RAJA BAHADUR KAMAKSHYA NARAIN SINGH Vs. STATE OF BIHAR
LAWS(PAT)-1960-5-9
HIGH COURT OF PATNA
Decided on May 04,1960

RAJA BAHADUR KAMAKHYA NARAYAN SINGH Appellant
VERSUS
STATE OF BIHAR Respondents


Cited Judgements :-

Deputy Commercial Tax Officer VS. Cameo Exports [LAWS(MAD)-2005-12-16] [REFERRED TO]
HUGS ADVERTISING INDUSTRIES VS. COMMERCIAL TAX OFFICER [LAWS(ST)-1999-11-6] [REFERRED TO]
S.M. PARSIA AND CO. VS. CTO/ULTADANGA CHARGE AND ORS. [LAWS(STT)-2003-7-1] [REFERRED TO]


JUDGEMENT

RAMASWAMI, C.J. - (1.)FOR the accounting year 1949-50, a notice was issued against the assessee by the Agricultural Income-tax Officer, Hazaribagh, under section 19(2) of the Bihar Agricultural Income-tax Act. The notice was issued on the 4th July, 1950, and the assessee filed a return on the 15th February, 1951. On the 3rd August, 1952, the AGricultural Income-tax Officer made the assessment on "best judgment" basis and held that the assessee was liable to pay tax of Rs. 1,58,541-1-0. Against this order the assessee presented an appeal to the Deputy Commissioner of Agricultural Income-tax, but the appeal was dismissed on the ground that the assessee did not pay 12 1/2 per cent. of the tax assessed at or before the time of the presentation of the appeal. The Deputy Commissioner of Agricultural Income-tax applied the provision to section 25(1) of the Agricultural Income-tax Act, which reads as follows :
"25. Appeal against assessment under this Act. - (1) Any assessee objecting to the amount of income assessed or the rate at which he is assessed under section 20 or denying his liability to be assessed under this Act or objecting to any order against him under section 21 or 41 made by the Agricultural Income-tax Officer, may appeal to the prescribed authority against the assessment or against such order :

Provided that no appeal shall be entertained by the prescribed authority unless it is satisfied that twelve and a half per centum of the tax assessed has been paid."

(2.)IT is necessary to state that the proviso was added by section 8 of the Bihar Finance Act, 1951 (Bihar Act VII of 1951), which came into force on the 1st of April, 1951. For the accounting year 1950-51 a notice under section 19 was issued against the assessee on the 12th June, 1951, and the assessment was made by the Agricultural Income-tax Officer on "best judgment" basis on the 3rd August, 1952. IT was held by the Agricultural Income-tax Officer that the assessee was liable to pay a tax of Rs. 1,58,541-1-0 on the estimated income of Rs. 3,16,651. Against this assessment order also, the assessee presented an appeal before the Deputy Commissioner of Agricultural Income-tax This appeal was also dismissed on the ground that the assessee had failed to to pay 12 1/2 per cent. of the tax assessed under the proviso to section 25(1) of the Bihar Agricultural Income-tax Act.
At the instance of the assessee the Board of Revenue has submitted the following question of law for the opinion of the High Court under section 28(1) of the Bihar Agricultural Income-tax Act :

"Whether, in the circumstances of the case, payment of a percentage of the tax, as prescribed in the Finance Act, 1951, was a condition precedent to the entertainment of the petition of appeal by the Deputy Commissioner, and whether the petition of appeal could be summarily rejected on the ground of the petitioners failure to deposit the said sum in time ?"

On behalf of the assessee Mr. P. R. Das put forward the argument that the right of appeal was a substantive right and was not merely a matter of procedure, and the right of appeal, therefore, cannot be affected by a statute enacted retrospectively, unless a clear intention to that effect is manifested. It was submitted by learned counsel that the right of appeal became vested in the assessee as soon as a charge was created under section 3 of the Bihar Agricultural Income-tax Act. The contention of learned counsel is that for the accounting year 1949-50 the charge of tax was created on the 31st March, 1950, and for the accounting year 1950-51 the charge was similarly created on the 31st March, 1951. It was submitted on behalf of the assessee that the right of appeal became vested for both the accounting years before the amendment of section 25(1) of the Bihar Agricultural Income-tax Act came into effect, that is, from the 1st of April, 1951. In support of the argument learned counsel referred to the decision of the Federal Court in Chatturam v. Commissioner of Income-tax, in which it was pointed out by the Federal Court that the liability to pay the tax is founded on sections 3 and 4 of the Income-tax Act, which are the charging sections, and section 22, etc., of the Act are the machinery sections for determining the amount of tax. It was held in that case that the jurisdiction of the Income-tax Officer is founded on sections 3 and 4 of the Income-tax Act, which are the charging sections, and the jurisdiction did not depend on the issue or receipt of the notice under section 22(1) or (2) of the Act. Learned counsel also referred to a similar observation of the Judicial Committee in Wallace Brothers and Co. Ltd. v. Commissioner of Income-tax.

I do not accept the argument of Mr. P. R. Das as correct. The two authorities referred to by learned counsel, namely, Chatturam v. Commissioner of Income-tax and Wallace Brothers and Co. Ltd. v. Commissioner of Income-tax only deal with the question as to when the liability to pay the tax arises. That is not the question presented for determination in the present case. The question is at what point of time the right of appeal vests in the assessee. This question is manifestly different from the question as to when the liability to pay the tax arises. It may be conceded that the liability to pay the tax arose under the charging sections on the 31st March, 1950, for the accounting year 1949-50, and on the 31st March, 1951, for the accounting year 1950-51, but the right of appeal did not vest on the assessee on those dates. In my opinion the right of appeal vested in the assessee on the date of initiation of the proceedings for assessment. I think that for the purpose of accrual of the right of appeal the critical date is the date of initiation of the assessment proceeding or, in other words, the date of the commencement of the lis. This view is borne out by the decision of the Supreme Court in Garikapatti Veeraya v. Subbiah Choudhury, where it was pointed out by the learned Chief Justice at page 553 of the report that the right of appeal is a vested right and such a right to enter the superior court accrues to the litigant and exists as on and from the date the lis commences. The gist of the reasoning is that the legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected and are to be regarded as one legal proceedings; and that the institution of the suit carried with it the implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit. It is, therefore, manifest from the decision of the Supreme Court that the date of the institution of the suit or legal proceeding is the critical date, and the date of the cause of action is not relevant for the purpose of determining as to when the right of appeal became vested in the litigant. The same view has been expressed by S. R. Das J. in an earlier decision of the Supreme Court in Hoosein Kasam Dada (India) Ltd. v. State of Madhya Pradesh. At page 999 of the report, the learned judge observed as follows :

"Finally, Sri Ganapathy Iyer faintly urges that until actual assessment there can be no lis and, therefore, no right of appeal can accrue before that event. There are two answers to this plea. Whenever there is a proposition by one party and an opposition to that proposition by another a lis arises. It may be conceded, though not deciding it, that when the assessee files his return a lis may not immediately arise, for under section 11(1) the authority may accept the return as correct and complete. But if the authority is not satisfied as to the correctness of the return and calls for evidence, surely a controversy arises involving a proposition by the assessee and an opposition by the State. The circumstances that the authority who raises the dispute is himself the judge can make no difference, for the authority raises the dispute in the interest of the State and in so acting only represents the State. It will appear from the dates given above that in this case the lis in the sense explained above arose before the date of amendment of the section. Further, even if the lis is to be taken as arising only on the date of assessment, there was a possibility of such a lis arising as soon as proceedings started with the filing of the return, or, at any rate, when the authority called for evidence and started the hearing and the right of appeal must be taken to have been in existence even at those dates. For the purposes of the accrual of the right of appeal the critical and relevant dated is the date of initiation of the proceedings and not the decision itself."

Applying the principle to the present case it is clear that the date of the initiation of the lis or proceeding is the date of notice under section 19(2) of the Agricultural Income-tax, which is to the following effect :

"19. (2) In the case of any person whose total agricultural income is, in the opinion of the Agricultural Income-tax Officer, of such an amount as to render such person liable to agricultural income-tax for any financial year, the Agricultural Income-tax Officer may serve in that year a notice upon him requiring him to furnish, within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth, along with such other particulars as may be provided for in the notice, his total agricultural income during the previous year :

Provided that the Agricultural Income-tax officer may, in his discretion, extend the date for the delivery of the return."

(3.)FOR the accounting year 1950-51 the date of notice under section 19(2) of the Act is the 12th June, 1951, which is later than the date when the proviso to section 25(1) was inserted by the amending Bihar Act VII of 1951. It is manifest, therefore, that for the accounting year 1950-51, the proviso applies and the Deputy Commissioner of Agricultural Income-tax was right in rejecting the petition of appeal of the assessee for failure to pay the prescribed proportion of tax. FOR the accounting year 1949-50, however, the legal position is different. The notice under section 19(2) of the Act was issued on the 4th July, 1950, which is, therefore, the date of the initiation of the assessment proceedings. The amendment of section 25(1) came into effect on the 1st of April, 1951, long after the initiation of the assessment proceeding and the commencement of the lis. I am, therefore, of opinion that for the accounting year 1949-50 the proviso to section 25(1) of the Act does not apply and the appeal of the assessee is governed by the old law, and the Deputy Commissioner of Agricultural Income-tax ought not to have required the payment of the prescribed proportion of the tax before entertaining the appeal. I hold, therefore, that for the accounting year 1949-50, the Deputy Commissioner ought not to have rejected the petition of appeal of the assessee for failure to pay the prescribed proportion of the tax.
I would accordingly answer the question of law referred to the High Court in the manner indicated above. There will be no order as to no order as to costs of this reference.

CHOUDHARY J. - I agree.

Question answered accordingly.



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