1993 (2) TMI 15 - HC - Income Tax

Court orders rectification of agricultural income assessment based on Income-tax Act estimate.

The court held that the assessing authority erred in refusing to rectify the assessment order of agricultural income from tea. It was determined that the ... Agricultural Income Tax, Income From Tea, Income Tax Act, Rectification Of Mistakes Issues:Assessment of agricultural income from tea under the Karnataka Agricultural Income-tax Act, 1957 based on the order of assessment made under the Income-tax Act, rectification of assessment order due to alteration in relevant records, refusal of Agricultural Income-tax Officer to rectify assessment order, interpretation of Rule 6 of the Karnataka Agricultural Income-tax Rules, 1957, exercise of power under section 37 of the Agricultural Income-tax Act.Analysis:The judgment pertains to a case where the petitioner derived agricultural income from tea and was assessed under the Karnataka Agricultural Income-tax Act, 1957. The petitioner had filed its return along with the order of assessment made under the Income-tax Act for the assessment year 1978-79. Despite an appeal pending against the Income-tax assessment order, the assessing authority proceeded with the assessment under the Karnataka Agricultural Income-tax Act, citing no statutory bar due to the conclusion of the Income-tax assessment.The Commissioner of Income-tax later reduced the total tea income, which was communicated to the petitioner after the assessment under the Karnataka Agricultural Income-tax Act. The petitioner sought rectification of the assessment order based on the reduced income, but the Agricultural Income-tax Officer rejected the application, stating the remedy was to challenge the assessment through an appeal. This decision was upheld by the Deputy Commissioner (Appeals) and the Appellate Tribunal.The court emphasized that agricultural income from tea should be computed based on the estimate of income made under the Income-tax Act. Rule 6 of the Karnataka Agricultural Income-tax Rules, 1957 specifically governs this situation, stating that unassessed agricultural income from tea should be assessed under the State Act after deductions provided for in the State Act. The assessing authority failed to consider the altered income determined by the Commissioner of Income-tax, which necessitated rectification of the assessment order in line with Rule 6.The court held that the assessing authority erred in refusing to rectify the assessment order and should have exercised the power under section 37 of the Agricultural Income-tax Act. Consequently, the revision petition was allowed, the orders of the Deputy Commissioner of Commercial Taxes (Appeals) and the Karnataka Appellate Tribunal were set aside, and the assessing authority was directed to rectify the assessment order based on the petitioner's application and the court's observations.