K. S. PARIPOORNAN J. - At the instance of an assessee, the Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon, by order dated April 17, 1989, has referred the following two questions of law for the decision of this court under section 60(3) of the Kerala Agricultural Income-tax Act, 1950 :
'(a) Whether, on the facts and in the circumstances of the case, the application for registration submitted by the assessee before the assessing authority after the original assessment orders were set aside in revision by the Deputy Commissioner and assessments were to be made afresh by the assessing authority were proper ?
(b) Whether, on the facts and in the circumstances of the case, when the assessing authority had already treated the assessee as registered firm and continued the registration and made assessments on that basis and such orders the assessments were subsequently set aside by the Commissioner in revision under section 34, can the assessee be denied and deprived of the opportunity to apply for registration before assessments were to be made afresh by the assessing authority ?'
The respondent is an assessee to agricultural income-tax. We are concerned with the assessment years 1972-73 to 1980-81. The Agricultural Income-tax Officer completed the assessments as per the assessment orders dated November 15, 1973, September 12, 1978, October 15, 1980, and October 28, 1980, assigning to the assessee the status of a registered firm. In suo motu revisional proceedings, the Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon, by order dated April 16, 1983, set aside the assessments in respect of the firm for the years 1972-73 to 1980-81 and remanded to the assessing authority the assessments for fresh disposal according to law. The Deputy Commissioner held that the grant of registration to the firm and also the renewal thereof were irregular. The status assigned to the firm as a registered firm was found to be improper. So, the assessments were set aside. After remit, the Agricultural Income-tax Officer, Pathanamthitta, passed (revised) assessment orders for the above years on March 1, 1984. While passing the fresh assessment order for the year 1972-73, he noticed that there was a fresh application of the firm as reconstituted on June 16, 1970. The application was found to be in order and registration was granted to the firm as reconstituted on June 16, 1970. The status of 'registered firm' so granted for the year 1972-73 was followed for the subsequent years and the applications for renewal of the registration of the firm filed under section 27 of the Act were allowed for subsequent years. The Deputy Commissioner, in suo motu revisional proceedings, by order dated October 5, 1987, held that the acceptance of the fresh application for registration curing the defects in the original application and assigning the status as a 'registered firm' while passing the revised assessment orders was illegal and irregular. He found that the fresh application at the time of revised assessment proceedings ins not in accordance with the provisions of rule 2 of the Kerala Agricultural Income-tax Rules, 1951, and so, the assessments completed under rule 2(a) assigning the status as a 'registered firm' are irregular. By order dated October 5, 1987, the assessments were set aside and remanded for fresh disposal according to law. The assessee filed an application under section 60(3) of the Act to refer certain questions of law to this court before the Deputy Commissioner. The said application was dismissed by order dated January 19, 1988. Thereupon, the assessee moved this court by filing Original Petition No. 4312 of 1988 and this court directed the Deputy Commissioner to refer the questions of law formulated herein above for the decision of this court and that is how the above reference has come up before us for passing final orders.
The short question that arises for consideration is whether the acceptance of the fresh applications for registration at the time of revised assessment proceedings is in accord with the provisions of the Agricultural Income-tax Rules ?
We heard counsel for the assessee, Mr. Pathrose Mathai, as also counsel for the Revenue, Senior Government Pleader, Mr. T. Karunakaran Nambiar.
In order to render a proper decision on the questions of law referred to this court, it is necessary to refer to section 27 of the Kerala Agricultural Income-tax Act and rule 2 of the Kerala Agricultural Income-tax Rules. Section 27 of the Act reads as follows :
'27. Procedure in registration of firms. - (1) Application may be made to the Agricultural Income-tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to agricultural income-tax or super-tax.
(2) The application shall be made by such person or persons and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may prescribed; and it shall be dealt with by the Agricultural Income-tax Officer in such manner as may be prescribed.'
Rule 2 of the Rules reads as follows :
'2. Any firm constituted under an instrument of partnership specifying the individual shares of the partners may, under the provisions of section 27 of the Agricultural Income-tax Act, 1950 (hereinafter in these rules referred to as the Act), register with the Agricultural Income-tax Officer the particulars contained in the said instrument on application made in this behalf.
Such application shall be signed by all the partners (not being minors personally and shall be made -
(a) before the agricultural income of the firm is assessed for any year under section 18 of the Act, or
(b) if no part of such income of the firm has been assessed for any year under section 18 of the Act, before such income of the firm is assessed under section 35 of the Act, or
(c) with the permission of the Assistant Commissioner of Agricultural Income-tax hearing an appeal under section 31 of the Act, before the assessment is confirmed, reduced, enhanced or annulled, or
(d) if the Assistant Commissioner of Agricultural Income-tax sets aside the assessment and directs and Agricultural Income-tax Officer to make a fresh assessment, before such fresh assessment is made, or
(e) before or after the dissolution of the firm in respect of the assessment or assessments to be made on its agricultural income up to the date of dissolution :
Provided that where an application is made under clause (e) after dissolution of the firm, it shall be signed by all persons who were partners in the firm immediately before dissolution and by the legal representative of any such person who is deceased.'
It is true that the assessments originally made in the status of 'registered firm' were set aside by the Deputy Commissioner on April 16, 1983, and the matter remanded to the assessing authority for fresh disposal according to law. It is in the course of the fresh or revised assessment proceedings that the fresh application for registration of the firm reconstituted on June 16, 1970, was heard and allowed by the Agricultural Income-tax Officer on March 1, 1984. According to the Revenue, this cannot be done. The assessing authority erred in accepting the fresh application at the time of the revised assessment proceedings and it is not in accord with rule 2 of the Agricultural Income-tax Rules, 1951. According to the assessee, once the assessment proceedings were set aside and the matter remanded for fresh disposal according to law, the entire assessment proceedings are pending. No final orders have been passed. Since the assessment proceedings are pendings and the agricultural income of the firm is not assessed under section 18 of the Act, it is open to the assessee to file a fresh application for registration and the officer is bound to consider the same as per rule 2 of the Agricultural Income-tax Rules, 1951. This is permissible in view of rule 2(a) of the Rules. It is further contended that, at any rate, as per rule 2(d) of the Rules, after the order of remit, it is open to the Agricultural Income-tax Officer to receive an application for registration before a fresh assessment is made. The scheme of the Act and the Rules is to enable the firm to file an application for registration before the assessment order for the year is passed. In this case, once the assessment orders were set aside by the Deputy Commissioner on April 16, 1983, the original assessment orders ceased to be in existence and a fresh assessment order had to be passed for all the years. The assessment proceedings were pending. The fresh application for registration of the firm was properly considered by the assessing authority.
We considered the rival pleas. We are of the view that, when the assessments for the years 1972-73 to 1980-81 were set aside by the Deputy Commissioner by order dated April 16, 1983, the original assessment orders passed by the Agricultural Income-tax Officer ceased to be in existence. For the said years, fresh or revised assessment orders had to be passed. The assessment proceedings should be deemed to be pending. It is a case where the agricultural income of the firm was not assessed for those years under section 18 of the Act. The assessments had yet to be made. Till a final order of assessment is passed, the assessment proceedings should be deemed to be pending. In this view of the matter, the fresh application of the firm reconstituted on June 16, 1970, and the grant thereof by the Agricultural Income-tax Officer by order dated March 1, 1984, cannot be said to be in any way irregular, improper or unauthorised. We are of the view that the Deputy Commissioner was unjustified in law in holding, in his order dated October 5, 1987, that the action of the assessing authority in having accepted the fresh application at the time of revised assessment is not in accord with the provisions of rule 2 of the Agricultural Income-tax Rules, 1951. The Deputy Commissioner failed to note that the assessment proceedings for all the years were pending and the application was made before the agricultural income of the firm is assessed for all the years under section 18 of the Act. The matter squarely comes within rule 2(a) of the Agricultural Income-tax Rules, 1951.
It is settled law that assessment proceedings under the Act must be held to be pending from the time they are initiated until they are terminated by the final order of assessment (see Ghanshyamdas v. Regional Asst. CST : [1964]51ITR557(SC) and Addl. Asst. CST v. Firm Jagmohandas Vijay Kumar [1970] 25 STC 74 (SC). On this basis, it will follow that, when the assessments for the years 1972-73 to 1980-81 were set aside in suo motu revisional proceedings by the Deputy Commissioner by order dated April 16, 1983, and the matter was remitted to the assessing authority for fresh disposal according to law, the assessment proceedings must be deemed to be pending, final assessment orders had yet to be passed. A Bench of this Court in G. Karunakaran v. State of Kerala : [1979]120ITR571(Ker) , has held that, when an order of assessment is set aside by a superior authority and remanded to the Assessing Officer, the fresh assessment proceedings made on remit are only a continuation of the original assessment proceedings. In the light of the above decisions, we have no hesitation to hold that the Agricultural Income-tax Officer was justified in granting registration on the fresh application submitted before him during the revised or fresh assessment proceedings after remit. The Deputy Commissioner was in error in taking a contrary view. We, therefore, answer question No. 1 in the affirmative, in favour of the assessee and against the Revenue.
In the light of our discussion and the answer to question No. 1, it is unnecessary to deal with question No. 2 separately and give an answer thereto. The answer to question No. 2 is only academic. The reference is disposed of, as above. There shall be no order as to costs.
A copy of this judgment, under the seal of this court and the signature of the Registrar, shall be forwarded to the Deputy Commissioner of Agricultural Income-tax and Sales Tax, Quilon.