V. Annamalai and Others vs Agricultural Income Tax Officer and Another

R. Jayasimha Babu, J.—The revision petitions are directed against an order passed by the Commissioner of Agricultural Income Tax u/s 34

of the Act. By that order, no prejudice has been caused to the petitioner as that order did not have the consequence of enhancing any liability of

the petitioner or imposing any new liability on him or subject him to any restrictions which did not exist earlier.

This court, as early as in the year 1965, in the case of N.N. Seshadrinathan Vs. State of Madras, speaking through a Full Bench has held that an

application for revision will not lie to this court against an order made by the Commissioner u/s 34 of the Tamil Nadu Agricultural Income Tax Act,

if that order is not one which can be regarded as prejudicial to the assessee. While so holding, the court took note of the second proviso to Section

34 of the Act which reads as under :

Provided further that an order passed declining to interfere shall not be deemed to be an order prejudicial to the assessee.

The Full Bench held after referring to that proviso that (page 486) :

Whatever might have been the position without the existence of the second proviso, the position is incontestable after the addition of the second

proviso in Section 34 ... In the light of the second proviso, it is not necessary for us to dilate upon this point any further, having regard to the clear

and unambiguous language of the second proviso which, in our opinion, applies to all kinds and classes of orders falling under Sub-section (1) of

Section 34 whether passed suo motu or on invitation.

It is the case of the petitioner that the law so laid down by the Full Bench requires to be reconsidered, as according to the petitioner, it has not

taken note of the difference in language in Section 34 of the Act in contrast to that used in Section 54 of the Act. Reliance is placed on the fact that

Section 54 of the Act, which deals with revision by the High Court refers to orders under the section ""enhancing the assessment or otherwise

prejudicial"". The argument is that the words ""otherwise prejudicial"" used in Section 54 of the Act, would take within their ambit orders which are

not prejudicial to the assessee when such orders are made u/s 34 of the Act. We do not find it possible to accede to this argument. Section 54 of

the Act refers to orders enhancing the assessment when such orders are made u/s 34 of the Act or other orders made under that section otherwise

prejudicial to the assessee. The term ""otherwise"" in the context is used only to underscore the fact that orders which do not enhance the assessment

may nevertheless be prejudicial, if in fact there has been prejudice, but what is essential is that there must be prejudice to the assessee by reason of

the order made u/s 34 of the Act. The second proviso to Section 34 of the Act contains the legislative declaration that an order passed by the

Commissioner u/s 34 of the Act declining to interfere shall not be deemed to be an order prejudicial to the assessee. That declaration has been

recorded by the Full Bench as conclusive.

When an order is made u/s 34 of the Act declining to interfere, all that happens is that the order sought to be impugned remains intact. Nothing

is added thereto and nothing is subtracted therefrom. The position of the assessee does not get altered for the worse, it remains what it was before

he sought the revision. The prejudice that is referred to in Section 54 of the Act is a prejudice which is the direct consequence of the order which is

sought to be revised. The order made u/s 34 of the Act merely affirming an order made by the authority below, by itself does not cause prejudice.

That prejudice, if any, is the consequence of the order made, by the inferior authority and not by the Commissioner.

We, therefore, do not see any merit in the argument sought to be advanced by the petitioner on the basis of the slight difference in the language

as between Section 34 and Section 54 of the Act.

The other argument that was sought to be advanced for the petitioner was that the Full Bench was in error in not following the decision of the

Special Bench of five judges rendered in the case of VOORA SREERAMULU CHETTY Vs. COMMISSIONER OF Income Tax, MADRAS.,

. The case of VOORA SREERAMULU CHETTY Vs. COMMISSIONER OF Income Tax, MADRAS., was one which arose under the

provisions of the Income Tax Act. The Full Bench was concerned with the scope of Section 34 of the Act and has laid down the law with

reference to that section. The Full Bench relied upon the decision of the Privy Council in the case of CIT v. Tribune Trust, Lahore [1948] 16 ITR

214 which held that a reference does not lie under the Income Tax Act from an order u/s 33 of the Act, unless that order is prejudicial to the

assessee in the sense that he is in a worse position after the order was mades The decision of the Special Bench of the court in the case of

VOORA SREERAMULU CHETTY Vs. COMMISSIONER OF Income Tax, MADRAS., is at variance with the decision of the Privy Council

rendered later in the year 1948. The Full Bench has, therefore, held that the decision of this court in the case of VOORA SREERAMULU

CHETTY Vs. COMMISSIONER OF Income Tax, MADRAS., was no longer good law.

The test laid down by the Privy Council is as to whether by the impugned order, the assessee is in a worse position after the order was made.

The second proviso to Section 34 of the Act declares that he shall not be deemed to be in a worse position merely because the order of the lower

authority is not interfered with. We, therefore, see no substance in the argument that the decision of the Full Bench requires reconsideration.

In the result, these tax cases are dismissed as not maintainable. No costs. Counsel at this point placed before us the order made by a learned

single judge of this court in W. P. Nos. 16406 to 16409 of 1997, dated November 14, 1997, wherein the petitioner''s case, on merits, was

considered by the court and was rejected. However, in that order it has also been observed that it is open to the petitioner to file a revision petition

u/s 54 of the Tamil Nadu Agricultural Income Tax Act, if it is within time. That observation must be read subject to the law laid down by this court

with regard to the maintainability of the revision petitions against orders made u/s 34 of the Act. That observation by itself does not have the effect

of either amending the statute or overriding the decision of the Full Bench.