TMI Blog1997 (11) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... 05-1982 ITR 142 of 1994 1985-86 05-11-1985 05-08-1986 The Agricultural Income-tax Officer passed assessment orders for the aforesaid years assigning the status as "individual". As against those orders, the assessee filed appeals before the Appellate Assistant Commissioner. Those appeals were disposed of by the Appellate Assistant Commissioner on the dates mentioned above assigning the status as "Hindu undivided family/tenants-in-common". The Deputy Commissioner, however, initiated proceedings under section 34 of the Act on March 15, 1989, to revise the order of the Appellate Assistant Commissioner for the aforesaid assessment years suo motu. The Deputy Commissioner after the inquiry by common order dated March 20, 1989, set aside the assessments and remanded the cases to the assessing authority for fresh disposal. Subsequently, on April 26, 1990, the assessee filed applications requesting to refer to this court certain questions of law as authorised under section 60(2) of the Act. However, the Deputy Commissioner disallowed the request against which the assessee filed applications before this court for compelling the Commissioner to refer the question. This court by judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only condition prescribed in section 34(1) is that the Commissioner shall not pass any order prejudicial to the assessee without hearing him or giving him a reasonable opportunity of being heard. The above provision came up for interpretation before this court in various decisions. In Anantha Mallan's case [1963] 47 ITR 93 (Ker), the provisions contained in section 34 came up for interpretation. The Division Bench after analysing the relevant provisions observed as follows: "It follows that, because the Commissioner in both the cases had objections to the Appellate Assistant Commissioner's assessments, he ought to have followed the procedure indicated in section 32(2) and not exercised his revisory powers. To decide your own objections to assessment orders is violative of the principles of natural justice, that persons with biased mind must not adjudicate, which principle is not excluded by the statutory provisions in the Act." Section 32(2) upon which reliance was placed by the above Division Bench is as follows: "32. (2) The Commissioner may, if he objects to any order, passed by an Assistant Commissioner under section 31, direct the Agricultural Income-tax Officer to appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... family/tenants-in-common". What the Commissioner proposed to do by invoking section 34 was to assign the status as "individual" so that the tax burden on the part of the assessee would be high. The power conferred under section 34 is extraordinary because the Commissioner is authorised to revise the orders of the subordinate authority without following any period of limitation whatsoever. When such a power is conferred it has to be exercised with extreme care and caution and it involves implied restrictions. One of such restrictions has been stated by the Division Bench of this court in Dr. Thomas Varghese v. State of Kerala [1997] 226 ITR 365, namely, the authority exercising power suo motu affecting the interest of the parties is bound to show cause for such delay. The court further observed: "When completed assessments are reopened after a lapse of many years by invoking the suo motu power of revision, serious prejudice would be caused to the assessee. The result in such circumstances would be to unsettle matters which are already settled. Therefore, it is the inherent duty of the Deputy Commissioner to state the circumstances leading to the delay in initiating the action unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a different form as this : "When two courses of action are indicated for a particular occasion by the statute, of which one is general and the other particular, the latter ought to be followed, especially when that alone is consistent with the principles of natural justice." There is no justifiable reason to disagree with the principles laid down by the Division Benches either in Anantha Mallan's case [1963] 47 ITR 93 (Ker) or in George Oommen's case [1964] 52 ITR 977 (Ker). In view of the infirmity pointed out in the notice proposing to initiate action under section 34 of the Act, the copy of the said notice dated March 15, 1989, was made available by the Government Pleader for verification. There was no attempt by the Commissioner in that notice to explain causes for the delay in taking action under section 34(1). No explanation is also forthcoming in annexure-C order of the Deputy Commissioner. Thus, there is failure to perform the inherent duty cast on the Commissioner while initiating action under section 34(1) of the Act. The learned Government Pleader, however, pointed out that a different view is possible with regard to the assessment for the year 1985-86. The asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner invoking suo motu powers under section 34 of the Act set aside the assessments for all the six years and directed the assessing authority to pass fresh orders. At the instance of the assessee, the above question was directed to be referred. From the records, it could be seen that a report was called for by the Deputy Commissioner dated November 16, 1987. Subsequently, the office of the Deputy Commissioner issued notice dated March 15, 1989, proposing to invoke the suo motu power. The petitioner submitted his reply dated March 27, 1989. It is pertinent to note that the petitioner did not raise the question of limitation or unreasonable delay in reopening the assessment. Nor did he raise the ground of bias before the Deputy Commissioner. Learned counsel appearing on behalf of the assessee submits that the Deputy Commissioner ought not to have invoked the power under section 34 of the Agricultural Income-tax Act when there is a provision for filing an appeal. In support of his contention, he has referred to two decisions of this court in Anantha Mallan v. Commr. of Agrl. I.T. [1963] 47 ITR 93 (Ker) and George Oommen v. Commr. of Agrl. I.T. [1964] 52 ITR 977 (Ker). He further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sposal and for the assessment year 1986-87 the appeal was pending before the Appellate Assistant Commissioner. In the above circumstances, the assessment files relating to the years 1976-77 to 1980-81 and 1985-86 were submitted for an order by the Deputy Commissioner. Hence, the impugned proceedings are initiated by issuing notice to the assessee. Thus, it could be seen that the matter relating to the status of the asses see and his brother was pending before the authorities at one stage or the other. In so far as his brother is concerned, the matter stands concluded by the judgment of the High Court dated June 29, 1993 in Deputy Commr. of Agrl. I.T. v. R. S. Chidambaram [1994] 209 ITR 531 (Ker) based on the similar partition deed dated March 29, 1975, wherein the status of his brother was declared to be "individual". As the law is clear on the point and the Department for one reason or the other could not pursue the appeal against the order of the Agricultural Income-tax Officer, that too in reference to periods 1976-77 to 1980-81 and 1985-86, the suo motu proceedings have been initiated. Section 34 of the Kerala Agricultural Income-tax Act (hereinafter refer red to as "the Act" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The revisional powers are conferred on the higher authorities not only under the Agricultural Income-tax Act, but also under the various Acts. These powers are enshrined for a fair administration and superintendence over the subordinate authority and in the interest of the Revenue and the Government. A general argument that a revisional power would invariably be based on prejudicial approach against the subordinate officers cannot be entertained as a reasonable proposition. It is not the case of the assessee that the Deputy Commissioner in this case has got any bias against the assessee. In the absence of any plea with sufficient materials, I find that those arguments lack force and have to be rejected outright. The Supreme Court in Registrar, Co-operative Societies v. Dharam Chand [1961] 31 Comp Cas 454, while dealing with the power of the Registrar of Co-operative Societies as an administrative head found that the decision of the Registrar deciding a dispute cannot be characterised as biased. The Supreme Court expressed their views in the following words : ". . . the fact that the Registrar gave notice for the purpose of the removal of the managing committee was no reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if it is sufficiently substantial to create a reasonable suspicion of bias." In Dr. George Peter v. State of Kerala [1994] 205 ITR 79, a Division Bench of this court held that to reopen the final assessment after nearly seven or eight years in exercise of the power under section 34, cogent and sufficient reasons must be there. The Division Bench held that the power under section 34 can be validly used in the right and proper way, which the Legislature, when conferring it, is presumed to have intended. The Division Bench also held that the power of invoking suo motu power is not unfettered or untrammelled and that whether there were cogent reasons or other difficulties which prevented the Revenue from initiating revisional proceedings within reasonable time is a question of fact. In Teekoy Rubbers (India) Ltd. v. Comm. of Agrl. I.T [1996] 219 ITR 615 a Division Bench of this court has taken the view that there must be sufficient explanation for the exercise of suo motu power belatedly. In Grace George (Mrs.) and M. K. Thomas v. Addl. ITO [1982] 137 ITR 403, a Division Bench of this court held that the choice of exercising the power under sections 34 and 32(2) cannot be interfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or is passed on grounds extraneous to the legislation or if there are no grounds for passing it or if the grounds are such that no one can reasonably arrive at the opinion or satisfaction requisite under the legislation. The Supreme Court further held that the words "reason to believe" or "the opinion" is an altogether subjective process not lending itself even to a limited scrutiny by the court that such "a reason to believe" or "opinion" was not formed on the relevant facts or within the limits or restraints of the statute as an alternative safeguard to rules of natural justice where the function is administrative. A Division Bench of this court in K. A. Ammarkunhi Amma v. Commr. of Agrl. I.T. [1999] 235 ITR 401 (I. T. R. Nos. 71 to 76 of 1993, Division Bench judgment of this court dated September 5, 1997), has taken the view that a valid exercise of the revisional power is not an infringement of the power of the assessing authority. There is no bar or inhibition against getting at escaped turnover in exercise of the revisional power under section 35, so long as the grounds for exercise of that power are made out. In K. Ishare Bhat v. Commr. of Agrl. I. T. [1967] KLT 1073, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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