HIGH COURT OF KERALA

Chandraprabha Charitable Trust

v.

State of Kerala

K.S.RADHAKRISHNAN AND M.N. KRISHNAN, JJ.

ST REV. CASE NO. 113 OF 2003

JANUARY 11, 2007

Section 39(6), read with sections 35 and 41, of the Kerala Agricultural Income-tax Act, 1991 - Assessment of agricultural income - Time limit for completion of - Assessment year 1993-94 - Assessee filed return for assessment year in question in May, 1994 - Assessment order was passed on 15-6-1998 - Assessee contended that since order of assessment was passed after expiry of more than two years from date of filing of return, assessment was barred by limitation under section 39(6) - Whether return referred to is section 39(6) in return filed under section 35 and as per section 35(1) return should have been submitted prior to 1st July of relevant assessment year i.e., before 1-7-1993 in instant case - Held, yes - Whether since return filed by assessee was after expiry of date and assessment year prescribed under section 35(1), it could be said that assessee failed to furnish return in terms of section 35(1) - Held, yes - Whether, therefore, by virtue of Explanation to section 39(6), time limit of 10 years as provided under section 41 would apply and not time limit of two years as prescribed under section 39(6) and, as such, final assessment order was not time barred - Held, yes

FACTS

For the assessment year 1993-94, the assessee, a charitable trust, filed its return of income in May, 1994. It was assessed to agricultural income, by an assessment order was passed on 15-6-1998. The assessee filed appeal before the AAC contending that since the assessment order was passed after the expiry of more than two years from the date of filing the return, it was barred by limitation under section 39(6). The assessee’s contention, however, was rejected and the validity of the assessment order was upheld. The Tribunal confirmed the decision of the AAC.

On revision petition:

HELD

A combined reading of section 39(1)(b) and section 35(1) shows that the return referred to in section 39(6) is a return filed under section 35. As per section 35(1), every person who is liable to pay tax under the Act, shall furnish a return in the prescribed form before the Ist July of the assessment year and as per section 35(2), the Agrl. ITO can issue notice to any person before the end of the relevant assessment year requiring him to furnish the return within 30 days from the date of service of the notice. In the instant case, the relevant assessment year was 1993-94 and hence, as per section 35(1), return should have been submitted prior to 1-7-1993. But, admittedly, the return was filed by the assessee voluntarily only in May, 1994 i.e., after the expiry of the date and the expiry of the assessment year. Hence, it could not be treated as a return filed under section 35(1). This position is made very clear by the Finance Act, 2000 by adding Explanation to section 39(6). Explanation was made effective from 11-4-1991. Explanation and the time limit mentioned in sub-section (6) would apply only in the case of assessee who has filed return and it shall run from the date of receipt of the return by the Agrl. ITO. In the case of those who are liable to submit return under sub-section (1) of section 35, but has failed to furnish such return, the time limit prescribed under section 41 shall apply. Explanation to section 39(6) refers to the time limit prescribed under section 41. Time limit prescribed under section 41 is ten years and, therefore, the final assessment order was within the time limit prescribed under section 41. (Para 2)

Under the circumstances, the Tribunal was justified in holding that assessment order was not barred by limitation. (Para 3)

Therefore, the revision petition, having no merit, was liable to be dismissed.