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1962 DIGILAW 203 (CAL)

DHARANI MOHAN ROY v. STATE OF WEST BENGAL

1962-08-27

BANERJEE

body1962
( 1 ) THE petitioner is an intermediary and his estate vested in the State Government under the provisions of the West Bengal Estates Acquisition Act. The vesting, under the scheme of the Act, does not relieve an intermediary of his liability for payment of arrears of land revenue, cesses, taxes and other impositions by the State, relating to any period prior to the date of vesting. Section 7 of the West Bengal Estates Acquisition Act is of relevant consideration in this connection and is set out below :-"section 7 (1 ). All arrears of land revenue, cesses, taxes and other impositions by the State relating to any period prior to the date of vesting lawfully recoverable from any intermediary in respect of his share in any estate which vests in the State under Section 5 shall, after the date of vesting, continue to be recoverable from such intermediary, and shall without prejudice to any other mode of recovery, be recoverable under an order of Collector by deduction of the amount of such arrears from the money payable as compensation to such intermediary under this Act: provided that where the application of an intermediary under Section 9 is allowed by the State Government and the intermediary agrees writing that the whole of the compensation money payable to him as well as the amount recovered by the State Government under the provisions of Section 9 may be adjusted against the arrears recoverable from the intermediary under the foregoing paragraph, no other mode of recovery shall be adopted for the recovery of any such arrears, except the balance, if any, remaining due after such adjustment, and suits and proceedings, if any, pending for the recovery of any such arrears shall remain stayed until such adjustment has been made. (2) * * * * * * * * * * * * *" ( 2 ) SECTION 9, referred to in the proviso to the above quoted section reads as follows:-"section 9 (1) : An intermediary may apply to the State Government for recovery by the State Government of all sums recoverable by him under the provisions of Section 8. (2) The State Government may grant or refuse such application as it thinks fit but no such application shall be granted if made after the expiry of twelve months from the date of vesting unless the intermediary makes an agreement in writing referred to in the proviso to sub-section (1) of Section 7. (3) If the State Government grants the application, it shall be competent for the State Government to recover all such sums as if they were public demands, or in any other manner as if the State Government were the intermediary. * * * * * * * * * * * * (4) * * * * * * * * * * * (5)* * * * * * * * * * *" ( 3 ) THE petitioner states that at the time of vesting of his estate in the State Government, a sum of Rs. 54,101-5-7 was due to him as arrears of rent etc. He applied before the State Government, under Section 9 of the West Bengal Estates Acquisition Act, for recovery, by the State Government, of the said arrears and that the State Government granted the application by an order, dated March 25, 1958, which is set out below:-"whereas an application has been made after a period of 12 months from the date of vesting by Shri Dharani Mohan Roy son of late Peary Mohan Roy, represented by his Constituted Attorney Shri Prafulla Kumar Mitra, 85 Amherst Street, Calcutta, under Section 9 of the West Bengal Estates Acquisition Act, 1953 (West Bengal Act I of 1954), for recovery by the State Government of all sums recoverable by him under the provisions of Section 8 of the said Act in respect of all interests held by him as intermediary in the district of Howrah, Hooghly and Midnapore; whereas the applicant has agreed in writing that the whole of the compensation money payable to him as well as the amount recovered by the State Government under the provisions of said Section 9 may be adjusted against the arrears recoverable from the intermediary under Section 7; now, therefore in exercise of the power conferred by sub-section (2) of Section 9 of the said Act, the Government is pleased to grant the said application. " ( 4 ) THE petitioner says that by reason of the aforesaid order, he became entitled to the benefits of the proviso to Section 7 (1) of the West Bengal Estates Acquisition Act and the State Government was debarred from adopting any other mode for recovery of tax in arrears and due from him, relating to a period prior to the date of vesting, excepting for any balance due after adjustment of arrears against the compensation and arrears of rent recoverable by the State Government. ( 5 ) THE Agricultural Income-Tax Officer, Range II, by an order, dated December 27, 1960, assessed agricultural income-tax on the petitioner for the assessment year 1955-56 (corresponding to the accounting year 1954-55), amounting to Rs. 30,102. 94 np. , and by a letter, dated December 12, 1960, called upon the petitioner to deposit the sum in the Calcutta Try by January 20, 1961. Thereupon, on January 19, 1961, the petitioner wrote the following letter to the Agricultural Income-Tax Officer:-"i agreed in writing with the Government of West Bengal, Land and Land Revenue Department, Land Reforms Branch that the whole of the compensation money payable to me as well as the amount recoverable by the State Government under the provisions of Section 9 of the West Bengal Estates Acquisition Act 1953, may be adjusted against the arrears of taxes, revenue etc. recoverable from me. The said Government was pleased to grant my said application by the order No. 5366/l Ref. dated 25. 3. 58. The said order may be produced before you if required. In this connection I beg to draw your kind attention to Sections 7 and 9 of the West Bengal Estates Acquisition Act, 1953. Therefore all the outstanding taxes due from me up-to-date having been stayed till it is paid in full by adjustment. " ( 6 ) TO the aforesaid letter, the Agricultural Income-Tax Officer gave the following reply, dated February 2, 1961:-"i am to state that I have been advised that the tax for the assessment year 1955-56 is not recoverable under Section 7 of the Estates Acquisition Act from the compensation payable. You are, therefore, requested to please pay the arrear dues. You are, therefore, requested to please pay the arrear dues. * * * * * * *" ( 7 ) TO the above letter the petitioner replied, on February 10, 1961, in the following language :-"i am to state that Section 7 (1) provides that all arrears of revenue, cess, taxes and other impositions by the State relating to any period prior to the date of vesting should be recovered by adjustment from the compensation money. This estate vested to Government on 1st Baisak 1362 B. S. and the tax of Rs. 30102. 94 np. relates for the year 1361 B. S. (accounting year 1954-55 ). Thus it is clear that the tax in question is due for the period prior to the date of vesting and as such it is recoverable by adjustment from the compensation money payable to this estate. " ( 8 ) THE contention made by the petitioner was repelled by the Agricultural Income-Tax Officer by his letter, dated February 17, 1961, on the following line of reasoning :-"tax is charged for each financial year under Section 3. In our parlance this is the assessment year. In respect of the assessment year 1955-56 you were assessed to a tax of Rs. 30,102. 94 np. This charge to tax accrued under Section 3 in the financial year 1955-56 (or the assessment year 1955) which is posterior to the vesting of the estate. * * * ** * *. ( 9 ) I would now request you to please see your way to pay the tax by the date in the challan enclosed herewith viz. : 27. 2. 61. In the event of your failure to pay penalty under Section 45 (1) may be imposed. " ( 10 ) THE petitioner also applied before the Commissioner of Agricultural Income-Tax for similar relief, but the Commissioner also rejected his prayer. ( 11 ) IT is in these circumstances that the petitioner moves the Court for a Writ in the nature of Mandamus restraining the respondent from giving effect to the notice of demand. " ( 10 ) THE petitioner also applied before the Commissioner of Agricultural Income-Tax for similar relief, but the Commissioner also rejected his prayer. ( 11 ) IT is in these circumstances that the petitioner moves the Court for a Writ in the nature of Mandamus restraining the respondent from giving effect to the notice of demand. ( 12 ) THE Agricultural Income-Tax Officer in showing cause states in his affidavit-in-opposition as follows:-" * * * * * * * * * * * i state, however, that the provisions of Section 9 of the West Bengal Estates Acquisition Act relates to realisation of arrears of rent prior to the vesting of the estate but the amount realised by the Government cannot be appropriated towards agricultural income-tax which relates to a period subsequent to the vesting of the estate of the petitioner in the State of West Bengal under the provisions of the West Bengal Estates Acquisition Act. " ( 13 ) MR. Salil Kumar Roy Chowdhury, learned Advocate for the petitioner, stated that the vesting of the petitioner's estate took place with effect from the 1st of Baisakh, 1362 B. S. (corresponding to April 15, 1955 ). For any period posterior to that date, Mr. Roy Chowdhury contended, the petitioner was not liable to pay agricultural income-tax and the tax assessed on the petitioner was referable to a period prior to the vesting. He further contended that, by reason of the agreement made by the petitioner, the whole of the compensation money payable to him as well as the amount recovered by the State Government under Section 9 of the West Bengal Estates Acquisition Act, would have to be adjusted against the arrears of revenue, cesses and taxes recoverable from him and that the respondent State was not entitled, under the proviso to Section 7 (1) of the West Bengal Estates Acquisition Act, to resort to any other mode of recovery excepting for the balance due after such adjustment. ( 14 ) MR. Roy Chowdhury is right in his contention that the assessment could not relate to a period posterior to the date of vesting. Paragraph 5 of the affidavit-in-opposition is to that extent wrong and confusing, because for any period after the vesting the quondam proprietor does not derive any agricultural income and is not liable to pay tax. Roy Chowdhury is right in his contention that the assessment could not relate to a period posterior to the date of vesting. Paragraph 5 of the affidavit-in-opposition is to that extent wrong and confusing, because for any period after the vesting the quondam proprietor does not derive any agricultural income and is not liable to pay tax. But the question for my consideration is whether the tax in dispute was in arrears, when the vesting took place. Paragraph 5 of the affidavit-in-opposition is to that extent wrong and confusing, because for any period after the vesting the quondam proprietor does not derive any agricultural income and is not liable to pay tax. But the question for my consideration is whether the tax in dispute was in arrears, when the vesting took place. ( 15 ) SECTION 2 (11) of the Bengal Agricultural Income-Tax Act (hereinafter referred to as the taxing Act) defines "previous year" as:-"previous year" means - (a) the twelve month ending on the 31st day of March next preceding the year for which the assessment is to be made, or, if the accounts of the assessee have been made up to a date within the said twelve months in respect of a year ending on any date other than the 31st day of March, then at the option of the assessee the year ending on the day to which his accounts have been so made up; (b) such period as may be determined by the Commissioner in the particular case of any person or class of persons; (c)* * * * * * * * * * * *"section 3 of the taxing Act is the charging section and reads as follows :-"agricultural income-tax shall be charged for each financial year in accordance with and subject to the provisions of this Act, at the rate or rates specified in the Schedule in respect of the total agricultural income of the previous year of every individual, Hindu undivided family, company, firm or other association of persons * * * * * * * * * *"section 6 of the taxing Act deals with the computation of tax and the material portion of the same is to the following effect:-"agricultural income-tax shall be payable by an assessee under the head 'agricultural income from rent or revenue' in respect of all rent and revenue, including any Local Cess or Education Cess referred to in Section 4 derived from land referred to in sub-clause (a) of clause (1) of Section 2 included in his total agricultural income and received in the previous year, subject to the following allowance, namely:-* * * * * * * * * * * * * section 33 deals with the notice of demand and is set out below:-"when any agricultural income-tax or penalty is due in consequence of any order passed under or in pursuance of this Act, the Agricultural Income-tax Officer shall serve upon the assessee or other person liable to pay such tax or penalty a notice of demand in the prescribed form specifying the sum so payable. Section 44 prescribes the time when tax is payable and a material extract therefrom is set out below:-"44 (1) Any amount specified as payable in a notice of demand under Section 33 or an order under Section 35, Section 36 or Section 37, shall be paid within the time, at the place and to the person mentioned in the notice or order, or if a time is not so mentioned, then on or before the first day of the second month following the date of the service of the notice or order, and any assessee failing so to pay shall be deemed to be in default: * * * * * * * * * * * * * ( 16 ) MR. Masud, learned Advocate for the respondent, contended that the tax for the accounting year 1954-55 was computed in the assessment year 1955-56, because under Section 6 read with Section 2 (11) of the taxing Act, the tax is payable by the assessee on the income of the previous year. He further contended that only on such assessment being computed that the tax became due. The Agricultural Income-tax Officer is then required to serve a notice of demand under Section 33 of the taxing Act, and it was only on service of the notice that the tax becomes payable and if not paid falls in arrears only on the expiry of the time specified in the notice. He argued that the provision for adjustment against compensation, as in the proviso to Section 7 (1) of the West Bengal Estates Acquisition Act, related to tax in arrears at the time of vesting and not to tax which fall into arrears subsequent thereto. He, however, very fairly conceded that the statement in the affidavit-in-opposition that the tax related to a period posterior to the date of vesting was not correctly stated. ( 17 ) I am unable to uphold the argument advanced by Mr. Masud. It is no doubt true that agricultural income-tax does not become recoverable until and unless the time fixed by the notice of demand expires and in that sense does not fall in arrears. ( 17 ) I am unable to uphold the argument advanced by Mr. Masud. It is no doubt true that agricultural income-tax does not become recoverable until and unless the time fixed by the notice of demand expires and in that sense does not fall in arrears. But once it falls into arrears and it relates to any period prior to the vesting, it also falls within the main part of Section 7 (1) of the West Bengal Estates Acquisition Act and gains the protection from other modes of recovery of tax, if the assessee satisfies the other requirements of the proviso to Section 7 (1 ). It is not disputed that the petitioner otherwise fulfils the conditions of the proviso to Section 7 (1) of the West Bengal Estates Acquisition Act. He is, therefore, entitled to the benefits thereof. No steps for realisation of the agricultural income-tax relating to the period prior to the vesting, can be taken against him except for the balance that may be left after adjustment of the arrears of tax against compensation. ( 18 ) FOR the reasons aforesaid I make this Rule absolute and direct the respondent not to enforce the demand for agricultural income-tax against the petitioner excepting by adjustment in the first instance and thereafter excepting for the balance which may be left after adjustment of the tax against the compensation payable. Let a Writ of Mandamus accordingly issue. There will be no order as to costs. The petitioner is relieved of all undertakings given by him to this Court. Petition allowed.