1997 (9) TMI 41 - HC - Income Tax

Deputy Commissioner's Jurisdiction Upheld for Section 34 Matters

KA Ammarkunhi Amma Versus Commissioner Of Agricultural Income-Tax

The court held that the Deputy Commissioner had jurisdiction to invoke section 34 as the issues raised were not subject to the appellate decisions. It was ... Agricultural Income Tax, Revision, Merger Issues Involved:1. Whether an assessment decided by an appellate authority can be again taken up under section 34 by the Deputy Commissioner in revision.2. Whether there is any escapement of income in these cases and whether it is not a mere 'change in opinion' to disallow expenses already allowed in assessments.Detailed Analysis:Issue 1: Revisional Power under Section 34 Post-Appellate DecisionThe primary contention from the assessee was based on the principle of merger, arguing that once an assessment order is taken in appeal, it merges with the appellate order, thereby stripping the Deputy Commissioner of jurisdiction to invoke section 34. The court examined previous decisions, including *Anantha Mallan v. Commr. of Agrl. I. T. [1963] 47 ITR 93*, which held that the Commissioner should not exercise revisional powers if aggrieved by an appellate order, and *Oommen v. Commr. of Agrl. I. T. [1963] KLJ 211*, which reinforced this view. However, these cases were distinguished as they involved direct revision of appellate orders, unlike the present case where the Deputy Commissioner targeted the original assessments.The court also considered *CIT v. Amritlal Bhogilal and Co. [1958] 34 ITR 130* and *CIT v. S. Ratnam Pillai [1991] 188 ITR 494*, which supported the view that revisional powers could be exercised on matters not subject to the appeal. The court concluded that the Deputy Commissioner's actions were valid as the issues raised under section 34 were not the subject matter of the appeals, thus the principle of merger did not apply.Issue 2: Escapement of Income and Change of OpinionThe second issue revolved around whether the revisional proceedings were a mere change of opinion or a legitimate case of escapement of income. The court emphasized that the revisional authority, not being the original assessing authority, could not be accused of changing its opinion. The court noted that the Deputy Commissioner's actions were based on identifying specific errors, such as improper deductions and unassessed income from rubber trees, which were not considered in the original assessments.The court referred to *Suppan Chettiar v. Commr. of Agrl. I. T. [1958] KLJ 834* and *Smt. Lucy Kochuvareed v. Commr. of Agrl. I. T. [1971] 82 ITR 845 [FB]*, which suggested that escaped income should be addressed under section 35. However, it was clarified that the Supreme Court had reversed the latter decision, and a Full Bench in *Madras Rubber Factory Ltd. v. State of Kerala [1979] 44 STC 208* had upheld the revisional powers under similar circumstances. The court concluded that the revisional authority could address escaped income under section 34, provided the grounds for revision were met.Conclusion:The court answered the first question in the affirmative, holding that the Deputy Commissioner had jurisdiction to invoke section 34 as the issues raised were not subject to the appellate decisions. The second question was re-drafted to focus on the jurisdiction to direct assessment of escaped income and was also answered in the affirmative, supporting the revisional authority's actions. The judgment thus favored the Revenue on both counts.