TMI Blog1982 (10) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ed pre-assessment notices to the petitioner which were duly served on him. Petitioner submitted objections to the particulars stated in the pre-assessment notices, but did not adduce any evidence or produce any document in support of his objections. The objections were rejected and best of judgment assessments for the five financial years 1975 to 1980 were completed under s. 18(4) of the Act as per Exs. P-2 to P-6 orders. These orders as well as notices of demand were duly sent to and served on the petitioner. He did not pay the tax assessed and demanded. Under Ex. P-8, penalty was also imposed on him for the entire period. Subsequently, the arrears of tax and the penalty were recommended to be recovered under the Revenue Recovery Act. Petitioner, apprehending action by the 5th respondent, Tahsildar, has filed the present original petition under art. 226 of the Constitution of India. Meanwhile, he applied under s. 19 of the Act to cancel Exs. P-2 to P-6 orders and that petition was dismissed. He then filed separate revision petitions under s. 34 of the Act before the second respondent and those revisions were also dismissed under Ex. P-7. He filed an application for reference under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial year, separate demand notices were sent and they were duly served on the petitioner. The file placed before me also shows that demand notices for each financial year were separately sent and served on the petitioner. Postal acknowledgments are seen in the file. This ground of attack also, therefore, fails. The next contention is that the assessment orders have been made after the expiry of the time-limit prescribed in sub-s. (2) of s. 35 of the Act. Sub-section (1) of s. 35 requires that in the case of escaped assessment in any financial year, notice be issued to the person concerned within 5 years of the end of that financial year and on sending a notice, it is open to the concerned ITO to proceed to assess or reassess the income. With reference to each of the financial years involved in this case, assessment had not been made in the concerned financial year. If the petitioner had agricultural income chargeable to tax under the Act, it was clearly a case of escaped assessment. On sending the notice as contemplated therein, the first respondent could proceed to make the assessment. The financial years concerned in this case are from 1975 to 1980. First of these years ende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs' limit, but within the one year of the date of the service of Ex. P-1 notice. That is why the petitioner challenges the first proviso to sub-s. (2) of s. 35. However, as already stated above, it is not correct to say that Ex. P-2 order was served on the petitioner only on June 28, 1981. The file shows that a copy of the order and the notice of demand under s. 30 were sent to him on February 27, 1981. There is postal acknowledgment in the file showing that the petitioner has signed it on March 7, 1981. Therefore, Ex. P-2 assessment is supportable under sub-s. (2) of s. 35 even without the help of the first proviso thereto. Therefore, it is unnecessary for me to consider the challenge levelled against the first proviso. There is no contention before me that Exs. P-2 to P-6 orders were made or served beyond time. Verification of the relevant dates shows that they were made and served well within the time. The learned counsel for the petitioner also contended that before issuing the escaped assessment notices under s. 35(1) of the Act, the first respondent ought to have recorded his reasons for doing so and since he did not do so, the entire, proceedings are illegal. I find fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and determine the sum payable by him on the basis of such return. Under sub-s. (2) the officer, if he is not satisfied, without requiring the presence of the person, who made the return, or the production of evidence, that the return is correct and complete, shall serve on the person, who made the return, a notice requiring him, on the date specified therein, either to attend the office of the Agrl. ITO or to produce or to cause to be produced any evidence on which such person may rely in support of the return. Sub-section (3) enables the officer concerned, after considering such evidence as may be produced and such other evidence as the officer, may require, to assess the agricultural income of the assessee and determine the sum payable by him on the basis of such assessment. Sub-section (4) of s. 18 of the Act reads thus: (4) If any person fails to make a return under sub-section (2) of section 17, or fails to comply with all the terms of a notice issued under sub-section (4) of that section or under sub-section (2) of this section, the Agricultural Income-tax Officer shall make the assessment to the best of his judgment and determine the sum in payable by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f judgment assessment and assessment made on the return and the evidence produced by the person concerned. Section 31(1) of the Act provides for appeal against assessment. According to this section, any assessee objecting to the amount of income assessed or tax determined or loss computed under s. 18 or denying his liability to be assessed under this Act or objecting to any order under any of the provisions of ss. 19, 20, 21, 25, 29 and 41 made by the Agrl. ITO or to the cancellation by him of the registration of a firm or to the refusal to register a firm may appeal to the Asst. Commissioner against the assessment or against such order. The proviso to sub-s. (1) of s. 31 states that no appeal shall lie in respect of an, assessment made under sub-s. (4) of s. 18. It is thus clear that when best of judgment assessment is made under s. 18(4) of the Act, such assessment is not appealable. However, such assessment is capable of being challenged in revision under s. 34 or by a petition for cancellation of the assessment under s.. 19, but no appeal will lie. Where an assessment is not made to the best of judgment of the officer concerned, but on the basis of evidence as contemplated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of s. 35 clearly indicates that escaped assessment can be made only after issuing a notice under s. 35(1), that the notice must contain all or any of the requirements contemplated under s. 17(2) and once a notice is issued, the officer concerned may proceed to assess or reassess the income and in doing so, he will be governed by those provisions of the Act, which would be applicable as if the notice issued by him tinder s. 35(1) of the Act were a notice issued under s. 17(2) of the Act. In other words, this provision lays down that when a notice under s. 35(1) of the Act is issued, it must be, so far as the procedure and the manner of assessment are concerned, treated as a notice under s. 17(2) of the Act and all the consequences which would follow the latter must necessarily follow the former too. Where a notice is issued under s. 17(2), if the return is filed, the officer may proceed under s. 18(1) of the Act. If the return is not filed, lie may proceed under s. 18(4) of the Act. It is open to him to issue a notice under s. 17(4) or under s. 18(2) of the Act and proceed in accordance with s. 18(4) of the Act. The Act does not lay down any other manner or procedure for passing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 35 before April 27, 1970, shall be deemed to be as valid and effective as if such assessment or reassessment has been made under the section as amended by the Amending Act. Act 15 of 1970, which, among other things, amended sub-s. (2) of s. 35. This amendment would render valid certain assessments which would have been invalid but for the amendment. Section 8(1) of the Act was enacted to give retrospective validation to orders already passed before that amendment. It was argued before the court that since s. 35(2) of the Act refers to s. 18 also, section 8(1) of the Amending Act saves even assessments which were not escaped assessments. This argument was repelled by the court and in doing so, it was observed that orders under s. 35(1) of the Act stand on a different footing from other assessment orders. This observation has to be read in the light of the facts which arose for consideration in that case. Section 8(1) of the Amending Act specifically refers to s. 35 of the Act. Therefore, s. 8(1) could apply to only those orders which originated from s. 35(1). In other words, the provisions cannot apply to orders which did not originate from s. 35(1). That distinction was drawn in ..... 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