STATE OF BIHAR Vs. MAHARAJADHIRAJA SIR KAMESHWAR SINGH BAHADUR OF DARBHANGA

JUDGEMENT

(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.

(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.