The grievance of the petitioner in the writ petition is against Exts.P6 and P8 orders to the extent they uphold the levy of interest in Ext.P2 order passed by the 1st respondent. 2. Brief facts necessary for disposal of this writ petition are as follows:
For the assessment year 1988-89, the agricultural income tax assessment of the petitioner was completed on 27.3.1993 pursuant to the petitioner declaring an income of Rs.4,60,950/-. The assessment was thereafter modified on 8.10.1998 reckoning the figure of income as Rs.4,13,120/-. In an appeal filed by the petitioner before the Appellate Tribunal, the assessment originally done was modified by Ext.P2 order dated 24.5.2006, and the tax liability of the petitioner was determined as Rs.64,446/- and interest was levied on the said sum for the period from November, 1998 to May, 2006 at the rate of 113.75%. In Ext.P2 order, it is stated that the demand notice already issued to the petitioner, pursuant to Ext.P1 assessment order dated 27.3.1993, stands modified to the extent contemplated in Ext.P2 order. It would appear that against Ext.P2 order, the petitioner preferred an appeal before the First Appellate Authority, who dismissed the appeal. A further appeal was preferred before the 2nd respondent Appellate Tribunal, which, by Ext.P6 order, modified the orders passed by the authorities below to the extent of adopting the rate of tax applicable as 55%, in lieu of 60% that was adopted by the lower authorities. The contention of the petitioner with regard to the legality of the levy of interest in terms of the Agricultural Income Tax Act, 1991, when the assessment was done pursuant to the Agricultural Income Tax Act of 1950, was rejected by the 2nd respondent Tribunal in Ext.P6 order. Aggrieved by Ext.P6 order of the Tribunal, to the extent it did not accept the contention of the petitioner with regard to the legality of the levy of interest, the petitioner preferred a rectification application before the Tribunal. In Ext.P8 order, passed by the Tribunal in the rectification petition, the Tribunal found no reason to interfere with the earlier order passed and accordingly dismissed the rectification petition. It was thereupon that the petitioner challenged Exts.P6 and P8 orders before this Court in the present writ petition.
3. A statement has been filed on behalf of the respondents wherein Ext.P8 order passed by the Appellate Tribunal rejecting the rectification application is sought to be justified. It is also pointed out that against Ext.P6 order of the Tribunal, there was a remedy available to the petitioner by way of revision and insofar as the petitioner had not resorted to the said remedy, the writ petition itself is not maintainable. The petitioner has filed a reply affidavit refuting the averments in the statement filed on behalf of the respondents.
4. I have heard Sri.Ramesh Cherian John, the learned counsel appearing on behalf of the petitioner as also Sri.Liju V. Stephen, the learned Government Pleader appearing on behalf of the respondents.
5. On a consideration of the facts and circumstances of the case as also the submissions made across the Bar, I find that the limited challenge in the writ petition is against that portion of Exts.P6 and P8 orders that uphold the levy of interest, for the period from November, 1998 to May, 2006, on the petitioner. Learned counsel for the petitioner would place reliance on the decision of this Court in Vally Estate v. Additional Agricultural Income Tax Officer - [1994 (1) KLT 799] to contend that insofar as the proceedings for assessment, in relation to the agricultural income of the petitioner for the assessment year 1988-89, had to be done in accordance with the provisions of the Agricultural Income Tax Act, 1950, it was not open to the respondents to levy interest on the tax amount found due and payable by the petitioner for the said assessment year, based on the provisions of the Agricultural Income Tax Act, 1991. He would also place reliance on the judgment of the Honourable Supreme Court in Karimtharuvi Tea Estates Limited v. State of Kerala - [(1966) 60 ITR 262] for the proposition that, in agricultural income tax assessments, the law that is applicable is the law that is prevailing as on the first day of April, of the relevant assessment year. To the same effect is the decision of the Honourable Supreme Court in Sedo Forex International Drill Inc. v. Commissioner of Income-tax - [(2005) 279 ITR 310], which is also cited by the learned counsel for the petitioner. No doubt, as rightly pointed out by counsel for the petitioner, the law that applies for the purposes of assessment under the Agricultural Income Tax Act is the law that is in force as on the 1st day of April in the year of assessment and the assessment of the petitioner for the said assessment year would have to be completed on the basis of the said law. As a matter of fact, the law that was applied to complete the assessment of the petitioner was the law that applied as on the first day of April in the year of assessment. The petitioner, however, contends that the levy of interest was also to be governed by the law in force as on that date. It is relevant to note, in that connection, that the levy of interest is attracted only when there is a non-payment of tax that is assessed. The law that governs the levy of interest must therefore be the law that is in force when the delay in payment of tax is occassioned. It is not in dispute in the instant case that the assessment proceedings, which had been initiated pursuant to the filing of return by the assessee at a point of time when the Agricultural Income Tax Act, 1991 had not yet come into force, was continued thereafter by virtue of the transitional provisions under the Agricultural Income Tax Act, 1991. Section 99 of the Agricultural Income Tax Act, 1991 which deals with repeal and saving reads as follows:
99. Repeal and Saving:-(1) The Agricultural Income Tax Act, 1950 (Act XXII of 1950) is hereby repealed:
Provided that such repeal shall not affect the previous operation of the said Act or any right, title, obligation or liability already acquired, accrued or incurred thereunder, and subject thereto, anything done or any action taken, including any appointment, notification, notice, order, rule, form or regulation, certificate, license or permit in the exercise of any power conferred by or under the said Act, shall be deemed to have been done or taken in the exercise of the powers conferred by or under this Act, as if this Act were in force on the date on which such thing was done or action was taken and all arrears of tax and other amounts due at the commencement of this Act may be recovered, as if they had accrued under this Act and any reference in the said Act to an Officer, Authority, Tribunal or Court shall be construed as reference to the correspondent Officer, Authority, Tribunal or Court appointed or constituted under this Act, and if any doubt arises as to who is such corresponding Officer, authority, Tribunal or Court, the decision of the Government thereon shall be final.
(2) Notwithstanding anything contained in sub- section (1) any application, appeal, revision or other proceeding made or preferred to any officer or authority under the said Act, and pending at the commencement of this Act, shall, after such commencement, stand transferred to and be disposed of by the officer or authority who would have had jurisdiction to entertain such application, appeal, revision or other proceeding under this Act, as if it had been in force on the date on which such application, appeal or revision or other proceedings was made or preferred.
(3) Nothing contained in sub-section (1) shall affect the right to initiate and complete any proceeding pending on the commencement of this Act regarding the assessment, levy, collection and recovery of the tax chargeable under the said Act including that of escaped agricultural income or affect the liability of any person to pay any sum due from him or any existing right of refund under the said Act.
(4) Notwithstanding such repeal of the Agricultural Income Tax Act, 1950 (Act XXII of 1950), any proceedings pending before any Agricultural Income Tax Authority, Appellate Tribunal or High Court at the commencement of this Act, shall be continued and finally decided or determined under the provisions of that Act.
(5) Any arrears of tax or other amount pending and any recovery proceedings initiated or continued shall be continued as if the levy, collection and recovery are made or is continuing under the provisions of this Act and provisions of this Act relating to penalty and interest shall apply to such arrears of tax, or other amount which are in arrears at the commencement of this Act.”
It will be apparent from a reading of the said provision that the repeal of the Agricultural Income Tax Act, 1950 did not affect the previous operation of the said Act or anything done or any action taken, including any notice, order issued in exercise of any power conferred by or under the said Act and the same was deemed to have been done or taken in exercise of the powers conferred by under the 1991 Act. As already noticed, in the instant case, the proceedings that were initiated in terms of the 1950 Act were continued under the 1991 Act and Ext.P1 assessment order was passed only on 27.3.1993, after the coming into force of the new Act. Thereafter, pursuant to a modification of the completed assessment, a modified assessment order was passed on 8.10.1998. It was still thereafter, pursuant to the appellate proceedings before the Appellate Tribunal, that Ext.P2 revised assessment order dated 24.5.2006 was passed which levied interest on the tax amount that was found due and payable by the petitioner for the assessment year 1988-89. It needs to be noted that at the time of passing Ext.P2 revised assessment order, the provisions providing for the levy of interest, for a delay in payment of tax, had already come into force through the 1991 Act. Further, by way of the transitional provisions contained in the 1991 Act, all proceedings initiated under the earlier enactment had to be deemed as proceedings under the later enactment for the purposes of assessment and recovery of tax. In that view of the matter, therefore, the levy of interest for the period from November, 1998 to May, 2006, when Ext.P2 order was passed, cannot be said to be illegal. The petitioner would also rely on the provisions of Section 99 of the 1991 Act and in particular, sub section (5) thereof, which states that any arrears of tax or other amount pending and any recovery proceedings initiated or continued, shall be continued as if the levy, collection and recovery are made or is continuing under the provisions of the 1991 Act and that the provisions of the said Act relating to penalty and interest would apply to such arrears of tax, or other amount which are in arrears at the commencement of the 1991 Act. The petitioner would contend that insofar as a specific provision for a levy of interest in respect of amounts pending by way of arrears of tax is made only in respect of such amounts as are in arrears at the commencement of the 1991 Act, the respondents are not justified in levying interest in respect of the assessment done against the petitioner in respect of the assessment year 1988-89 because, at the time of coming into force of the 1991 Act, there was no final assessment completed against the petitioner pursuant to which there was any arrears due from the petitioner. I am not impressed with the said contention of the petitioner for the reason that the reference to sub section (5) of Section 99 is only in respect of arrears pursuant to assessments that were concluded prior to the coming into force of the 1991 Act. The said provision is an enabling provision that enables the State Government to recover taxes, that became due and payable under the earlier enactment, subsequent to the repealing of the said enactment and the passing of the new enactment. In the case of proceedings that were pending at the time of coming into force of the 1991 enactment, it is the provision of sub section (1) of Section 99 that would apply, to deem those proceedings as proceedings under the 1991 Act for the purposes of assessment and effecting recovery of tax thereafter. In that view of the matter also, I am of the view that the levy of interest on the amounts found due and payable by the petitioner in the instant case cannot be found fault with.
Lastly, I must deal with the contention of the learned counsel for the petitioner that there was no demand notice served on the petitioner prior to levying interest for the delayed payment of tax. As already noted, while finalising the assessment, the respondents had issued a demand notice demanding the balance tax that was found payable by the petitioner consequent to the assessment. Thereafter, when modified orders were passed, including the levy of interest, the order specifically indicated that the demand notice already issued to the petitioner would stand modified to take into account the modifications effected in the modified order. This admittedly included the interest component as well. As the petitioner does not deny having received the original demand notice, it will not be open to him to contend that there was no demand notice in respect of the interest subsequently levied since it was made known to him, through the modified order, that the demand notice earlier issued would also stand modified accordingly. Resultantly, I do not find any reason to interfere with Exts.P6 and P8 orders passed by the respondents, and hence, I dismiss this writ petition, but without any order as to cost.
A.K.JAYASANKARAN NAMBIAR JUDGE prp