TaxTMI 
TaxTMI 
TaxTMI 
1994 (6) TMI 190
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..... 1,10,360 for the period ended December 31, 1984, relating to the agricultural income-tax of the tea estate for the year 1985-86, under section 24(3) of the Act. Since there was no assessment under the Income tax Act, 1961, applicant No. 1 could not file a certified copy of the order of assessment under the Income-tax Act, 1961, for the purpose of assessment to agricultural income-tax in respect of applicant No. 1 for the year 198586. The certified copy of the order of assessment under the Income-tax Act, 1961, was to be filed under section 8(3) of the Act. For non-filing of such certified copy of the order of assessment under the Income-tax Act, respondent No. 4 made an assessment to agricultural income-tax to the best of his judgment under section 25(5) of the Act at Rs. 1,72,524, after setting off losses for the years 1982-83 and 1983-84. In that order of assessment dated March 26, 1992, respondent No. 4, the Agricultural Income-tax Officer, added a sum of Rs. 2,16,066 representing expenditure shown in the balance-sheet during the year 1985-86. The applicants received a demand notice dated March 26, 1992, in respect of Rs. 1,19,042 payable as agricultural income-tax. They recei....
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.... violates articles 14, 19, and 300A of the Constitution. It is alleged that the requirement of deposit of 50 per cent. of the tax assessed for admission of the appeal has a serious effect on the livelihood of taxpayers and is violative of the provisions of article 21 of the Constitution. The applicants further allege that under similar circumstances and under the same State Government, the assessee is required to pay only the admitted amount of tax, interest or penalty for filing of appeal under the sales tax laws of the State and that the discrimination, by way of asking for deposit of 50 per cent. of the tax assessed for admission of an appeal under the Act, is harsh, oppressive, unjust and violative of article 14 of the Constitution. The respondents deny all the material allegations made by the applicants by filing an affidavit-in-opposition. The case of the respondents is that as the applicants did not produce the order of assessment of the income-tax authority for the assessment year 1985-86, the Agricultural Income-tax Officer completed the assessment to the best of his judgment on the basis of section 25(5) of the Act. The assessment is not barred by limitation for being co....
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....ught to have been levy of interest under the provisions of section 26E of the Act. These matters are to be decided by the appellate authority in case the appeal filed before respondent No. 3 is admitted. The sole question to be determined in this application is whether the requirement of deposit of 50 per cent. of the assessed tax as pre-requisite for admission of appeal against the order of assessment dated March 26, 1992, is ultra vires any of the articles of the Constitution. If the proviso to section 34(1) of the Act is ultra vires articles 14, 19 and 300A or 21 of the Constitution, the appellate order dated December 17, 1992, is to be set aside ; otherwise, the application before this Tribunal is to be rejected. Before examining the constitutional validity of the provisions relating to appeal against the order of assessment under the Act, it will be useful to recite these provisions. Section 34 of the Act, before amendment by the Bengal Agricultural Income-tax (Amendment) Act, 1975 (West Bengal Act VI of 1975), did not contain any provision for deposit of 50 per cent. of the assessed tax for admission of an appeal against an order of assessment under the Act. Section 34, prio....
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....lf-assessment and certain other provisions. " Mr. G. R. Saha, the learned advocate for the applicants, has assailed the provisions regarding deposit of 50 per cent. of the tax assessed for entertainment of an appeal against an order of assessment under the Act on several grounds. His first contention is that the aforesaid Statement of Objects and Reasons for passing the Bengal Act VI of 1975 does not show the necessity for passing such a stringent provision for deposit of 50 per cent. of the tax assessed for entertainment of an appeal. It is contended that as the circumstances necessitating the deposit of 50 per cent. of the tax assessed are not mentioned in the Statement of Objects and Reasons for passing the Act, these provisions for deposit of 50 per cent. of the tax assessed should not continue. This contention cannot be accepted. Reference to the Statement of Objects and Reasons is permissible for understanding the background, the antecedent state of affairs, the surrounding circumstances in relation to the statute, and the evil which the statute sought to remedy. The Statement of Objects and Reasons seeks to explain what reasons induced the mover to introduce the Bill in the....
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.... Act, 1949, as amended in its application to Gujarat by Gujarat Acts No. 8 of 1968 and 5 of 1970 regarding entertainment of an appeal by a person who had not deposited the amount of tax due from him and who had not been able to show to the appellate judge that the deposit of the amount would cause him undue hardship, arising out of his own omission and default. In paragraph 40 of that report the following observations were made by the Supreme Court (at page 1249) : " We fail to understand as to why the Legislature while granting the right of appeal cannot impose conditions for the exercise of such right. In the absence of any special reasons there appears to be no legal or constitutional impediment to the imposition of such conditions. It is permissible, for example, to prescribe a condition in criminal cases that unless a convicted person is released on bail, he must surrender to custody before his appeal against the sentence of imprisonment would be entertained. Likewise, it is permissible to enact a law that no appeal shall lie against an order relating to an assessment of tax unless the tax had been paid. Such a provision was on the statute book in section 30 of the Indian Inc....
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.... Supreme Court on the ground that under the provisions of that section, an appeal could be admitted or entertained but could not be heard or disposed of without pre-deposit of disputed tax under that Act. The question is whether in the present case the requirement of deposit of 50 per cent. of the tax assessed can be stated to be unduly onerous so as to render the right of appeal totally illusory. The case of A. B. Shanthi v. Assistant Director of Inspection [1992] 197 ITR 330 (Mad) related to the question as to whether section 269SS of the Income-tax Act, 1961, under which a borrower was to be under an obligation to take a loan by an account payee cheque or account payee bank draft for an amount of Rs. 10,000 or more was violative of article 14, being punishable under section 276DD of the Income-tax Act. The single Bench decision of the Madras High Court in that case was that section 269SS of the Income-tax Act was violative of article 14 as no obligation was cast on the lender of the money, which was an integral part of a loan transaction and this discrimination by way of leaving the lender out of the purview of section 269SS would amount to a classification which was not a rati....
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....dments, their Lordships of the Gauhati High Court made a reference to the Supreme Court judgment in the case of Kunnathat Thathunni Moopil Nair v. State of Kerala, AIR 1961 SC 552, and were of the opinion that these amendments for preferring appeal and revision were ultra vires article 14 of the Constitution and were clearly confiscatory in character and effect. The view of this Tribunal regarding the confiscatory nature of tax is different. In an unreported decision in the case of Reja Tarapada Solvent Extraction Co. Pvt. Ltd. v. State of West Bengal (Case No. RN38(T) of 1990, disposed of on September 11, 1991), it was held by this Tribunal, on analysing the facts in the case of Kunnathat Thathunni Moopil Nair, AIR 1961 SC 552, that a tax to be confiscatory must be expropriatory. In the case of Kunnathat Thathunni Moopil Nair, AIR 1961 SC 552, the petitioner was making an income of Rs. 3,100 per year out of some forests for which he had to pay, under the Travancore-Cochin Land Tax Act, 1955, as amended in 1957, a tax which would have amounted to Rs. 50,000 a year and had to pay a levy of Rs. 4,000 on the surveyed portion of the said forest. The liability for taxation in respect of....
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....e ground of previous legislative practice. In a recent case of Sri Srinivasa Theatre v. Government of Tamil Nadu, AIR 1992 SC 999, the Supreme Court has held that the theory of legislative practice cannot be brought in to invalidate a legislation. In fact, the decision of the Bombay High Court in the case of Elora Construction Co. v. Municipal Corporation of Greater Bombay, AIR 1980 Bom 162, and of the Calcutta High Court in the case of Chatter Singh Baid v. Corporation of Calcutta, AIR 1984 Cal 283, go to show that the first proviso to section 34(1) of the Act, directing non-entertainment of any appeal against an assessment made under section 25 without deposit of 50 per cent. of the tax assessed by the appellant, is not at all violative of article 14 of the Constitution. Taxation is not an intrusion into the right to private property (Keshavji Ravji and Co. v. CIT [1990] 183 ITR 1 ; AIR 1991 SC 1806) and hence the first proviso to section 34(1) of the Act for deposit of 50 per cent. of the tax for entertainment of an appeal is not violative of article 300A of the Constitution. Article 21 is not attracted in a case of trade or business, either big or small. The right to carry on ....
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.... is not abused by a recalcitrant party and there is no difficulty in enforcement of the order appealed against in case it is ultimately dismissed. It is open to the Legislature to impose an accompanying liability upon a party upon whom a legal right to prefer appeal is conferred and to prescribe conditions for the exercise of that right. In the sales tax laws of this State, already referred to, the deposit of the admitted tax has been made precondition for entertainment of an appeal against an order of assessment of tax. In some statutes such as Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972, and the West Bengal State Tax on Professions, Trades, Callings and Employments Act, 1972, scope has been made for exercise of judicial discretion in the matter of deposit of tax for entertainment of an appeal. The proviso to section 27(1) of the Taxes on Entry of Goods into Calcutta Metropolitan Area Act, 1972, enjoins deposit of an amount equal to 50 per cent. of the tax assessed or such lesser amount as the appellate officer may, after considering all the circumstances of the case, fix for entertainment of an appeal against any order passed under that Act. Rule 19(3) of th....
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.... dismissing the application, I am inclined to give the applicants another opportunity to deposit 50 per cent. of the assessed tax for entertainment of the appeal rejected by respondent No. 3 on December 17, 1992. As already stated, respondent No. 3 twice gave opportunity to the applicants to deposit 50 per cent. of the assessed tax by writing at first on March 27, 1992, and, thereafter, on November 27, 1992. The appeal was rejected not on merits, but on the ground of nondeposit of 50 per cent. of the assessed tax by December 15, 1992. In the circumstances, I think that, in the interest of justice, the applicants should be given one more opportunity to deposit 50 per cent. of the assessed tax for entertainment of the appeal filed by them before respondent No. 3 on July 23, 1992. If the applicants avail of this opportunity the appeal will be heard on the merits. In case the applicants do not avail of this opportunity, the order of respondent No. 3 dated December 17, 1992, will stand. The following order is accordingly passed : The application is allowed for the limited purpose of giving the applicants one more opportunity to proceed with the appeal filed by them on July 23, 1992, b....
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....uch, violative of article 14 of the Constitution. Mr. G. R. Saha, the learned advocate, appearing for the applicants, has, inter alia, relied on a judgment of the Gauhati High Court in the case of Monoranjan Chakraborty v. State of Tripura [1991] 81 STC 291. Mr. S. N. Bose, appearing for the respondents, has contended that the above first proviso to section 34(1) is a machinery provision for enforcing collection of revenue legally payable by the assessee and that it cannot be held to be arbitrary or coercive or ultra vires the Constitution and he has relied on a judgment of the Supreme Court in the case of Shyam Kishore v. Municipal Corporation of Delhi, AIR 1992 SC 2279 to support his case. For a proper appreciation of the true purport and ratio of these two judgments, it is worthwhile to have a look at these judgments in some detail. The Supreme Court judgment, cited by Mr. S. N. Bose relates to a case where section 170(b) of the Delhi Municipal Corporation Act, 1957, was under challenge as being violative of article 14. Under section 170(b) of that Act, it was provided that an appeal against the levy or assessment of any tax under that Act could not be heard or determined by th....
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....sioner, [1981] Lab IC 1015, a decision of the Delhi High Court (to which one of us was a party), the lack of a provision conferring an effective right of appeal against determination of damages under the Employees' Provident Fund Act was held violative of the provisions of the Constitution. That decision is the subject-matter of an appeal which is still pending in this court. It is fortunately not necessary, for the purposes of the present case, to enter into that area in view of the construction which we propose to place on section 170(b). We shall now turn to that question.'' It may be seen from the above that the Supreme Court had no occasion to consider a case and decide what the position would be if the conditions placed on a right of appeal were unduly onerous or such as to render the right of appeal totally illusory. Section 170(b) of the Delhi Act was held to be intra vires the Constitution on the broader interpretation of the same given by the court to say that the section provided that an appeal can be admitted or entertained but only cannot be heard or disposed of without pre-deposit of the disputed tax and that such an interpretation will provide some much needed relief....
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.... 4 SCC 3, it was held by the Supreme Court (at page 583 of AIR 1974 SC) : " Equality is a dynamic concept with many aspects and dimensions and it cannot be 'cribbed, cabined and confined' within traditional and doctrinaire limits. From a positivistic point of view, equality is antithetic to arbitrariness. In fact, equality and arbitrariness are sworn enemies ; one belongs to the rule of law in a republic while the other, to the whim and caprice of an absolute monarch. Where an act is arbitrary, it is implicit in it that it is unequal both according to political logic and constitutional law and is, therefore, violative of article 14. " In the case of Ramana Dayaram Shetty v. International Airport Authority of India, AIR 1979 SC 1628 ; [1979] 3 SCC 489, Bhagwati J. (as His Lordship then was) observed : "A legislation which does not contain any provision which is directly discriminatory may yet offend against the guarantee of equal protection if it confers upon the executive or administrative authority an unguided or uncontrolled discretionary power in the matter of application of law." This interpretation of article 14 was also followed in the case of Maneka Gandhi v. Union of Indi....
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.... is decisive. Their Lordships considered the decisions of the Supreme Court in Kunnathat Thathunni Moopil Nair v. State of Kerala, AIR 1961 SC 552 and Babubhai and Co. v. State of Gujarat, AIR 1985 SC 613 ; [1985] 2 SCC 732, where, at page 736, the Supreme Court observed : "It is not possible to formulate an effective test to determine in which case absence of corrective machinery by way of appeal or revision to a superior authority to rectify an adverse order passed by an authority or body on whom the power is conferred may indicate that the power so conferred is unreasonable or arbitrary. . . ." After considering whether the absence of appeal is likely to make the whole procedure oppressive and arbitrary and render the statutory provisions confiscatory in character and effect, their Lordships of the Gauhati High Court concluded : "Absence of appeal, in the instant case, in our opinion, has made the whole procedure of levy of tax and imposition of penalty highly oppressive and arbitrary. Such law, therefore, has to be held to be harsh, unjust and violative of article 14. We, therefore, hold that the first and the second provisos to sub-section (1) of section 20 and the proviso to ....
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....of income-tax under the enactments relating to Indian income-tax is relevant in this case. Section 8(1B) reads as follows : " (1B). Where the computation of the income derived from tea has not been computed for the purposes of assessment of income-tax under the enactments relating to Indian income-tax, or where such computation has been completed but the assessment under the enactments relating to Indian income-tax has been annulled or set aside under those enactments and no order of assessment under section 25 has been made within six years from the end of the year in which the agricultural income was first assessable, the Agricultural Income-tax Officer shall, notwithstanding anything to the contrary contained in this Act, assess the agricultural income derived from tea in such manner and within such period as may be prescribed and shall determine the sum payable by the assessee on the basis of such assessment ; . . . . " The Agricultural Income-tax Officer has, therefore, to assess the agricultural income derived from tea and determine the sum payable by the assessee on the basis of such assessment, even in a case where no order of assessment has been made under the Indian Inc....
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....ent of the Agricultural Income-tax Officer under section 25 as also certain other orders passed by him under the various provisions of the Act and reads as follows : " 34. Appeal against assessment under this Act. _ (1) Any assessee objecting to the amount of total agricultural income or total world income assessed under section 25 or section 31 or the amount of loss computed under section 26 or the amount of agricultural income-tax determined under section 25 or section 31 or denying his liability to be assessed under this Act or objecting to a refusal of an Agricultural Income-tax Officer to make a fresh assessment under section 31 or objecting to any order under section 30 or section 32 made by an Agricultural Income-tax Officer or objecting to any order imposing any penalty by an Agricultural Incometax Officer under sub-section (1) of section 45 or sub-section (3) of section 24A or objecting to refusal of an Agricultural Income-tax Officer to allow a claim to a refund under section 47, 48 or 51 or the amount of the refund allowed by the Agricultural Income-tax Officer under any of those sections, may appeal to the Assistant Commissioner against the assessment or against such r....
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....ultural income-tax year 1985-86. However, he could not file a certified copy of the order of assessment under the Incometax Act, 1961, for the purpose of assessment of agricultural income-tax in respect of the year 1985-86, as envisaged under section 8(3) of the Act. Hence, respondent No. 4 proceeded to make an assessment to the best of his judgment as provided under section 25(5) of the Act. The relevant portion of the order of assessment dated March 26, 1992, is reproduced below : Rs. "Net profit as shown in the balance-sheet 1,83,934 Add : In absence of certified copy of income-tax assess ment order, the expenditure as shown in the balance-sheet is curtailed to the extent of Rs. 2,16,066 on estimate and to the best of my judgment 2,16,066 Thus total income comes to 4,00,000 Less : 40 per cent. being thereof business income 1,60,000 Balance 60 per cent. being total agricultural income 2,40,000 Less : Loss set off Rs. 1982-83 20,466 1983-84 47,010 67,476 1,72,524 Tax imposed Rs. 1,19,042 Issue demand notice and challan to pay by April 27, 1992. Also calculate the interest under section 26E(i). (Sd.) K. Pramanick, 26-3-92, Agrl. ITO.'' It may be seen that in the computation of the....
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....onclusion that the proviso has rendered the right of appeal nugatory and the law, as has been enacted, is harsh, oppressive, unjust and violative of article 14 of the Constitution. I hold, therefore, that the impugned proviso is arbitrary, unjust and oppressive and should be struck down as being violative of article 14 of the Constitution. In view of the foregoing, the application is allowed. The first proviso to sub-section (1) of section 34 of the Bengal Agricultural Income-tax Act, 1944, is declared to be ultra vires article 14 of the Constitution of India and is, accordingly, struck down. The order dated December 17, 1992, passed by respondent No. 3, namely, the Assistant Commissioner, Agricultural Income-tax, Jalpaiguri Circle, Jalpaiguri, is set aside and he is directed to entertain the appeal filed by the applicant and hear and dispose of the same on the merits without demanding deposit of 50 per cent. of the tax as assessed by the Agricultural Income-tax Officer, Jalpaiguri Range, being respondent No. 4. In doing so, he should arrive at his independent judgment notwithstanding the observations in this judgment regarding the order of assessment dated March 26, 1992, passed b....