Gupta, J. - (1.) One T. V. Kochuvareed who owned rubber plantations in Trichur was assessed by the Agricultural Income-tax officer, Trichur, on a net agricultural income of Rs. 31,662/- and Rs. 30,856/- respectively for the assessment years 1959-60 and 1960-61. The assessee had in his possession immature rubber plantation covering 193 acres during the assessment year 1959-60 and 293 acres during the assessment year 1960-61. In computing the income for the said two years, the Agricultural Income-tax Officer had disallowed out of the expenses claimed for the upkeep and maintenance of the immature area Rs. 2500/- for the year 1959-60 and Rs. 3500/- for the year 1960-61. T. V. Kochuvareed died in 1961 leaving behind him as his heir and legal representative his wife who is the respondent before us. On March 13, 1963 the Commissioner of Agricultural Income-tax issued a notice under Section 34 of the Kerala Agricultural Income-tax Act, 1950 to the respondent, which was served on her on March 15, 1963, proposing to revise suo motu the assessment for the said two years on the ground that the deductions allowed were excessive and without any proper basis as a result of which Rs. 16,800/- for the year 1959-60 and Rs. 25,800/- for 1960-61 had "escaped assessment." The respondent was asked to file objections, if any, within fifteen days of the receipt of the notice. The respondent in her objection contended that the proposed revision of her husband's income which was said to have "escaped assessment" was outside the scope of Section 34. On this objection another notice was served on her on September 26, 1966 stating that the expression "escaped assessment" used in the earlier notice was inadvertent and asking the respondent to file further objections, if she liked, after this clarification. The respondent filed further objections on October 12, 1966 which the Commissioner rejected by his order dated August 23, 1967 and remanded the cases to the Agricultural Income-tax Officer for fresh disposal. The relevant part of this order is as follows:"In these circumstances I find that the disallowance of Rs. 2500/- for 59-60 and Rs. 3500/- for 1960-61 towards upkeep and maintenance of immature area is irregular as it is not based on any rational method. The orders of assessment for these years are therefore set aside and the cases are remanded to the Agricultural Income-tax Officer, Trichur, for fresh disposal according to law after examining each item of expenditure individually and the general charges by applying the principles laid down by the Kerala High Court in its judgment reported in (1964) 52 ITR 629 (Ker)". At the instance of the respondent the Commissioner of Agricultural Income-tax referred the following question of law to the High Court of Kerala under Section 60 (2) of the Kerala Agricultural Income-tax Act, 1950: "Whether on the facts and in the circumstances of the case the Commissioner has jurisdiction to pass an order in this case under Section 34 of the Agricultural Income-tax Act, 1950."
(2.) The High Court by a majority held that the power of revision vested in the Commissioner under Section 34 of the Act could not be invoked for the purpose of assessing income that had "escaped assessment" and that such income could be assessed only the resorting to the procedure under Section 35 of the Act. In these appeals by special leave the appellant questions the correctness of this decision.
(3.) In is necessary to refer to the relevant provisions of the Act before proceeding to consider the contentions of the parties. Section 3 provides that agricultural income-tax shall be charged for each financial year on the total agricultural income of the previous year at the rate or rates specified in the Schedule to the Act. Total agricultural income is defined in Section 2 (s) as the aggregate of all agricultural income mentioned in Section 4 computed in accordance with the provisions of Section 5 including all income of the description specified in Section 9 and all receipts of the description specified in Section 10 (a), (c) and (d). Section 5 enumerates the deductions from the total income which have to be made in computing the agricultural income. Section 17 (1) of the Act requires every person whose total agricultural income during the previous year exceeded the limit which is not chargeable to agricultural income-tax, to furnish to the Agricultural Income-tax Officer a return stating his total agricultural income in that year and the expenditure incurred by him out of that income. Section 18 deals with the powers of the Agricultural Income-tax Officer to assess the total agricultural income of the assessee and determine the sum payable by him. Section 19 authorises the Agricultural Income-tax Officer to cancel the assessment in certain cases at the instance of the assessee and to make a fresh assessment in accordance with the provisions of Section 18. Sec. 31 provides an appeal to the Assistant Commissioner against any order of assessment with which the assessee is dissatisfied. Sub-section (7) of the section requires the Assistant Commissioner to communicate the orders passed by him disposing of the appeal to the assessee and the Commissioner. Under Section 32 an assessee objecting to an order passed by an Assistant Commissioner may appeal to the Appellate Tribunal. Sub-section (2) of the section permits the Commissioner, if he objects to any order passed by the Assistant Commissioner under Section 31, to direct the Agricultural Income-tax Officer to appeal to the appellate Tribunal against such order. Sub-section (5) of Section 32 provides that the Appellate Tribunal after giving both parties an opportunity of being heard may pass such order thereon as he thinks fit. The tribunal is required to communicate the order to the assessee and to the Commissioner. Section 34 and Section 35 are the two most important sections for the purpose of these appeals. S. 34 which confers on the Commissioner revisional powers is in these terms: "34 Revision.- (1) The Commissioner may, of his own motion or on application by an assessee, call for the record of any proceeding under this Act which has been taken by any authority subordinate to him and may make such enquiry or cause such enquiry to be made and subject to the provisions of this Act. may pass such orders thereon as he thinks fit: Provided that he shall not pass any order prejudicial to an assessee without hearing him or giving him a reasonable opportunity of being heard: Provided further that an order passed declining to interfere shall not be deemed to be an order prejudicial to the assessee. (2) Any order passed under sub-section (1) shall be final subject to any reference that may be made to the High Court under Section 60." Section 35 which deals with income escaping assessment reads: "35. Income escaping assessment.- (1) If for any reason agricultural income chargeable to tax under this Act has escaped assessment in any financial year or has been assessed at too low a rate, the Agricultural Income-tax Officer may, at any time within three years, of that end of that year serve on the person liable to pay the tax 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-section (2) of Section 17 and may proceed to assess or re-assess such income and the provisions of this Act shall so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. Provided that the tax shall be charged at the rate at which it would have been charged if such income had not escaped assessment or full assessment, as the case may be: Provided further that the Agricultural Income-tax Officer shall not issue a notice under this sub-section unless he has recorded his reasons for doing so (2) No order of assessment under S. 13 or of assessment or reassessment under sub-s. (1) of this section shall be made after the expiry of three years from the end of the year in which the agricultural income was first assessable: Provided that where a notice under sub-section (1) has been issued within the time therein limited, the assessment or reassessment to be made in pursuance of such notice may be made before the expiry of one year from the date of the service of the notice even if at the time of the assessment or reassessment the three years aforesaid have already elapsed: Provided further that nothing contained in this section limiting the time within which any action may be taken or any order, assessment or reassessment may be made shall apply to a reassessment made under Section 19 or to an assessment or reassessment made in consequence of, or to give effect to any finding or direction contained in an order under Section 31, Section 32, Sec. 34 or Section 60. (3) In computing the period of limitation for the purposes of this section, any period during which the assessment proceeding is stayed by an order or injunction of any court or other competent authority shall be excluded.";