Case: The Inspecting Assistant Commissioner of Agricultural Income Tax &amp; Sales Tax &amp; Another Vs. V.M. Ravi Namboodiripad etc

2. Now coming to the facts of the case the respondent is the Manager of a Nambudri Illom. That illom was assessed to tax under the Kerala AgriculturalAct, 1950 (hereinafter to be referred to as the Act) in respect of the assesment years61 andAll the assessments were made on March 14, 1962.3. Section 3 of the Act providesx at the rate or rates specified in the Schedule to this Act shall be charged for each financial year in accordance with and subject to the provisions of this Act, on the toal agricultural income of the previous(3) and (4) of that section as it stood on March 14, 1962 read asIn the case of an undivided Aliyasanthana family or branch of Marumakkathayam tarwad including a Nambudiri family or a family like that of the Moothathu or any other class governed by the law applicable to Nambudiries consisting of more than five members and whose agricultural income exceeds six thousand ruppes, the tax shall be assessed at the average rate applicable to the share of the agricultural income due to five members of the family or to six thousand rupees, whichever is higher"."(4) In the case of an undivided Hindu family consisting of brothers only or of a brother or brothers and the son or sons of a brother or brothers and whose agricultural income exceeds six thousand rupees, the tax shall be assessed at the average rate applicable to the share of income due to a brother or to six thousand rupees, whichever isFor the purposes of thisthe expression share of income due to a brother means the portion of the total agricultural income of the family which would have accrued to a brother, if a partition of the assets had been effected according to law on the day before the assessment is made; and(b) son includes a sons son.Subsequent to the passing of assessment orders on March 14, 1962, Act XII of 1964 was passed by the Kerala Legislature. That Act amended(3) of the Act and omitted(4). That amendment came into force with effect from April 1, 1958. Amended;In the case of a Hindu undivided family consisting of more than 5 members entitled to claim a share on partition and whose agricultural income exceeds six thousand rupees, the tax shall be assessed at the average rate applicable to the share of the agricultural income due to five members of family or to rupees six thousand whichever is higher".The amendment was given retrospective effect.6. Subsequent to that amendment, the AgriculturalOfficer by having recourse to his power under Section 36 of the Act, corrected the assessments in accordance with the amended provision. Section 35 of the Act provides for bringing to tax the income that has escaped assessment or has been assessed at too low a rate. Section 36 empowrs the AgriculturalOfficer to rectify the mistakes in an assessment order which are apparent on the face of the records. Under Section 35, the reassessment can be done only within three years of the end of the concerned financial year but under Section 36 the rectification can be made within three years of the date of the assessment. If the power exercised by the AgriculturalOfficer can be held to have been exercised under Section 36, then all that we have to see is whether the powers exercised by the AgriculturalOfficer were exercised within three years from the date of the assessment order, in respect of each one of those assessments. If, on the other hand, we come to the conclusion that the case falls within Section 35 then what we have to see is whether the power was exercised in respect of each of the assessment within the period prescribed therein.

Court's reasoning:
8. For the reasons to be presently stated that judgment of the High Court cannot be accepted as correct. Section 35 of the Act corresponds to sec. 34 of the IndianAct, 1922 and Section 36 corresponds to Section 35 of that Act. This Court had occasion to deal with the scope of Sec. 35 of the IndianAct, 1922 in M. K. Venkatachalam, I.T.O. v. Bombay Dyeing and Mfg. Co. Ltd. 1959 SCR 703 = (AIR 1958 SC 875  ). Therein theOfficer, by his order dated October 9, 1952, asssessed the assessee for the assessment yearand gave his credit foras representing interest on tax paid in advance under Section(5) of theAct. On May 24, 1953, the Indian(Amendment) Act, 1953 came into force adding a proviso to Section) of the Actto the effect that the assessee was entitled to interest not on the whole of the advance tax paid by him but only on the difference between the payment made and the amount assessed. The Amendment Act provided that it shall be deemed to have come into force on April 1, 1952. TheOfficer, acting under Section 35 of the Act, rectified the assessment order holding that the assessee was entitled to a credit of onlyby way of interest on tax paid in advance as a result of the retrospective operation of the amendment in Section(5) and issued a notice of demand against the assessee for the balance of Rs.The assessee filed a petition in the High Court of Bombay under Art. 226 of the Constitution praying for a writ prohibiting to be issued to the appellants from enforcing the rectified order and notice of demand. The High Court issued the writ prayed for holding that Section 35 was not applicable to the case as the mistake mentioned in Section 35 had to be apparent on the face of the order and the question could only be judged in the light of the law as it stood on the day when the order was passed. Overruling that decision this Court held that theOfficer was justified in exercising his powers under Section 35 and rectifying the mistake. This Court held that as a result of the legal fiction brought about as a result of the retrospective operation given to the Amending Act, the subsequently inserted proviso must be read as forming part of Section) of theprincipal Act as from April 1, 1952, and consequently the order of theOfficer dated October 9, 1952, was inconsistent with the provisions of the proviso and suffered from a mistake apparent from the record.Unfortunately in the present case the attention of the learned Judges of the High Court was not invited to any of the two decisions referred to earlier.For the reasons mentioned above, we come to the conclusion that the AgriculturalOfficer was empowered to make the rectification under Section 36 of the Act. But from the material before us, it is not possible for us to decide which of all assessments would fall within the period prescribed in Section 36 of the Act.For that reason these cases have got to go back to the High Court for deciding that question in accordance with this decision.