1963 (4) TMI 97 - HC - Income Tax

1969 (8) TMI 6 - SC

Issues Involved:
1. Validity of assessments made under Section 20(4) of the Assam Agricultural Income-tax Act, 1939 without serving individual notices under Section 19(2) or initiating proceedings under Section 30.
2. Interpretation and application of Section 20(4) and Section 30 of the Assam Agricultural Income-tax Act, 1939.
3. Compliance with the procedural requirements under the Assam Agricultural Income-tax Act, 1939, specifically regarding the issuance of notices.
4. The impact of non-compliance with Section 20A regarding the discontinuance of business and the transfer of land.

Detailed Analysis:

1. Validity of Assessments Made Under Section 20(4) Without Serving Individual Notices Under Section 19(2) or Initiating Proceedings Under Section 30:
The main contention by the petitioners was that no best judgment assessment under Section 20(4) could be made without serving an individual notice under Section 19(2) or initiating proceedings under Section 30. It was argued that the assessment could only proceed after due notice under Section 19(2) or by initiating proceedings under Section 30 if no such notice was served. The court found that in the absence of individual notices under Section 19(2) or proceedings under Section 30, the assessments made under Section 20(4) were without jurisdiction and thus invalid.

2. Interpretation and Application of Section 20(4) and Section 30 of the Assam Agricultural Income-tax Act, 1939:
The court examined the provisions of Sections 19, 20, and 30 to determine the proper procedure for making assessments. Section 19(2) requires an individual notice to be served in the financial year, and if no such notice is served, proceedings under Section 30 can be initiated within three years. The court held that Section 20(4) could not be invoked without complying with the notice requirements of Section 19(2) or Section 30. The court emphasized that Section 20(4) is a penal provision and can only be invoked if the assessee fails to file a return after being served with a notice under Section 19(2).

3. Compliance with Procedural Requirements Under the Assam Agricultural Income-tax Act, 1939:
The court found that the procedural requirements under the Act were not followed. The petitioners alleged that they were not served with any notices under Section 19(2) or Section 30, and the court found no evidence to show that such notices were issued or refused by the petitioners. The court noted that the dates of the alleged notices were not mentioned in the counter-affidavit, and no explanation was given for not supplying certified copies of the notices to the petitioners. Consequently, the court held that the assessments made under Section 20(4) were illegal due to non-compliance with the procedural requirements.

4. Impact of Non-Compliance with Section 20A Regarding the Discontinuance of Business and Transfer of Land:
The court addressed the contention that Section 20A cast an obligation on the petitioners to inform the Agricultural Income-tax Officer of the discontinuance of their business. The court clarified that Section 20A applies to the discontinuance of business by a firm or association of individuals, not to the transfer of land. Since the petitioners had transferred the land, they ceased to have any agricultural income from the date of transfer, and no obligation under Section 20A was cast upon them to inform the Agricultural Income-tax Officer of the transfer.

Judgment:
The court concluded that the assessments made under Section 20(4) without serving individual notices under Section 19(2) or initiating proceedings under Section 30 were illegal. The court issued a mandamus directing the opposite parties not to give effect to the ex parte assessments made under Section 20(4) of the Act. The applications were allowed with costs fixed at Rs. 200, with each set receiving Rs. 100.

Separate Judgment by Dutta, J.:
Dutta, J. agreed with the Chief Justice that the assessments were illegal and that a mandamus should issue. He provided additional reasoning, emphasizing that assessment proceedings do not commence with the public notice under Section 19(1) but require an individual notice under Section 19(2) or proceedings under Section 30 after the financial year ends. He reiterated that Section 30 introduces a time limit for making assessments and that the assessments in the present cases were illegal due to non-compliance with the notice requirements.

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