Limitation for assessment: assessments beyond the prescribed five-year period cannot support revenue recovery despite transferee liability.

Assessment limitation under the Agricultural Income Tax regime is decisive: Section 35(2) of the 1950 Act prescribed a five-year period for completing assessments and an amended assessment made beyond that period cannot validly underpin recovery. The 1991 Act's savings provision preserves application of pre-1991 limitation rules to earlier periods, and the transferee liability provision in the 1991 Act depends on an existing, enforceable tax liability. Resultantly, revenue recovery initiated on an assessment effected after the five-year limitation is untenable and cannot support recovery against the transferee.

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Issues: Whether Revenue Recovery proceedings initiated under Exts.P3 and P4 against the transferee are sustainable where the amended assessment for assessment year 1988-1989 was passed on 06.09.1997, beyond the five year period specified by Section 35(2) of the Agricultural Income Tax Act, 1950, having regard to Section 99(3) of the Agricultural Income Tax Act, 1991 and the transferee liability under Section 57 of the Agricultural Income Tax Act, 1991.

Analysis: The assessment in question relates to agricultural income first assessable in 1988-1989. Section 99(3) of the Agricultural Income Tax Act, 1991 preserves application of the provisions of the 1950 Act for proceedings relating to periods prior to 1991. Section 35(2) of the Agricultural Income Tax Act, 1950 requires assessments to be completed within five years from the end of the year for which the agricultural income was first assessable. The amended assessment upon which recovery was founded was passed on 06.09.1997, which is beyond the five year period under Section 35(2). Although Section 57 of the Agricultural Income Tax Act, 1991 imposes liability on a transferee where an assessee has defaulted, such recovery depends on a valid assessment or tax liability that is not time-barred under the applicable limitation provision.

Conclusion: The Revenue Recovery proceedings under Exts.P3 and P4 are untenable as the amended assessment was effected beyond the five year limitation under Section 35(2) of the Agricultural Income Tax Act, 1950, and therefore the proceedings are quashed; decision is in favour of the assessee.

Ratio Decidendi: Where a statute in force for the relevant period (Section 35(2) of the Agricultural Income Tax Act, 1950) prescribes a five year limitation for completion of assessments and a subsequent amendment is made beyond that period, the resulting assessment cannot validly support revenue recovery, notwithstanding transferee liability under a later Act preserved by a savings provision (Section 99(3) of the Agricultural Income Tax Act, 1991).

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