SALAR JUNG SUGAR MILLS LTD Vs. STATE OF MYSORE

JUDGEMENT

(1.) The petitioner who is an assessee under the Mysore Agricultural Income-tax Act, 1957 (hereinafter called the 'Act), has challenged the provisional assessment made for the assessment year 1969-70 and the proceedings taken tor recovery of the tax so assessed. For the assessment year 1969-70, the petitioner filed a return on 30th May 1969 showing a net profit of Rs. 2,61,585. in arriving at the net prolts, the petitioner had claimed certain deductions. The Agricultural Income-tax Officer, Bellary (Respondent 4) issued a notice on 22-11-1969 stating that he proposed to disallow a sum of Rs. 1,99,017 claimed as deduction by the petitioner and to make a provisional assessment on the income of Rs. 4,60,602. Over-ruling the objections raised by the petitioner to the said proposal the 4th Respondent made a provisional assessment order on 21-2-1970 assessing a tax of Rs. 1,25,606. The notice of demand which ought to have followed the provisional assessment was, in fact, issued on 11-2-1970 in advance of the provisional assessment order. Since the petitioner did not pay the tax so demanded, a penalty of Rs. 15,700-75 was levied and proceedings were initiated by the 5th Respondent for the recovery of the provisional tax and penalty. Thereupon the petitioner approached this Court for relief under Article 226 of the Constitution of India.

(2.) The contention of Sri Venugopalachary, the learned counsel for the petitioner is. that the provisional assessment order made by the 4th Respondent under sub-sec. (1) of S. 20 of the Act is illegal as the assessing authority has no jurisdiction to make a provisional assessment order on an income not as mitted by the assessee. The contention of the learned counsel in our opinuion, is well founded. Sub-sec. (1) of S. 20 which empowers the assessing authority to make a provisional assessment order reads thus:

(3.) The above provision is in pari materia with S. 141 of the Income-tax Act, 1961 (Central Act 43 of 1961) . In Jaipur Udyog Limited v. Commissioner of Income-tax, AIR. l969 SC. 470 the Supreme Court had occasion to pronounce on the ambit of the power of the Income-tax Officer under S. 141 of the Central Income-tax Act. It has been laid down in the said decision that the scheme of S. 141 is to call upon the assessee to pay tax provisionally at the appropriate rate on what he admits as his taxable income, subject to the benefit of the allowances under sub-sec. (2) and that the section does not permit an enquiry to be made whether the total income returned by the assessee exceeds the amount admitted by him, nor whether the allowances or deductions claimed are admissible. The scheme of S. 20(1) of the Act being similar to S. 141 of the Income-tax Act, 1961, the assessing authority has power only to call upon an assessee to pay tax provisionally on what be admits as his taxable income. The 4th Respondent in making the provisional assessment order has exceeded his jurisdiction in calling upon the petitioner to pay tax on income not admitted. Therefore the impugned provisional assessment order, the demand based thereon and the recovery proceedings are liable to be set aside and accordingly they are quashed. The petitioner is entitled to the costs of this writ petition. Advocate's fee Rs. 100.