Decided on February 19,1952



RAMASWAMI,J. - (1.) THIS case is stated by the Board of Agrl. IT under S. 25(1) of the Bihar Agrl. IT Act (Act VII of 1938). On 28th Dec., 1945, the Agrl. ITO of Darbhanga made an order of assessment holding that the agricultural income of Maharajah of Darbhanga was Rs. 37,43,520 for the accounting year 1944 - 45. The assessee had claimed a sum of Rs. 2,82,192 as capital receipt according to the terms of a zarpeshgi lease. The claim was accepted by the Agrl. ITO who completed the assessment on 28th Dec., 1945. The Asstt. CIT approved the assessment and demand notice was issued. The assessee paid two out of three instalments of the amount of tax but on the 22nd March, 1946, the Agrl. ITO issued notice under S. 26 on the ground that agricultural income from Gaya zarpeshgi lease should have been taxed. In response to the notice the assessee filed a fresh return and after examination of the accounts the Agrl. ITO determined the net income from the Gaya zarpeshgi lease to be Rs.
(2.) ,50,879 and after adding it to the total income imposed a tax of Rs. 39,512 and odd. The assessment was approved by the Asstt. CIT on 23rd March, 1946 The assessee appealed to the CIT who held that no income had escaped assessment and the Agrl. ITO had no jurisdiction to apply s. 26 of the Act. The CIT allowed the appeal. On behalf of the State of Bihar a revision application was filed before the Board of Agricultural Income -tax who has referred the case to the High Court under s. 25(1) of the Act. 2. The question referred are : (1) Whether in view of the circumstances of the case, and particularly the manner in which, after due consideration, the Agrl. ITO in his first judgment dt. the 10th March, 1947, had held that the assessee was not liable to be assessed for the receipt on account of the zarpeshgi lease, the Agrl. ITO had jurisdiction to revise his own order under S. 26 of the Act, and (2) Assuming he had the jurisdiction to revise his own order under S. 26 of the Act, whether the income from the zarpeshgi lease of the assessee was taxable under the Act. The first question is whether the Agrl. ITO was competent under S. 26 of the Act to review the previous order of assessment and to hold that the assessee was liable to be assessed for the income from the properties granted in zarpeshgi lease. On behalf of the assessee Dr. Sultan Ahmad argued that there was no escape of income from the process of assessment and that S. 26 has been wrongly applied in this case. It was contended by the learned counsel that in order to hold that the income had escaped assessment there must have been either some fresh facts brought to the notice of the Agrl. ITO or some alteration in the state of the law. It was urged that a mere change of view on the part of the Agrl. ITO was not sufficient. In my opinion the argument is not correct. Sec. 26 states : -" If for any reason any agricultural income chargeable to agricultural income -tax has escaped assessment for any financial year, or has been assessed at too low a rate, the Agrl. ITO may, at any time within one year of the end of that financial year, serve on the person liable to pay agricultural income -tax on such agricultural income, or in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under Sub -S. (2) of S. 17, and may proceed to assess or reassess such income." Having regard to the opening words of the section, "for any reason", there is no justification for giving a restricted meaning to the word "escape". In its lexicographic sense, the word escape connotes, "to elude" or "to succeed in avoiding". If an item of income is not charged because it is not included in the return it will be proper to say that the income has escaped assessment. Similarly income will be said to have escaped assessment if it has not been charged on account of a mistake or oversight on the part of the taxing authorities. The Agrl. ITO is therefore entitled to proceed under this section to reassess income if he thinks that owing to some mistake in the first assessment a part of the income has not been assessed. It is not necessary that there must be new facts brought to the notice of the Agrl. ITO or that there should be any change in the law. Dr. Sultan Ahmad also stressed the argument that the phrase "escaped assessment" must mean not that the question has been considered and decided in favour of the assessee but the Agrl. ITO had omitted to consider the question at all. Learned counsel contended that the section cannot apply to a case where the Agrl. ITO has upon consideration reached the erroneous conclusion that a part of the income was not assessable. But such a consideration is not possible in view of the later part of the section, "where income . . . . . . . . . has been assessed at too low a rate". This clause cannot refer to a matter of a mere inadvertence but must refer to a deliberate assessment made by the Agrl. ITO in the preceding year with knowledge of the facts. The phrase "escaped assessment" must be construed in a similar manner, and must be held to apply to a case where the Agrl. ITO deliberately reached an erroneous result as much as to a case where the officer had not considered the matter at all but simply omitted assessment of the property on account of inadvertence.
(3.) THERE is a cursus curiae of all the High Courts in support of the interpretation with reference to s. 34 of the Indian IT Act which is in pari materia with S. 26 of the Bihar Agrl. IT Act : CIT vs. Raja of Parlakimedi (1926) ILR 49 Mad 22, Amir Singh Sher Singh vs. CIT (1935) 3 ITR 171., In re P. C. Mallick and D. C. Aich 1940 8 ITR 236, and Chimanram vs. CIT (1943) 11 ITR 44 AIR Bom 132. In Anglo Persian Oil Co., Ltd. vs. CIT (1933) 1 ITR 129, there is also a dictum of Sir George Rankin to the effect that S. 34 is applicable to put right an assessment by which a deduction has been improperly allowed and that there is nothing in S. 34 which limits it to the case of non -disclosure by the assessee or discovery of new matter or inadvertence.;

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