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SUPREME COURT OF INDIA
K.S. HEGDE AND A.N. GROVER, JJ.
The Inspecting Assistant Commissioner of Agricultural Income-tax and Sales Tax (Special) Kozhikode (In both the Appeals), Appellant
Versus
Poomulli Manakkal Parameswaran Namboodiripad (In both the Appeals), Respondent.
Civil Appeals Nos. 62 and 63 of 1969, D/- 18-8-1971.
Advocates appeared
Dr. V. A. Seyid Muhammad, Sr. Advocate, (Mr. P. K. Pillai, Advocate for Mr. M. R. Krishna Pillai, Advocate, with him), for Appellant (In both the Appeals); Mr. S. T. Desai, Sr. Advocate, (Mr. A. S. Nambiar, Advocate, with him), for Respondent (In both the Appeals).
Kerala Agricultural Income-tax Act, 1950 - Section 29, 29 (3), (1), 17 (2), 39, 35, 29, 10(a), 18, 14 (1), 2 (m), 3 (1) and 2 (kk) - Constitution of India, 1950 - Article 226 - Madras Nambudri Act, 1932 - Kerala Nambudri Act, 1958 - Kerala Act, 1957 - States Reorganization Act, 1954 - Travancore-Cochin Agricultural Income-tax Act, 1950 - Indian Income-tax Act, 1922 - Section 25-A - Karta - Assessment Year - Agricultural Income-Tax - Whether that family was divided or undivided had been gone into in earlier years - Whether that intention has been expressed with sufficient clarity so as to make it enforceable – Held, Scheme of taxation under Act is similar to that under Indian Income-tax Act, 1922 - Liability to pay tax under Act in respect of any income is incurred as and when income is earned and total income on which tax is payable in any particular previous year gets settled at end of previous year - Section 29 is only a machinery section - This Court has held that Section 25-A of Indian Income-tax Act, 1922 is only a machinery section - Same must be position in regard to Section 29 of Act - That being so, it cannot be said that family was "hitherto assessed as a Hindu undivided family" - Nor can it be said that family was "being assessed for first time as a Hindu undivided family" - As seen earlier that family was sought to be assessed as Hindu undivided family earlier but ultimately assessing authority had to assess members of that family as members of a divided family - In other words it had held family to be divided one - Such a family cannot be considered as being "assessed for first time as a Hindu undivided family" - Expression "which (meaning family) is being assessed for first time as a Hindu undivided family" presupposes existence of family - That is a condition precedent - Section 29 (1) does not permit assessing authority to create a family by rejoining divided parts or otherwise - If that is not so, families which had been divided years back can be again resurrected by assessing authorities for purpose of Act - Family referred to in Section 29 (1) is a family known to law and not a deemed family - Suffice it to say that in this case, family sought to be taxed was non-existing in concerned previous years and hence cannot be considered as a Hindu undivided family "being assessed for first time" -That being so there is no room for application of "deeming" provision in Section 29 (3) - Looking at course of events, one cannot fail to notice with regret persistence with which Department was harassing respondent - To say least conduct of concerned officers in this case cannot inspire confidence in functioning of Department - Appeals dismissed.
Judgment
HEGDE J:- In these appeals by certificates brought by the Department, we have to decide as to what is the true scope of Section 29 of the Kerala Agricultural Income-tax Act, 1950 as amended in 1964 (to be hereinafter referred to as the Act)?
2. This case has a long history which by no means is complimentary to the Department. The common respondent in both these appeals moved the High Court of Kerala under Article 226 of the Constitution praying that the appellant herein may be prohibited from taking further proceedings for assessing him as the Karta of Poomulli Mana to agricultural income-tax for the assessment year 1961-62.
3. The respondent was the karta of a Namboodri family known as Poomulli Mana till March 30, 1958. The Namboodri in the Malabar District of the Kerala State were previously governed by the Madras Nambudri Act, 1932. Now they are governed by the Kerala Nambudri Act, 1958. The respondent s family owned large tracts of lands both in Malabar District which was a part of the Madras State till November 1, 1956 as well as in the erstwhile Travancore and Cochin State. Under the States Reorganization Act, 1954, the new State of Kerala was formed consisting of the former Malabar District of the State of Madras as well as the former Travancore-Cochin State. The new State of Kerala came into being on November 1, 1956. Thereafter the Travancore-Cochin Agricultural Income-tax Act, 1950 was extended to the former Malabar District with effect from April 1, 1957 by Kerala Act 8 of 1957. In the assessment year 1957-58, the assessing authorities assessed Poomulli Mana as an undivided family. That order was quashed by the High Court. On March 30, 1958, the members of the family entered into a registered partition deed under which the family became divided. Thereafter the respondent ceased to be the karta of the family. Nevertheless the authorities under the Act issued notices to the respondent under Section 17 (2) and Section 39 of the Act proposing to assess him as the manager of his H. U. F. for the assessment years 1957-58 and 1958-59. The respondent challenged the validity of those notices before the High court of Kerala. When the case came up for hearing before a Division Bench of that High Court, the learned Counsel appearing for the Department informed the Court that the Department was going to assess the respondent only as an "individual" and not as the karta of his family. On the basis of that representation, the Court passed the following order:
The learned Government Pleader submits, quite categorically that the assessment proposed is of the petitioner as an individual , and not in any other capacity.
In view of the submission we do not consider it necessary to proceed further with the petition. We record the fact that the Department does not propose to assess the petitioner except as an individual and leave him to seek his remedies under the Act or the Constitution in case he feels himself aggrieved by any subsequent action of the Department."
4. Despite this assurance, the Department issued a notice under Section 35 of the Act on February 9, 1960 proposing to assess the respondent as the karta of his H. U. F. for the assessment year 1959-60. The respondent again moved the High Court to quash that notice. The said notice was quashed by a learned single judge of the High Court on January 3, 1961 on the ground that it is against the undertaking given by the Government in the earlier proceedings. That decision was affirmed in appeal. Yet another notice dated November 8, 1961 was issued by the Department under Section 35 to the respondent to show cause why he should not be taxed as the karta of his H. U. F. for the assessment year 1958-59. This notice was again quashed by the High Court by its judgment dated December 17, 1963.
5. Section 29 of the Agricultural Income-tax Act, 1950 was amended by the Kerala legislature by Act 12 of 1964. We shall now set out Section 29 as it stood before its amendment in 1964 as well
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