INSPECTING ASSISTANT COMMISSIONER OF AGRICULTURAL INCOME TAX AND SALES TAX, KOZHLKODE vs. POOMULLI MANAKKAL PARAMESWARAN NAMBOODRIPAD

CIVIL APPEAL No. 62/1969Supreme Court[1972] 1 S.C.R. 29818 August 1971Bench: 2 JudgesAuthor: K.S. HEGDE, A.N. GROVER INSPECTING ASSISTANT COMMISSIONER OF AGRICULTURAL.12 pages
AI SummaryDismissed

What were the facts?

The assessee, Poomulli Manakkal Parameswaran Namboodripad, was the karta of a Namboodri family until March 30, 1958, when a partition deed divided the family. Despite this, the Agricultural Income-tax Department attempted to assess him as the karta of his Hindu Undivided Family (HUF) for various assessment years, including 1961-62. The assessee had previously obtained High Court orders setting aside these assessments, with the Department conceding he should be taxed as an 'individual'. In 1965, the Department issued a notice for assessment year 1961-62, relying on an amendment to Section 29 of the Travancore-Cochin Agricultural Income-tax Act, 1950, by Act 12 of 1964. The Department argued this amendment allowed re-assessment as Karta because no decision on the family being divided had been made by the Agricultural Income-tax Officer. The High Court ruled in favour of the assessee.

What did the Supreme Court hold?

The Tribunal held that the amended Section 29 of the Travancore-Cochin Agricultural Income-tax Act, 1950, although retrospective from April 1, 1958, is a machinery section. It is only attracted if one of the two conditions in Section 29(1) is met: either the family was assessed as undivided in the previous year, or it was being assessed for the first time. The deeming provision in Section 29(3) applies only if these conditions are satisfied. In this case, the High Court had repeatedly set aside attempts to assess the family as undivided, and the Department itself had assessed individual members as belonging to a divided family. Therefore, the family was not 'hitherto assessed as a Hindu undivided family' nor was it 'being assessed for the first time as a Hindu undivided family'. The expression 'being assessed for the first time' presupposes the existence of the family, which was not the case here as the family had been divided and ceased to exist prior to the assessment proceedings. The Tribunal found no merit in the appeals, dismissing them. The Tribunal noted with regret the persistence of the Department in harassing the respondent.

What were the issues?

1. Whether, in light of the amended Section 29 of the Travancore-Cochin Agricultural Income-tax Act, 1950 (by Act 12 of 1964), the Department could re-assess the respondent as the Karta of his family for assessment year 1961-62, given that the family had been divided since March 30, 1958, and previous assessments were as an 'individual'. Assessee's contentions: The family had been divided and assessed as individuals for several years. The amended Section 29, even with its retrospective effect, was a machinery section and only applicable if the conditions in Section 29(1) were met. The family was not being assessed for the first time as an HUF, nor was it being assessed as an undivided family in the previous year. The amended section did not permit the creation of a family that had ceased to exist. Revenue's contentions: The amendment to Section 29 by Act 12 of 1964, with retrospective effect from April 1, 1958, permitted the Department to re-assess the respondent as the Karta of the family. This was permissible because no decision that the respondent's family was divided had been rendered by the Agricultural Income-tax Officer, and therefore, the family must be deemed to be an undivided family.

Which sections of the Income-tax Act were involved?

Section 29,Section 3(1),Section 2(m),Section 2(kk)

AI-generated summary — verify with the full judgment below

298 INSPECTING ASSISTANT COMMISSIONER OF AGRICULTURAL. INCOME TAX AND· SALES TAX, KOZlllKODE v. POOMULLI MANAKKAL PARAMESWARAN NAMBOODRIPAD August 18, 1971 (K. S. HEGDE AND A. N. GROVER, JJ.] Travancore-Cochin Agricultural Income-tax Act, 1950, as amended by Act 12of1964, s. 29-Scope of In 1958, there was a partition in the family of the respondent by a registered partition deed. In January 1960, it was conceded on behalf of the Agricultural Income-tax Officer, before the High Court, that the respondent was liable to be taxed only as an 'individual', that is, it was conceded that the respondent's family was a divided family.

Various attempts made by the Department thereafter, to assess the reepondent as Karta of his family were set aside by the High Court, and the res- pondent and other members of his quondam family were asces"d as 'individuals' till 1964. In 1965, notice was again issued to the mpondent with respect to the assessment year 1961-62 for assessing him as the karta of his family, and the respondent filed a writ petition in the High Court. The Department contended that in view of the arcendment of s. 29 of the Travancore-Cochin Agricultural Inco

The order continues below.

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