1997 (11) TMI 60 - HC - Income Tax

Deputy Commissioner's Power of Revision Under Kerala Income-tax Act: Procedural Requirements Key

Deputy Commissioner Of Agricultural Income-Tax And Sales Tax Versus RS. Parameswaran

The court held that the Deputy Commissioner did not validly exercise the power of revision under section 34 of the Kerala Agricultural Income-tax Act for ... Agricultural Income Tax, Tenants-in-common Issues Involved:1. Validity of the exercise of revision power under section 34 of the Kerala Agricultural Income-tax Act, 1950.2. Competency of the Deputy Commissioner to initiate proceedings under section 34(1) of the Act.3. Compliance with principles of natural justice.4. Timeliness and justification for invoking suo motu power of revision.Detailed Analysis:1. Validity of the Exercise of Revision Power under Section 34 of the Kerala Agricultural Income-tax Act, 1950:The primary issue addressed is whether the Deputy Commissioner validly exercised the power of revision under section 34 of the Act. The court examined the statutory provisions of section 34(1), which allows the Commissioner to revise orders without any prescribed time limit, provided the assessee is given a reasonable opportunity to be heard. The court referenced previous judgments, including *Anantha Mallan v. Commr. of Agrl. I.T.* [1963] 47 ITR 93 and *George Oommen v. Commr. of Agrl. I.T.* [1964] 52 ITR 977, which emphasized that the Commissioner should follow the specific procedure under section 32(2) when objecting to an order by the Appellate Assistant Commissioner. The court concluded that the Commissioner violated these principles by not directing the Agricultural Income-tax Officer to appeal to the Appellate Tribunal.2. Competency of the Deputy Commissioner to Initiate Proceedings under Section 34(1) of the Act:The assessee argued that the Deputy Commissioner is not a specified authority under section 15 of the Act and thus not competent to initiate proceedings under section 34(1). The court clarified that section 34(1) authorizes the Commissioner to revise orders of subordinate authorities, and this power can be exercised without a time limit. The court found that the Deputy Commissioner, acting on behalf of the Commissioner, had the authority to initiate such proceedings.3. Compliance with Principles of Natural Justice:The court reiterated the importance of complying with principles of natural justice, particularly the rule that no one should be a judge in their own cause. The court noted that the Commissioner should have directed the Income-tax Officer to appeal to the Appellate Tribunal rather than exercising revisional powers, as this would have ensured an unbiased adjudication. The court cited the principles laid down in *Anantha Mallan's case* and *George Oommen's case*, which emphasized that when two courses of action are available, the specific procedure consistent with natural justice should be followed.4. Timeliness and Justification for Invoking Suo Motu Power of Revision:The court examined whether the Deputy Commissioner provided a reasonable explanation for the delay in initiating action under section 34(1). The court found that the notice dated March 15, 1989, did not explain the causes for the delay. The court emphasized that when exercising extraordinary powers without a time limit, the authority must act with extreme care and caution, and any delay must be justified. The court concluded that the Deputy Commissioner failed to perform this inherent duty, rendering the exercise of power invalid for the assessment years 1976-77 to 1980-81.However, the court acknowledged a different view for the assessment year 1985-86, noting that the assessment order was passed on November 5, 1985, and the appellate order on November 5, 1986. The notice under section 34(1) was issued on March 15, 1989, which the court deemed not unreasonably delayed. Thus, the court found the revision for the year 1985-86 justified.Conclusion:The court answered the referred question in the negative for the assessment years 1976-77, 1977-78, 1978-79, 1979-80, and 1980-81, indicating that the power of revision under section 34 was not validly exercised. For the assessment year 1985-86, the court found the revision justified and answered in favor of the Revenue. The court declined to consider other questions referred to it.