COMMISSIONER OF AGRICULTURAL INCOME TAX vs PANAMPUNNA ESTATES.

K. K. USHA, J. :

The reference is at the instance of Commr. of Agrl. IT. It arises out of an order passed by the Kerala Agrl. Tribunal, Additional Bench, Kottayam in AITA No. 56 of 1982. The relevant assessment year is 1972-73 for which the accounting year was from 1st April, 1971 to 31st March, 1972. The following questions are referred by the Tribunal to this Court pursuant to a judgment of this Court in OP 6249/90 :

"(i) Whether on the facts and circumstances of the case, the assessment for the year 1972-73 dt. 29th March, 1976 and served on the assessee on 12th November, 1976 is valid and legal in law ?

(ii) Is the service of the assessment form on the assessee on 5th April, 1976 has any bearing in the matter ?"

The assessee firm filed its return of agricultural income for the first time in respect of the asst. yr. 1972-73. The return was filed before the Agrl. ITO, Kottayam on 13th February, 1973. A notice under s. 18(2) was issued on 11th September, 1975 and the pre-assessment notice was issued on 13th March, 1976. The firm submitted its reply on 27th March, 1976. The assessment order was passed on 29th March, 1976 and it was communicated to the assessee on 5th April, 1976 in the old form under the Travancore-Cochin Agrl. IT Act, 1950. Thereafter the assessment order was again communicated to the assessee in the proper form on 12th November, 1976.

The first question arising for consideration is whether the assessment made in the year 1972-73 is barred in view of the provisions contained under s. 35(2) of the Kerala Agrl. IT Act, 1950. Sec. 35(2) as it stood before amendment by Act 13 of 1976 provided that no order of assessment under s. 18 or assessment or re-assessment under sub-s. (1) of s. 35 shall be made after the expiry of the three years from the end of the year in which the agricultural income are first assessable. If the period prescribed under the unamended section is to be applied, then the assessment should have been completed by 31st March, 1975. If that be so, the assessment order now passed on 29th March, 1976 whether communicated on 5th April, 1976 or 12th November, 1976 is barred. But the contention raised on behalf of the Revenue is that since three years provided under sub-s. (2) of s. 35 had been substituted by five years by Act 13 of 1976, which replaced Ordinance 13 of 1975, it should be taken that the assessment was completed within the time prescribed, since five years would expire only on 31st March, 1977.

We are not able to accept the above contention raised by the Revenue. Act 13 of 1976, which brought in the amendment by extending the period of 3 years to 5 years was given effect to only from 27th October, 1975. By that time, as mentioned earlier, by applying the three years rule period for completing assessment was already over. Subsequent amendment cannot give the power of assessment to the officer in respect of an year for which the assessment has already become barred. We are fortified in our above view by a decision of the Supreme Court in S.S. Gadgil, Income Tax Officer, Bombay Vs. Lal and Company, , The apex Court observed as follows :

"(13) As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non-resident party under the IT Act before it was amended, ended on 31st March, 1956. It is true that under the amending Act by s. 18 of the Finance Act, 1956, authority was conferred upon the ITO to assess a person as an agent of a foreign party under s. 43 within two years from the end of the year of assessment. But authority of the ITO under the Act before it was amended by the Finance Act of 1956 having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date when he issued the notice it is within the period provided by that amending Act. This will be so, notwithstanding the fact that there has been no determinable point of time between the expiry of the time provided under the old Act and the commencement of the amending Act. The legislature has given to s. 18 of the Finance Act, 1956, only a limited retrospective operation i.e., upto 1st April, 1956, only. That provision must be read subject to the rule that in the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospectively that is expressly mentioned, nor to authorise the ITO to commence proceedings which before the new Act come into force had by the expiry of the period provided, become barred".

The above view has been reiterated by the Supreme Court in J.P. Jani, Income Tax Officer, Circle IV, Ward G, Ahmedabad and Another Vs. Induprasad Devshanker Bhatt,

We, therefore, answer the first question in the negative against the Revenue and in favour of the assessee. In the facts of the present case the second question is irrelevant and, therefore, we decline to answer the same.