N. BALAKRISHNA PANICKER vs STATE OF KERALA.

MRS. K. K. USHA, J :

The petitioner, an assessee under the Agrl. IT Act, seeks to raise the following question for the decision of this Court :

"1. Whether, on the facts and circumstances of the case, the Tribunal was right in law in holding that the income from the 38.73 acres of rubber estate which was given on lease by the petitioner to M/s Dwarka Enterprises, a partnership firm as per lease deed dt. 1st Oct., 1984 can be treated as the personal agricultural income of the petitioner under the provisions of the Kerala Agrl. IT Act ?

Whether, on the facts and in the circumstances of the case, the Agrl. ITAT was right in law in holding that giving on lease of 38.73 acres of rubber estate by the petitioner to the partnership firm namely M/s Dwarka Enterprises is a diversion of income by the petitioner to the lessee firm and the actual recipient of the income from the 38.73 acres of rubber estate is the petitioner and not the partnership firm?"

The petition relates to the asst. yr. 1985-86. In respect of all previous years the income from the rubber cultivation was assessed in the individual capacity of the petitioner. The assessing authority issued notice under s. 17(2) of the Act on 13th May, 1985 requiring the appellant to submit the return of his agricultural income for the year in question. The petitioner did not respond. The assessing authority then issued notice under s. 17(4) of the Act on 3rd Sept., 1985 for which also there was no response. The assessing authority thereupon sent another notice under s. 17(4) of the Act on 9th May, 1986. To this notice the respondent replied on 21st May, 1986, that his rubber plantation has been registered as a firm by name and style "Dwarka Enterprises". But even then no return was filed nor any document or records produced to prove the existence of the firm. The assessing authority thereupon sent another letter dt. 4th July, 1987, requiring the petitioner to produce all documents and records in support of the claim of existence of the firm and also to file a return of agricultural income for the year in question. There was no response to this notice. It was thereafter the assessing authority issued a pre-assessment notice dt. 23rd July, 1987 proposing to complete the assessment on estimation basis and in the individual capacity of the petitioner. To this he sent a reply dt. 25th March, 1987 again contending that a plantation has been converted into a firm but still no records were produced regarding the registration of the firm nor any return filed. The assessing authority thereupon sent letters dt. 18th Jan., 1988 and 17th Feb., 1988 requiring the petitioner to file the return for the year and to file application for registration of the firm as required under s. 27 of the Act. These directions were not complied with. It was under these circumstances, the assessing authority sent letter dt. 2nd May, 1988 proposing to reject the claim of partnership firm and to complete the assessment for the year as proposed in the pre-assessment notice dt. 23rd Aug., 1987.

The petitioner thereupon filed an application for registration of the firm and also filed a return of agricultural income in individual capacity on 24th May, 1988. The assessing authority found that the application for registration of the firm was not acceptable and in spite of the claim put forward by the petitioner that the plantation has been converted into a firm no return of firm was filed. It is also seen that no accounts and records were produced before the assessing authority in support of the claim that the plantation had been converted into a partnership firm. The assessing authority as well as the appellate authority took the view that the claim that a partnership firm has been established for running rubber plantation cannot be accepted. It was under these circumstances, the assessment was completed on best judgment basis in the individual capacity of the petitioner and was confirmed by the appellate authority. The Tribunal also found that the claim put forward by the petitioner that it was a partnership firm which was the recipient of income from 38.73 acres of rubber estate cannot be accepted as true. It was under these circumstances, it held that the alleged firm constituting of the petitioner and his 5 children is only a method of diversion of the income by the owner of the estate to a lessee firm.

The income for the asst. yr. 1985-86 was treated as the personal income of the petitioner since the authorities came to the conclusion that the petitioner has not proved that the income was as a matter of fact, received by a partnership firm. Above is a finding of fact. It was on this finding the Tribunal came to the conclusion that the attempt of the petitioner was only to divert the income from the petitioner to that of the alleged firm.

We, therefore, find that no question of law arises in this case for decision by this Court. The petition stands dismissed.