s. 72 of the Act. The petitioner is certainly aggrieved by the action taken for recovery of the amount due as per Ext. P-2 by sale of the properties purchased by him as per Ext. P-1 from Mr. Benjamin Dominic. That apart, as already stated, r. 76 of the Rules provides that any person aggrieved by an order passed by the Agrl. ITO can file appeal against the said order before the AAC. In r. 76, the expression used is person aggrieved as against the expression used in s. 72 of the Act as 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 ss. 246 and 253 of the IT Act, 1961 providing for appeals before the AAC and to the Tribunal, came up for consideration before the Calcutta High Court in CIT vs. N. Ch. R. Row & Co. (supra). That was a case where the assessee-firm registered under the IT Act was carrying on business at Calcutta. The partners of the firm as per the partnership deed were N. Ch. R. Row and P. Jagannathan. The return of the firm for the asst. yr. 1963-64 was filed in December, 1963, by N. Ch. R. Raw 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 ITO and by an order passed under s. 158 of the Act, the ITO 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 source for which deduction was claimed by the assessee but disallowed by the ITO. The said addition was challenged in appeal by the firm. The same was sustained by the AAC. Aggrieved by the order of the AAC, 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 representatives 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 AAC. The contention taken by the said Bhaskara Rao was that he was the real partner and N. CH. R. Raw 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 AAC 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 s. 2(7) of the IT Act which is similar to the provisions of s. 2(7) of the Agrl. IT 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 :

"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 Diaries (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 :

"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 Tribunal from an order passed by the AAC 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 s. 246 of the IT 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. Nomethy was a Canadian technician who came to India on 5th May, 1965, to work with Hindusthan Steel, Durgapur, whose services were initially approved for a period of three years and later extended upto 4th May, 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. Nomethy, it would be paid by them. An assessment on the income of Mr. Nomethy had been made on the basis of the return filed for the asst. yr. 1969-70 and the salary received upto 31st March, 1969, was assessed to tax. In order to regularise the assessment made by including certain amounts paid by way of salary to Mr. Nomethy, the ITO issued notice under s. 148 for bringing the additional salary to tax. Pursuant to the said notice, Hindusthan Steel Ltd., filed a return on behalf of Mr. Nomethy by their Deputy Financial Officer. Holding that the return was not signed by the assessee, the ITO made an assessment under s. 144 of the Act. Aggrieved by the order of the ITO, the Hindusthan Steel Ltd., filed appeal before the CIT(A) who set aside the assessment on the ground that the ITO has not served notice on the real assessee and that Hindusthan Steel Ltd. was not authorised to receive 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 the Hindusthan Steel Ltd. was competent. In that context the Calcutta High Court considered the provisions of s. 246 of the IT Act which provides for appeal by an assessee aggrieved by any of the orders specified therein passed by the ITO and the provisions of s. 2(7) of the Act defining the 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 against whom a proceedings has been taken for the assessment of the income of Mr. Nomethy. 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 IT 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 under 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 tax will never appeal. The Calcutta High Court also relied on its earlier decision in CIT vs. N. Ch. R. Raw & Co. (supra).

Apart from all the above, in the instant case, though s. 72 of the Act refers to assessee aggrieved, r. 76 refers to person aggrieved. On harmonious reading of the provisions of s. 72 and r. 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 Agrl. ITO can file an appeal to the AAC. What is required to be established is that the person is aggrieved by the order passed by the Agrl. ITO. In the instant case, the fact that the property belonging to the petitioner is proceeded against for recovery of the amount due as per Ext. 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 Ext. 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 Ext. P-2 assessment order and, therefore, Exts. P.-4 and P-5 appeals have to be entertained by the third respondent subject to satisfying the other conditions provided in s. 72 of the Act r/w r. 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 under 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 Exts. 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 Ext. P-2 assessment order, further proceedings for recovery of the balance amount pursuant to Ext. 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.