Rajagiri Rubber and Produce Co. Ltd. vs Commissioner of Income Tax

V. V. Kamat, J.—The question that is referred by the Commissioner of Agricultural Income Tax Act, 1950, is as to whether, on the facts and circumstances of the case, the proceedings of the Commissioner of Agricultural Income Tax, Trivandrum, u/s 34 of the Agricultural Income Tax, by the order dated July 27, 1984, in respect of the assessment year 1972-73 after the lapse of more than ten years is barred by limitation of time and whether the Commissioner of Agricultural Income Tax is barred u/s 34 after the lapse of more than ten years, to direct the assessing authority to make a revision of assessment originally completed on February 11, 1974 ?

The assessee is the Rajagiri Rubber and Produce Company Limited, Alleppey. The assessment for the years 1972-73, 1973-74, 1974-75 and 1975-76 were completed by the Inspecting Assistant Commissioner, Kottayam, as per the respective orders dated February 11, 1974, February 18, 1974, November 26, 1974, and December 29, 1975.

These orders are sought to be revised by resort to the provisions of Section 34 of the Agricultural Income Tax Act, 1950, as it was then legally controlling the situation. The proceedings taking resort to Section 34 are sought to be revised admittedly after the lapse of more than ten years. Illustratively with regard to the year 1972-73 the order is dated July 27, 1984 ; with regard to the year 1973-74 the order is also dated July 27, 1984. Even as regards the other assessment years 1974-75 and 1975-76 the orders u/s 34 are also passed on July 27, 1984.

The contention is taken up that such resort to exercise of the powers u/s 34 of the Act is not sustainable at this distance of time of a period of ten years after the assessment orders are completed. It must be stated that there is no material on record even in the nature of an attempt to explain as to why such a long period of ten years is required for the exercise of such power.

The position of law that the exercise of revisional power u/s 34 of the Act has to be resorted to within a reasonable time even though no limitation is laid down by law would have to be taken as more than settled. There are at least illustratively four decisions of this court in K. Ishwara Bhat v. Commr. of Agrl. I. T. [1967] KLT 1073 ; Deputy Commissioner of Agrl. Income Tax and Sales Tax Vs. P.S.B. Paul Pandian, ; Iswara Bhat Vs. Commissioner of Agricultural Income Tax, and Balanoor Tea and Rubber Co. Ltd. Vs. State of Kerala, . The principles enunciated would show that even in the absence of a time-limit prescribed by the statute, the repository of power should initiate the proceedings within a reasonable time ; by the same token, even for the completion of the proceedings, the same logic should apply and the final order in regard thereto should also be passed within a reasonable time on the basis that the repository should be reasonable to the extent that the Damocles'' sword should not hang endlessly, at the caprice of the statutory authority. It is further settled that if there are explaining reasons for not setting in motion the suo motu contemplated exercise of the power u/s 34 of the Act, it has to be adversely inferred that the assessee would be the justifiable affected party. The situation would be a factual peculiarity on the facts and circumstances of each case.

It is thus seen that when the suo motu power u/s 34 of the Act is sought to be exercised after a lapse of a period of ten years the statutory repository of power is under an obligation to place on record exceptional and extenuating circumstances in the absence of which it cannot be understood and encouraged by the court that because there is no period of limitation such resort can be taken at the whim and caprice of the authority invested with the power of suo motu exercise. It will have to be said that by itself in its inception cogent and sufficient reasons are necessary for its exercise. All these mean that the Revenue should be able to demonstrate that there were circumstances beyond control or other supervening events or insurmountable difficulties because of which the proceedings could not be set in motion within the normal period. It must be stated that the record does not spell out even by whisper any such material in regard to the exercise of such power after the lapse of an elongated period of ten years.

While considering even these aspects which are settled beyond the pale of controversy it would be necessary to note that in the subsequent enactment -- Kerala Agricultural Income Tax Act, 1991, in the parallel statutory provisions of Section 76 therein there is a legislative mandate that the Commissioner shall not pass any order if more than four years have elapsed after the passing of the order referred to therein, leaving aside the period consumed by any operation of the stay order or injunction order of any court. This subsequent statutory provision, it must be stated, must have been required to be incorporated as a result of pronouncements of the courts in regard thereto, referred to above. It also needs to be mentioned that the decisions take a detailed and meticulous resume of various decisions in regard to the question.

For all these reasons, it will have to be stated that initiation of the proceedings u/s 34 of the Agricultural Income Tax Act after the lapse of a period of more than ten years would have to be termed as barred by limitation. Therefore, the question referred is answered in the affirmative -- in favour of the asscssec and against the Department. A copy of this judgment under the seal of this court and the signature of the Registrar of this court shall be caused to he sent to the Commissioner of Agricultural Income Tax, Trivandrum. Order accordingly.