Case: State Of Uttar Pradesh Vs. Raja Yadvendra Dutt Dube

1. By order dated May 14, 1949, the Sub-Divisional Officer; Jaunpur, assessed Raja Yadvendra Dutt Dube - hereinafter called the respondent - under S. 16(3) of the U. P. Agricultural Income-tax Act, 1948 to pay agricultural income-tax for the account period 1335 Fasli (July 1, 1947 to June 30, 1948) on a net income of Rs. 72,769-15-2. Being of the view that a part of the income of the respondent had escaped assessment the Collector of Jaunpur by order dated June 9, 1950, recomputed tax under S. 25 read with S. 16 (4) of the Act for the said account period on a total net income of Rs. 80,859-13-6. In appeal by the respondent the Agricultural Income-tax Commissioner by order dated March 5, 1952, set aside the orders of the Collector and also of the Sub-Divisional Officer and directed that the assessment be reopened by the Collector and fresh assessment of the income for 1355 Fasli be made after giving notice to the respondent. In the view of the Commissioner, assessment made by the Sub-Divisional Officer was without jurisdiction and the order of reassessment by the Collector "being in review and substitution of the order of assessment" want of jurisdiction in the order of assessment attached to the order of re-assessment as well. The respondent then moved the Board of Revision against the order of the Commissioner. The Board agreed with the Commissioner, that the assessment order made by the Sub-Divisional Officer was "illegal and invalid", but in the view of the Board the Commissioner exceeded his authority in setting aside the order of the Sub-Divisional Officer, which was not challenged in appeal before him. However, the Board observed, the illegality and invalidity of the order of assessment having come to their notice, they would take up the matter suo motu in exercise of their revisional jurisdiction and declare the order passed by the Sub-Divisional Officer as illegal and set it aside. Accordingly, in setting aside the order of the Commissioner, they also set aside the order of assessment made by the Sub-Divisional Officer, and directed that "Fresh assessment will be made according to law." The Board then referred under S. 24 (4) of the Act the following question of law to the High Court of Allahabad foron the facts and having regard to the provisions of Section 25 of the Act, the Board could on the 15th October, 1952, direct a fresh assessment to be made?" The High Court, recorded an answer in the negative. The State of Uttar Pradesh has appealed to this Court.

Court's reasoning:
8. There is in the Act no procedure prescribed about ascertainment of the gross agricultural income of an assessee which is determinative of the jurisdiction of the Sub-Divisional Officer, but as in other taxing statutes where the taxing authority is constituted a tribunal of exclusive jurisdiction the authority has the power, subject to rectification by a superior Court to decide facts on the proof of which his jurisdiction depends. The Sub-Divisional Officer had therefore power to decide whether the gross agricultural income of the respondent did or did not exceed Rs. 1 lakh.The notice under S. 15(3) was issued to the respondent by the Sub-Divisional Officer, presumably on the assumption that the gross agricultural income of the respondent did not exceed Rs. 1 lakh, but when the Sub-Divisional Officer found on scrutiny of the return that the gross agricultural income of the respondent exceeded Rs. 1 lakh, he could not exercise the powers of the assessing authority. There is no provision in the Act or the rules for transfer of proceeding from the Sub-Divisional Officer to the Collector, when the Sub-Divisional Officer in dealing with a return finds that he has no jurisdiction. When he arrived at the conclusion that the gross income of the respondent exceeded Rs. 1 lakh, the proceeding initiated by the Sub-Divisional Officer including the issue of notice must, unless the conclusion is set aside by a superior authority, be held unauthorised, for the power to issue a notice under S. 15 (3) is only conferred upon the assessing authority, and the assessing authority within the meaning of S. 2 (6) is a person authorised to assess agricultural income-tax. The Sub-Divisional Officer had no power to assess agricultural income of the respondent, because his gross income exceeded Rs. 1 lakh, and he had on that account no power to issue the notice.9. It is true that the Board of Revision did not expressly set aside the notice issued by the Sub-Divisional Officer under S. 15 (3), but the Board agreed with the Commissioner that the original order of assessment passed by the Sub-Divisional Officer "was absolutely without jurisdiction", and directed that the entire case be reopened by the Collector and fresh assessment of the income for Fasli year 1355 be made by the Collector after giving notice to the respondent. The Board thereafter passed the same order which the Commissioner claimed (sic) without authority to make. It must, therefore, be held that the notice issued by the Sub-Divisional Officer was not only unauthorised, but was also quashed by the Board.10. The second contention that when notice under S. 15 (1) is issued, the Collector may without a notice under S. 15 (3) commence fresh assessment proceeding on the return made to the Sub-Divisional Officer has no substance. This question does not appear to have been raised or argued at any stage before the Board. Again, if the proceedings for assessment were commenced on a return made pursuant to an invalid notice, and the proceeding for assessment were set aside on the ground of want of jurisdiction of the authority making the assessment, the entire proceeding must be deemed to be vacated, and relying upon the return made to the authority who had assessed the income, another authority cannot proceed to assess the income of the assessee. Mere issue of a notice under S. 15 (1) cannot come to the aid of the Collector in commencing fresh assessment proceeding many years after the date on which that notice was issued, on a return which was not made to him. When after a general notice a special notice was issued unauthorisedly and proceedings were taken pursuant to that special notice, the general notice cannot be relied upon to start fresh proceeding for assessment on the assumption that the return must be deemed to be made to him pursuant to the general notice. The Collector must, before the proceeding to assess, issue under S. 15 (3) a notice when no return was filed pursuant to the notice under S. 15 (1), and a notice under S. 15 (3) cannot issue after expiry of the year of assessment to which the notice relates.11. The third contention also has no substance. The Collector issued a notice under S. 25 of re-assessing income which had escaped assessment and assessed the income of the respondent, but the proceeding of the Collector was set aside as unauthorised, and the Collector was directed to start a fresh proceeding for assessment. The notice issued by the Collector must also be deemed to be quashed. The Collector has, therefore, under the direction given by the Board, to issue a fresh notice before a proceeding for assessment may be started; and the earlier notice issued under S. 25 cannot be relied upon by the Collector.12. The High Court was therefore right in the answer which it recorded. It is somewhat unfortunate that on account of the diverse orders passed by the authorities from time to time without a correct appreciation of the scheme of the Act, the respondent escapes liability to pay tax which was lawfully due by him, but that cannot justify the commencement of a fresh proceeding for assessment contrary to the provisions of the statute.