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TMI Blog1989 (4) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... di Estate" and accessories for recovery of ₹ 2,08,51,230.98 with interest being the arrears of sales tax, agricultural Income Tax, employees' provident fund, etc., due from the petitioner. 3. The petitioner owns the Ponmudi Estate measuring about 892 acres out of which an extent of 600 acres is a tea plantation. The counter-affidavit of the third respondent, Tahsildar, shows the break-up of the tax liability as follows : Rs. Sales tax : 23,37,825.03 Bank arrears due to Small Scale Development Corporation : 41,618.93 Emergency risk : 8,792.77 -do- : 5,206.00 Agricultural income-tax : 1,75,98,366.62 Employees' provident fund : 7,20,936.15 Basic tax : 5,237.46 Plantation tax : 1,33,248.02 2,08,51,230.98 4. The arrears of agricultural Income Tax and surcharge for the years 1977-78 to 1981-82 due from the petitioner are as follows as can be seen from the counter-affidavit filed on behalf of the respondents : Year Agrl. income-tax Surcharge Total Rs. Rs. Rs. 1977-78 22,64,821.40 2,26,482.14 24,91,303.54 1978-79 13,71,664.80 1,37,166.48 15,08.831.28 1979-80 6,63.618.30 66,361.83 7,29,980.13 1980-81 47,49,694.80 4,74,969. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment orders, exhibit P-8 series. 7. The learned single judge, as already stated, has declined to interfere with these orders for the reason of the persistent default of the assessee in complying with the various notices issued by the assessing authority and his failure to file objections to the pre-assessment notice. The learned judge has also adverted to his default in complying with the orders of the Supreme Court for sale of a portion of the estate to discharge his liability under a decree obtained by the Indian Bank against him. 8. It is true that the, assessee is a defaulter. He has failed to submit returns in response to the notices issued under Section 35 of the Act. His case that he had not received any of those notices is not accepted by the revisional authority and the learned single judge. A best judgment assessment cannot, however, be capricious or vindictive. Following the decisions in CIT v. Laxminarain Badridas, Raghubar Mandal Harihar Mandal v. State of Bihar [1958]1SCR37 , and State of Kerala v. C. Velukutty [1966]60ITR239(SC) , the Supreme Court in Brij Bhushan Lal Parduman Kumar v. CIT [1978]115ITR524(SC) , stated at page 530 : "It will appear clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1989. Exhibit P-8(e) is the order of assessment to agricultural Income Tax for the assessment year 1977-78. The income from tea is estimated in exhibit P-8(e) at ₹ 27,79,000. The assessment order passed by the Assistant Commissioner of Sales Tax for the year 1978-79 is at page 164 of the paper book. This order shows that the petitioner was assessed to sales tax for the prior year 1977-78 on a total and taxable turnover of ₹ 27,79,900. Thus, the total taxable turnover for the year 1977-78 is taken as the agricultural income from tea for the said period in exhibit P-8(e) order of assessment. Exhibit P-8(d) is the order of assessment to agricultural Income Tax for the year 1978-79. Income from tea is estimated in exhibit P-8(d) at ₹ 14,97,690, The sales tax assessment order for the said period is at page 164 of the paper book. The taxable turnover for the year 1978-79 for assessment of sales tax is determined at ₹ 14,97,690. Exhibit P-8(b) is the order of assessment to agricultural Income Tax for the year 1980-81. Income from tea is estimated at ₹ 60,00,000. The order itself shows that the estimation is based on sale of tea gathered from the sales tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of List II provides for taxes on agricultural income, Article 366(1) of the Constitution defines "agricultural income" as follows : '"agricultural income' means agricultural income as defined for the purposes of the enactments relating to Indian Income Tax." 13. Sub-section (1) of Section 2 of the Indian Income Tax Act, 1922, defines "agricultural income", the material portion of which reads : '"agricultural income' means- (a) any rent or revenue derived from land which is used for agricultural purposes, and either assessed to land revenue in the taxable territories or subject to a local rate assessed and collected by officers of the Government as such ; (b) any income derived from such land by--(i) agriculture, or (ii) the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market, or (in) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that (a) the Explanation to Section 2(a)(2) of the Kerala Agricultural Income Tax Act adopts this rule of computation, and (b) the balance 60 per cent of the income so computed is agricultural income within the meaning of the Central Income Tax Act and the Constitution. The agricultural income taxable under the Kerala Act is 60 per cent of the income so computed after deducting therefrom the allowances authorised by Section 5 of the Kerala Act in so far as the same has not already been allowed in the assessment under the Central Income Tax Act. There is no provision in the Kerala Act authorising the Agricultural Income Tax Officer to disregard the computation of the tea income made by the Income Tax authorities acting under the Central Income Tax Acts. The Agricultural Income Tax Officer in making an assessment of agricultural income is bound to accept the computation of the tea income already made by the Central Income Tax authorities and to assess only 60 per cent of the income so computed less allowable deductions as agricultural income taxable under the Kerala Act." 16. The Explanation referred to above in the Agricultural Income Tax Act, 1950, was deleted by the Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax Rules, 1962, but that by itself does not make any difference and the reading of the aforesaid decisions makes it perfectly clear that even without that Explanation, the position would have been the same. The conclusion which must follow is that although the Explanation has been deleted from Sub-clause (2) of Clause (a) of Section 2 of the Kerala Agricultural Income Tax Act and in spite of the amendments carried out by the Amendment Act of 1979 and thereafter the Amendment Act of 1980 in the case of the Bengal Agricultural Income Tax Act, an Agricultural Income Tax Officer acting under the Kerala Agricultural Income Tax Act or the Bengal Agricultural Income Tax Act has no power to levy agricultural income-tax except in respect of 60 per cent of the income derived by an assessee from the sale of tea grown and manufactured by him and computed in the manner laid down under the relevant Central Income Tax Act and the Rules framed thereunder." 17. In the present case, the taxable turnover on the sale of tea for the respective assessment years is taken as the agricultural income from tea and the entire income is seen assessed in total disregard of the constitutional provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the sale of tea. 20. The impugned orders of assessment, exhibit P-8 series, and the revi-sionai order, exhibit P-13, are, therefore, vitiated by errors apparent on the face of the record. There is also lack of jurisdiction to assess income above 60 per cent derived from tea and these orders are clearly unsustainable in law. 21. The petitioner seeks to quash also the revenue recovery proceedings culminating in exhibit P-7 notification for sale of the Ponmudi Estate. The counter-affidavit of the third respondent shows that revenue recovery proceedings are taken against the petitioner for recovery of amounts due from him under various heads as referred to in the earlier part of this judgment. The Ponmudi Estate was attached under Section 36 of the Revenue Recovery Act and the Collector has assumed management of the same in exercise of his powers under Section 37 of the Act. The agricultural Income Tax arrears due from the petitioner relate also to earlier years. There are also arrears of sales tax, basic tax, plantation tax, employees' provident fund, etc., aggregating to large amounts to be recovered from the petitioner. The teamed Advocate-General has brought to our noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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