2013 (1) TMI 514 - HC - Income Tax

Court quashes Revenue Recovery in Agricultural Tax case due to time limit breach.

SAVY L. PURAYIDAM Versus THE AGRICULTURAL INCOME TAX. PALAKKAD & Others

The Court quashed the Revenue Recovery proceedings against the petitioner under the Agricultural Income Tax Act for the assessment year 1988-1989, as the ... Recovery proceedings - Agricultural Income Tax Act 1950 - tax payable for the assessment year 1988- 1989 - Held that:- Agricultural income against the transferor was first assessable during 1988- 1989. The amended assessment order which led to the Revenue Recovery proceedings in question, was passed only on 06.09.1997. This, admittedly, is beyond the five year period specified in Section 35(2), thus Revenue Recovery proceedings initiated against the petitioner by Exts.P3 and P4, is clearly untenable and need to be quashed. Issues:Challenge to Revenue Recovery proceedings under the Agricultural Income Tax Act for the assessment year 1988-1989.Analysis:The petitioner contested the Revenue Recovery proceedings initiated against him for the recovery of tax payable under the Agricultural Income Tax Act for the assessment year 1988-1989. The petitioner argued that despite making payments as per Ext.P1 and Ext.P2, the recovery proceedings were unjustified, leading to the filing of the writ petition challenging Exts.P3 and P4.The respondents, in their counter affidavit, contended that the petitioner, as the transferee of the properties of an assessee, was liable for the tax due from the transferor under Section 57 of the Agricultural Income Tax Act, 1991. They justified the initiation of the recovery proceedings based on the petitioner's status as the transferee of the properties of M/s.Kunharpathy Cardamom Estate's owner, Sri.Sakthivel.The Court noted that the assessment year in question was 1988-1989 and observed that the assessment order for the transferor, Sri.Sakthivel, was amended on 06.09.1997. Referring to Section 99(3) of the A.I.T. Act, 1991, which preserved the provisions of the 1950 Act for proceedings prior to 1991, the Court highlighted that Section 35(2) of the 1950 Act mandated assessments to be completed within five years from the first assessable year of agricultural income.As the assessment against the transferor was first assessable in 1988-1989 and the amended assessment leading to the Revenue Recovery proceedings was issued in 1997, beyond the five-year period specified in Section 35(2), the Court deemed the Revenue Recovery proceedings against the petitioner as untenable. Consequently, the Court quashed Exts.P3 and P4, allowing the writ petition in favor of the petitioner.