1967 (7) TMI 36 - HC - Income Tax

Court Invalidates Commissioner's Order, Upholds Partition Deed, Sets Time Limit Interpretation

The court found the partition deed valid, setting aside the Commissioner's order, and interpreted the time limit for exercising revisional powers, ruling ... Petitioner applies u/s 54(1) of the Madras Agricultural Income-tax Act, 1955, to revise an order of the Commissioner of Agricultural Income-tax - Whether the time limit u/s 33A(1) of the IT Act is for the exercise of suo motu rivisional power of CIT - held that suo motu power was exercised by the Commissioner in this case after the time limit had expired Issues:1. Validity of the partition deed under the Madras Agricultural Income-tax Act, 1955.2. Interpretation of the time limit for exercising revisional powers under section 34(2)(c) of the Act.Analysis:Issue 1: Validity of the partition deedThe petitioner applied for an order under section 29(1) of the Madras Agricultural Income-tax Act, 1955, claiming a partition of joint family properties. The Income-tax Officer found it to be a partial partition and rejected the request under section 29(1). The Commissioner upheld this decision, considering the partition not genuine and more of a settlement. The court disagreed with the Commissioner's reasoning, stating that a partial partition is valid under personal law and does not automatically indicate tax evasion. The court found no evidence to suggest the partition was not genuine, especially considering the transfer of registry and separate maintenance of the lands allotted to minors. The court also clarified that the partition deed could not be considered a settlement, as the daughters had inherent rights under the succession Act of 1956. Therefore, the court set aside the Commissioner's order as it was based on erroneous reasoning.Issue 2: Interpretation of the time limit for exercising revisional powersThe court analyzed the time limit under section 34(2)(c) of the Act, which restricts the Commissioner from revising orders made more than three years previously. The court emphasized that this time limit applies to the Commissioner's exercise of powers, regardless of whether the revision is initiated by application or suo motu. The court referred to precedents from the Income-tax Act of 1922 to support this interpretation. The court distinguished a previous case where the time limit was linked to the disposal of applications, emphasizing that the time limit in the present case is for the Commissioner's exercise of revisional powers. Therefore, the court held that the Commissioner exceeded the time limit in this case by exercising suo motu powers after the expiry of three years. Consequently, the court allowed the petition and directed costs to be paid.In conclusion, the court found the partition deed valid and set aside the Commissioner's order. Additionally, the court interpreted the time limit for exercising revisional powers, ruling that the Commissioner exceeded the limit in this case.