Smt. R. Dhanalakshmi vs Agricultural Income Tax and Sales Tax Officer and Others

M.M. Pareed Pillay, J.—The petitioner seeks to quash exhibit P-5 order of the second respondent and also exhibits P-4 and P-5 orders of assessment.

The only point urged by the petitioner is that the assessment orders made against him by the first respondent were revised by the second respondent and so tax due from him cannot be collected without proper demand notice. His contention is that, on the basis of the order dated May 24, 1988, in the revision by the second respondent and the consequent revised assessments dated August 9, 1988, and June 14, 1988, there was no demand notice for the payment of the dues and so without fresh notice of demand revenue recovery proceedings cannot be initiated against him for the realisation of the tax amount.

Learned counsel for the petitioner relying on Income Tax Officer, Kolar and Another Vs. Seghu Buchiah Setty, , submitted that, as the original assessment order was modified in revision by the second respondent, a fresh notice of demand is indispensible and, without sending such a notice, the fourth respondent could not have taken revenue recovery proceedings to collect the dues from the petitioner. The learned Government Pleader pointed out that, in view of the Kerala Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1967 (Act 23 of 1967), such a contention is wholly devoid of merit.

The question that arises for consideration is whether, in a case where the assessment order has been modified by the appellate or revisional authority, a fresh notice of demand is necessary or not. Act 23 of 1967 was enacted with a view to provide for the continuation and validation of proceedings in relation to Government dues and for matters connected therewith. The preamble to the Act makes the position clear with regard to the object of the Act. It is apparent that the object of the Act is to do away with a fresh demand notice in every case consequent to the order in appeal or revision or in other proceedings. This is obviously to obviate the delay in the realisation of Government dues from assessees.

Section 2(b) defines "Government dues". Government dues, in relation to any scheduled Act, means any tax, penalty, fine, interest, or any other sum payable to the Government by an assessee under the Act and shall include the surcharge on profession tax levied u/s 4 of the Kerala Surcharge on Taxes Act, 1957. The Agricultural Income Tax Act, 1950 (Act 22 of 1950), is a scheduled Act. Section 3(a) of Act 23 of 1967 provides that, where Government dues are enhanced in appeal or other proceedings, the taxing authority shall serve upon the assessee another notice of demand only in respect of the amount by which such Government dues are enhanced. It further states that any proceedings in relation to such Government dues as are covered by the notice or notices of demand served upon the assessee before the disposal of such appeal or proceedings can be continued from the stage at which such proceedings stood immediately before such disposal and without service of any fresh notice of demand. Thus, from Section 3(a), it can be seen that, where the Government dues are enhanced in appeal or other proceedings, it is incumbent upon the taxing authority to serve upon the assessee another notice of demand in respect of the amount by which such Government dues are enhanced. Section 3(b) provides for a situation where the Government dues are reduced in appeal or other proceedings. Section 3(b) provides that it shall not be necessary for the taxing authority to serve upon the assessee a fresh notice of demand when the Government dues are reduced in appeal or other proceedings. In such a situation, it is the duty of the taxing authority to give intimation of the fact of such reduction to the assessee. In a case where the Government dues are reduced in appeal or other proceedings, the interest of the assessee is very well safeguarded as the statute enjoins the taxing authority to intimate the fact of such reduction to the officer or authority to whom a certificate was already issued for the recovery of the Government dues. Even in a case where the Government dues are reduced in appeal or other proceedings and where any proceedings were initiated on the basis of the notice or notices of demand served upon the assessee before the disposal of such appeal or proceedings, it can be continued in relation to the amount so reduced from the stage at which such proceedings stood immediately before such disposal. For the removal of doubts, Sub-section (2) of Section 3 states that no fresh notice of demand shall be necessary in any case where the amount of Government dues is not varied as a result of any order passed in any appeal or other proceedings under any scheduled Act. Thus it will not be open to the assessee to contend that he had filed an appeal or revision against the assessment order and, consequent to the order by the appellate or revisional authority, the assessment order has become non est and so a fresh demand notice is necessary.

The contention of the petitioner that the assessment orders against him were modified by the second respondent in revisional proceedings and so, without a fresh demand notice, he is not liable to pay the tax is devoid of any merit. The petitioner is not entitled to the reliefs sought in the original petition. In the result, the original petition is dismissed.