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PETITIONER: DELHI CLOTH & GENERAL MILLS CO. LTD.

       Vs.

RESPONDENT: STATE OF U.P. & ORS.

DATE OF JUDGMENT18/10/1978

BENCH:

ACT:      U.P. Agricultural Income tax Act, 1948-5. 6(1) scope of - Assessee given option to select one of the two alternative methods  of   computation  of   agricultural   income-Option exercised  with  the  return  changed  when  filing  revised return-If permissible.

HEADNOTE:      Section 6(1)  of the  U.P. Agricultural Income tax Act, 1948 gives an option to an assessee to select one of the two alternative methods of computation of agricultural income as provided in  s. 6(2), whichever is more advantageous to him. Such option  is required  to be  indicated  along  with  his return   submitted    under   s.   15   of   the   Act.      While submitting  its return  for the  assessment  year 1954-55 the  assessee chose  the option to be assessed under s. 6(2)  (b) of the Act. It later submitted a revised return under s.  15(4) but stuck to the option to be assessed under s. 6(2)  (b) .  The assessing authority, notwithstanding the filing of  these two returns by the assesses, called upon it to file  a return  of the  income computed under s. 6(2)(a). Thereafter the  assessing authority  served a  notice on the assesses requiring  it to  produce evidence in support of it return. After  the assesses  produced the required evidence, the assessing  authority issued  a notice to the effect that certain  income   escaped  assessment  and  called  for  its objections, if  any. The  assesses asked  for inspection  of records; but it was refused. At the instance of the assesses the Revision  Board directed  true  assessing  authority  to permit inspection  of the  record. After  inspection of  the record he  assesses filed  a fresh  (third) return.  At this stage the  assesses preferred  the method  of computation of income provided under s. 6(2)(a) instead of s. 6(2)(b) which it chose earlier.      Without  deciding   the  question  as  to  whether  the assesses was  entitled to  change the  option, the assessing authority made  a best judgment assessment under s. 6(2)(b). On appeal  the Commissioner directed the assessing authority to first  decide the  question relating  to change of option whereupon the assessing authority held that the assesses had no right to change its earlier option. On further appeal the Revision Board upheld the order of the assessing authority.      In the  assessee’s writ  petition challenging the order of the  assessing authority a single Judge of the High Court held that  it was  open to the assesses to change its option at the  time of filing a subsequent or fresh return. But the Division Bench  was of  the view  that the  assesses had  no right to change its option.      In its  appeal the assessee contended before this Court that (1) it is open to the assessee to change its option not

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merely every  year but  during the  year by  filing a  fresh return or  a revised  return provided  it is done before tho assessment is  completed (2) although the assessee filed its first return and the 110 revised return,  the assessing  authority  issued  a  notice under  8.  15(3)  along  with  a  statement  of  provisional estimate computed in accordance with s. 6(2) (a) pursuant to which the  assessee filed  the third  return exercising  the option for  computation in  accordance with s. 6(2) (a) and, therefore,  the   assessing  authority   had  to   make  the assessment in  accordance with  s. 6(2)  (a) and  (3) in any event since  the assessing authority had proceeded to make a best judgment assessment under s. 16(4) it had no option but to make  the assessment  with due  regard to the provisional estimate served  under s.  15(3B) notwithstanding any option exercised under s. 6(1) of the Act. Allowing the appeals, ^      HELD: The Division Bench of the High Court was wrong in holding that  when  once  the  option  is  exercised  by  an assessee by filing the requisite declaration he will have no right to  change the  option by  filing a  fresh  return  or revised return  before the assessment is made for that year. [121 Cl      1. Whatever restrictions had been imposed on the change of option  by the  original proviso  to  s.  6(1)  had  been removed and  the concept  of "first return’ was deleted from r. 5  That being  so, the  expression "his return of income" occurring in r. S would apply to any of returns contemplated under s.  15, In  fact r.  5  is  obligatory  and  makes  it incumbent upon  an assessee  to file, along with his return, a, declaration  indicating his  option under  s.  6(1).  The exercise of  such  option.  including  a  change  of  option indicated in  the declaration  filed along with a subsequent return or  a fresh return or a revised return, will be valid provided the return itself is validly submitted. [120 G-H]      2. If  the return  was filed  under s.  15(4), then  in order to avail of the change of the option the assessee will have to  show that  it was  really a  revised return  in the sense that  the same  had been  filed  because  of  a  wrong statement discovered  in the  earlier returns.  Clearly  the third return  was filed in response to) the notice issued by the assessing  authority under  s. 15(3).  This  return  was rejected by  the assessing  authority not on the ground that it had  been filed  beyond time  but on  the ground that the assessee had  no right  to change  its option which suggests that the  return was  treated by  the assessing authority as having been  filed within  time but  was rejected  on merits holding that  the assessee  was not  entitled to  change its option. Therefore  the third return was not a revised return under s.  15(4) but  a fresh  return filed  within  time  in response to  the notice  under s.  15(3)  and  as  such  the assessee was  entitled to  change its  option and  have  the computation made  in accordance  with s.  6(2) (a). The fact that the assessee had produced come evidence in pursuance to the notice  in relation  to its  earlier returns  or that it took inspection of the records cannot and does not amount to acquiescence or  waiver of  its right  to file a declaration indicating its  option afresh  along with the return validly filed in  response to  the notice under s. 15(3) of the Act. [121 F-G;122D; G-H]      3. Moreover, irrespective of whatever option might have been exercised  by the assessee the best judgment assessment has to  be made  by the  assessing authority  by having  due

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regard  to   the  statement   of  provisional   estimate  of agricultural income  made in  accordance with  s. 6(2)  (a). Under s.  16(4) whenever the assessing authority proceeds to make the  assessment the  same is  required to be made "with due regard to the statement, if any, sent under 111 s. 15(3-B)  notwithstanding any  option exercised  under  s. 5(1)." The  scheme of  s. 16(4) clearly shows that in regard to the  best judgment assessment there is nothing sacrosanct about the  option exercised  by the  assessee under s. 6(1); equally it  can be  said that  in regard  to the assessments other that  best judgment assessments under the scheme of s. 15 there  is nothing  sacrosanct about tho particular option previously exercised by the assessee and he need not be held bound by  it provided  he changes  the option  by  filing  a subsequent or a fresh or a revised return in accordance with the applicable  provisions in s. 15. So far as the assessing authority is  concerned such  option,  whether  original  or subsequent, would be binding on it. [124F; H]

JUDGMENT:      CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1249 of 1968 and 1946 of 1972.      From the  Judgment and  order dated  27-9-1965  of  the Allahabad High Court in Special Appeal No. 95/62.      V. S. Desai and Rameshwar Nath for the Appellant (In CA 1946/ 72) .      G. N. Dikshit and O. P. Rana for the Respondent in C.A. 1946/ 72. D      The Judgment of the Court was delivered by      TULZAPURKAR, J.-  These appeals  by  certificate  under Art. 133(1)  of the Constitution raise an important question whether  an   assessee  having  once  exercised  the  option regarding the  method of  computation  of  his  agricultural income by  filing the  requisite declaration along- with his return is  entitled to  change the  option  under  the  U.P. Agricultural Income Tax Act, 1948 ?      The appellant-assessee  (The Delhi  Cloth  and  General Mills Company  Limited, Delhi) is a company registered under the Indian  Companies Act and has certain agricultural farms at  Daurala   in  Meerut  District  from  which  it  derives agricultural  income  chargeable  to  levy  of  agricultural income-tax and super tax under s. 3 of the U.P. Agricultural Income-Tax Act, 1948 (hereinafter called ’the Act’). Section 6(2)  of   the  Act  provides  two  alternative  methods  of computation  of   agricultural  income,  (a)  Rental  method (multiple of  Annual Rental  income) mentioned in clause (a) or (b);  Produce method (subject to deductions) mentioned in clause (b)  and under  s. 6(1)  an option  is given  to  the assessee to  select one or the other method whichever may be advantageous to him. Such option is required to be indicated ill a  Declaration in the prescribed Form No. A.I.T.-2 to be submitted under  Rule S  of the U.P. Agricultural Income-tax Rules, 1949 alongwith his return under s. 15 of the Act. For the assessment  year 1954-55  a return  of the  agricultural income for  the relevant  previous year ending June 30, 1954 (1361 Fasli) was filed under 112 s. 15(2)  of the  Act on November 27, 1954 by the appellant- assessee, returning  a net income of Rs. 1,06,664. Alongwith the return a declaration in Form No. A.I.T.-2 was also filed indicating the  option to  be assessed in accordance with s. 6(2) (b) of the Act. On April 4, 1955 the appellant-assessee

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discovering some mistake in the said re-turn filed a revised return under  s. 15(4)  of the Act showing the net income at Rs. 98,854  and explaining  that the  difference was  due to certain further  deductions that  were claimed on account of expenses, and  while filing  such revised  return the option unders.s-2 (b)  was adhered to. However, notwithstanding the filing of  the aforesaid  two returns,  one on  November 27, 1954 and  the revised  return on  April 4, 1955, on April 7, 1955 the  Assessing Authority  served  upon  the  appellant- assessee a  notice under  s.15(3) requiring  the  latter  to furnish within  period specified  in the  notice a return in the prescribed  form and  verified in  the prescribed manner setting forth  its total agricultural income in the previous year relevant  to the  assessment year 1954-55 and alongwith such  notice  a  provisional  estimate  of  the  assessee’s. agricultural income  for the previous year (i.e. 1361 Fasli) computed under  s.6(2)(a) was  also furnished as required by s. 15(3-B)  of the  Act; the  provisional estimate  made  in accordance with  s.6 (2) (a) of the Act showed the income of the assessee at Rs. 2,07,923/9/-.      It appears  that neither  the original  return filed on November 27,  1954 nor  the revised return filed on April 4, 1955 was  found to  be correct  or complete by the Assessing Authority and,  therefore, on  April 14,  1955 the Assessing Authority served  a notice  under s.16(2)  of the Act on the appellant-assessee  requiring  it  to  produce  evidence  in support of  its return;  in reply the assessee produced some evidence in the form of accounts and vouchers and details of the various  expenses were  also supplied.  On September 29, 1955, however,  another notice  was given  to the appellant- assessee stating  that its  income had escaped assessment to the tune  of  Rs.  38,947/-  and  objections  were  invited. Thereupon, the  appellant-assessee applied for inspection of the  record   before  the   Assessing  Authority,   but  the application was rejected on October 18, 1955 against which a revision was  filed by  the appellant  before  the  Revision Board and  on April  29, 1958 the Board allowed the revision application and  the Assessing  Authority  was  directed  to permit the inspection of the record. Thereupon the appellant took inspection  of the  record, but  on November  8,  1958, being the  date fixed for the hearing of the objections, the appellant filed  a fresh return (third return) in respect of its agricultural  income for  the  self-same  previous  year (1361 Fasli)  and this  was done  in response  to the notice dated April  7, 1955  that had  been served  upon it  by the Assessing Authority under s. 15(3-B) of the Act and along- 113 with this  return,  which  showed  the  net  income  of  Rs. 1,79,543/5/9, a   declaration  in the  prescribed  Form  No. A.I.T.-2   selecting   the   method   of   computation.   Of agricultural income  under s.6(2) (a) was also filed and the appellant prayed  that it  should be  allowed to  change the option and have its income computed under s.6(2) (a) instead of under s. 6(2) (b) as previously intimated.      The Assessing  Authority  without  first  deciding  the question whether  the appellant  was entitled  to change the option as  sought, by  its order dated March 27, 1959 made a best judgment assessment in accordance with the method under s.6(2) (b) of the Act and assessed the appellant’s income at Rs. 4,82,231.05  nP on  which the tax liability was assessed at  Rs.   2,88,488.46  nP.   The  appellant  challenged  the assessment order  ill an  appeal to  the Commissioner who by his order  dated July, 1, 1959 allowed the appeal, set aside the assessment  and remanded  the case back to the Assessing Authority with  a direction  that he should first dispose of

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the  question   relating  to  change  of  option  which  the appellant had  claimed he was entitled to have and then make the assessment  in accordance  with law  after allowing  the appellant an  opportunity to lead evidence in support of its return. The  Assessing Authority  thereupon  went  into  the question of change of option and by its order dated November 17, 1959  held that the appellant had no right to change its option and  that the assessment had to be made in accordance with s.6(2)  (b) of  the Act. The appellant went in revision before   the    Agricultural   Income-Tax   Revision   Board challenging the  said order  of the  Assessing Authority but the Revision  Board by  its order  dated  January  27,  1960 upheld the  decision of  the Assessing  Authority. The Board took the  view that  an assessee having exercised the option once in  Form No.  A.I.T.-2  filed  alongwith  the  original return could  not  change  that  option  subsequently  while filing another return or revised return under the Act.      By a  Writ Petition, being Civil Misc. Writ No. 1382 of 1960  filed  in  the  Allahabad  High  Court  the  appellant challenged the  validity of  the  two  orders,  one  of  the Assessing Authority  and the other of the Revision Board and sought a  mandamus  directing  the  Assessing  Authority  to assess the  appellant’s tax  liability after  computing  its agricultural  income  for  the  relevant  previous  year  in accordance with  s.6(2)(a)  of  the  Act  instead  of  under s.6(2)(b) of the Act. The learned Single Judge who heard the writ petition  by his  judgment and  order dated October 13, 1961 accepted  the contention  of the  appellant that it was open to  it to  change its  option  with  the  filing  of  a subsequent or fresh return with the result that the impugned orders were  quashed  and  he  issued  a  direction  to  the Assessing Authority 114 that it  shall proceed  to assess  the appellant-assessee in accordance with  the option  expressed by  it on November 8, 1958. The  respondents preferred  an appeal  to the Division Bench of  the High Court being Special Appeal No. 95 of 1962 and the  Division Bench  allowed the  appeal, set  aside the decision of the learned Single Judge and restored the orders passed by the Assessing Authority and the Revision Board. In its judgment  dated September  27, 1965,  the Division Bench took the  view that  the assessee had no right to change the option.      Initially the  appellant preferred  an appeal.  to this Court being Civil Appeal No.1249(NT) of 1968 on the strength of a  certificate issued  by the  Allahabad High Court under Art. 133(1)(a)  of the  Constitution but  at the time of the hearing of  that appeal  this Court accepted the preliminary objection raised  by the  respondents to the maintainability of the  appeal on  the ground  that the  High Court  was not competent to  grant the  certificate under Arts. 133 (1) (a) in as  much as the issue before the High Court was incapable of valuation  and the  order appealed against could not come within  the   scope  of  the  said  provision;  this  Court, therefore, revoked  the said  certificate and  sent the case back to  the High  Court for fresh consideration inasmuch as the appellant’s  prayer for grant of certificate in the High Court was made both under Arts. 133(1) (a) and 133(1) (c) of the Constitution and directed the High Court to consider the prayer  for  grant  of  the  certificate  under  the  latter provision. Thereafter  the High  Court by  its  order  dated April 18, 1972 granted the certificate under Art. 133(1) (c) on the  ground that  the question  of law  involved  was  of substantial importance  and also  of great public importance and it  is on  the strength  of such  certificate  that  was

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issued by  the High Court that the Civil Appeal No.1946 (NT) of 1972  has been  filed by  the appellant  in  this  Court. However, in  both the  appeals the principal question raised is whether  an assessee who has once exercised his option in regard to  the method  of computation  of  his  agricultural income by filing the requisite declaration in the prescribed Form No.  A.I.T.-2 alongwith his first or initial return can change the option under the Act?      In may  be stated at outset that after the judgment was delivered by  the learned single Judge of the Allahabad High Court on  October 13,  1961 answering the point in favour of the assessee,  the Assessing  Authority, since  no stay  was obtained during  the pendency  of Special   Appeal No. 95 of 1962, proceeded  with the assessment of the appellant on the basis of  that judgment  and  completed  the  assessment  on December 19,  1962, in accordance with s. 6(2)(a) of the Act and 115 we are  informed at  the Bar that the appellant has paid the tax   according to  that assessment  order.  But  after  the reversal of the judgment. Of the learned Single Judge by the Division Bench  that assessment order became ineffective and a fresh  assessment order  was made  on  July  30,  1969  in accordance with  the  judgment  of  the  Division  Bench  by adopting the  method of computation indicated in s.6(2) (b). Against that  assessment  order  dated  July  30,  1969  the appellant preferred ar. appeal but the same was dismissed on June 23,  1970 and  a revision against the dismissal of that appeal is  pending before  the U.P.  Agricultural Income-tax Board.  The  position,  therefore,  would  be  that  if  the appellant succeeds  in these  appeals the  assessment  order made against  it  on  July  30,  1969  and  which  has  been confirmed in  appeal on  June 23,  1970  and  which  is  the subject-matter of revision before the Board will be rendered ineffective and  the assessment  order made  against  it  on December 19,  1962 will  revive and  hold the  field and the appellant shall  be taken  to have  complied with the demand under that  order but  in case  the appellant fails in these appeals the  Appellate order  dated June 23, 1970 subject to the result of the revision will become operative.      Counsel  for   the  appellant   raised  two   or  three contentions before  us in  support of  the appeals.  In  the first place  he contended  that under  s. 6(1) of the Act an option to  choose one  or the other method of computation of agricultural income  has been  given to the assessee so that he could choose whichever method was advantageous to him and the assessee would be entitled to exercise such option every time he files a return, be it the initial or first return or a subsequent  return or  a revised  return, in regard to his agricultural  income   of  any   particular  previous  year, especially, as  Rule 5  of the U.P. Agricultural Income- tax Rules. 1949  makes it  incumbent upon the assessee to file a declaration in Form A.I.T.-2 indicating his option alongwith "his return  of income". He urged that this position becomes all the  more clear if the provisions of the present s.6 and Rule 5  are considered  vis-a-vis the said provisions before they were  amended. Secondly,  he urged  that in the instant case in spite of the appellant having filed its first return of November  27, 1954  and its  revised return  of April  4, 1955, the  Assessing Authority  had, served upon it a notice under s.15(3)  alongwith  a  statement  showing  provisional estimate of  the agricultural income of the appellant at Rs. 2,07,923-9 annas  in accordance  with  s.6(2)  (a)  for  the relevant previous  year ending  June 30,  1954 (1361 Fasli), pursuant to  which the  appellant filed  a fresh  return  on

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November 8,  1958 for  the said  previous year indicating in the accompanying 116 declaration in  Form No. A.I.T.-2 the option for computation in accordance with s.6(2) (a) of the Act and, therefore, the Assessing Authority had to make the assessment in accordance with s.6(2)(a) of the Act. Thirdly, he contended that in any event since  the Assessing  Authority after  the issuance of the notice  under s.  16(2) had  proceeded to  make  a  best judgment assessment  under s.16(4)  it had  no option but to make the  assessment with  due regard  to the  statement  of provisional estimate  served under s.15(3-B) notwithstanding any option exercised under s.6(1) of the Act.      on  the   other  hand,   counsel  for  the  respondents supported the  view taken  by the Division Bench of the High Court by  contending  that  the  option  conferred  upon  an assessee by  s. 6  is to be exercised in accordance with the provisions of  the Act  and the Rules and the only provision is that  contained in  Rule 5  which speaks of a declaration indicating the  option being  filed alongwith ’his return of income’ which  could only  be when  the assessee  filed  his first or initial return and there is no provision for filing such  a  declaration  alongwith  any  subsequent  return  or revised return.  He urged that only s.15(4) speaks of filing a revised  return which  could be  done only if the assessee discovered any  wrong statement  in  the  return  previously filed by  him under  sub-s.1 or  2 or  3 of   s.  15  but  a statement made  in such  previously filed  return  does  not become wrong  merely because  the assessee  had selected the wrong option;  in other words, the assessee does not get the right to  file a revised return under s.15(4) merely because he wishes to change the option. He? therefore, urged that in the absence of any positive provision being contained in the Act or  the Rules  conferring upon the assessee the right to change the  option, the  right of  the option once exercised must be  held to  have become  final. He, further urged that the aspect  whether an  assessee will have a right to change the option by filing a fresh declaration along with a return filed in response to the notice served under s. 15(3) of the Act, notwithstanding  his having  filed a  return  under  s. 15(1) or  s. 15(2)  and having  exercised his option at that time, was  not raised before the High Court by the appellant and as  such the  appellant should not be permitted to raise it now  inasmuch as  there is  no material on record to show that the  return filed  by the appellant on November 8, 1958 was in  response to that notice or was within time specified in that notice. In any event, he urged that sub-ss. (1), (2) and (3)  d s.  15 are  independent provisions and the notice under s. 15(3) does not give an assessee any right to change the option.  He further  urged that  in the instant case the assessee could be said to have acquiesced in the proceedings that were taken by the Assessing Authority on the 117 two earlier  returns  which  were  filed  by  him  based  on s.6(2)(b) and  as such the appellant could not be allowed to change the option initially exercised by it.      In order  to decide  the main  question that  has  been raised in these Appeals it will be necessary to refer to the provisions of  s.6  and  Rules  S,  and  7,  as  they  stood originally and  as they  stand  now  after  the  amendments. Originally s.6, which dealt with computation of agricultural income and conferred an option on the assessee to select one or the  other of  the two  methods of  computation mentioned therein ran thus:           "6. Computation  of agricultural  income.-(1)  The

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    agricultural income  mentioned in sub-clauses (i), (ii)      and (iii) of clause (b) of sub-section (1) of section 2      shall, at  the option  of the  assessee, be  computed m      accordance with clause (a) or clause (b) of sub-section      (2):           Provided that  an assessee  who has once exercised      his option  shall not be entitled to vary the method of      computation except  with the permission of the Board of      Revenue.           (2) (a)  Subject to  such deduction  in respect of      agricultural  calamities  as  may  be  prescribed,  the      income shall  be,  deemed  to  be  such  multiple,  not      exceeding  71  per  cent,  of  the  rent  of  the  land      calculated  at   the   latest   sanctioned   rent-rates      applicable to  hereditary tenants  of similar  class of      soil, as the Board of Revenue may fix for each district      or portion thereof:           Provided that the Board of Revenue may direct that      the multiple  for calculating  income  from  and  newly      brought  under  cultivation  shall  for  the  specified      number  of  years  be  such  lower  figure  as  may  be      specified, or           (b) the income shall be the gross proceeds of sale      of all the produce of the land subject to the Following      deductions:           (Here   followed   sub-clauses   (i)   to   (xiii)      specifying the (deduction) .           (3) If  the assessing  authority is satisfied that      the proceeds  of sale  have not been correctly shown by      the assessee or that any portion of the produce has not      actually been  sold, he  may assess  the value  of  the      produce for  purposes or  clause (b) of sub-section (1)      of section  2  by  determining,  to  the  best  of  his      judgment. the  amount of  produce and  the market value      thereof " 118 Original Rules  S, 6  and 7  of the U.P. Agricultural Income Tax Rules, 1949, framed under s.44 of the Act ran thus:           "5. An assessee shall, along with his first return      of in  come, file  a declaration  in  Form  No.A.I.T.-2      indicating his  option under sub-section (1) of section      6.           6. The declaration filed by an assessee under rule      S shall  be preserved  by the  assessing authority in a      separate guard file.           7. Where an assessee desires to vary the method of      computation indicated under rule 5, he shall before the      first day  of August  of the  year in  respect of which      assessment is  to be  made. present  an application for      permission in  that behalf  to the  assessing authority      addressed to  the Board of Revenue and the former shall      without unnecessary  delay forward  the  same  together      with such  remarks as  it may  consider proper  of  the      Board of Revenue for necessary orders."      lt may  be stated that the aforesaid provisions came up for consideration  before Division  Bench of  the  Allahabad High Court  in Kr.  Jyoti Sarup  v. Board  of Revenue,  U.P. (Lucknow) and  Anr. (1)  and justice  Mukherji took the view that "this  proviso (meaning  the proviso to sub-s (1) of s. 6) means  that once  and only  once during  the course of an assessee’s "assessable  life", can  he, unfettered, exercise the option  given to him under s.6(1) of the Act and that if once he  has exercised  his option,  he cannot,  without the permission  of  the  Board,  take  the  other  alternative." Justice Bind  Basni Prasad,  the other  Member of the Bench,

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observed that  "My interpretation  of s.6  (1) is that after the commencement of the U.p. Agricultural Income Tax Act, an assessee has  once selected  one method  of  computation  of agricultural income  he cannot  vary it  subsequently in any year without  the permission  of the  Board of  Revenue. The proviso is  not limited  in its  application to variation of such method in the course of a year".      Thereafter, the  Legislature thought  of amending these provisions. By  the Amending Act XVIII of 1954 the aforesaid proviso to  s.6(1) was deleted with effect from July 1, 1954 and an  altogether different  proviso unconnected  with  the option was substituted. By a Notification No. 2590/I-C289-C- 53 dated  August 29,  1953  the  word  "first"  n  occurring between the words "his" and "return" was deleted from      (1) (1952) 50 Allahabad Law Journal 557. 119 Rule 5  with effect from the date of the Notification. Rules 6 and 7  were totally deleted. The amended s. 6 as it stands today runs thus:           "6. Computation  of agricultural  income.-(1)  The      agricultural income  mentioned in  sub-clause (i), (ii)      and (iii) of clause (b) of sub-section (1) of Section 2      shall, at  the option  of the  assessee, be computed in      accordance with clause (a) or clause (b) of sub-section      (2),           Provided that the agricultural income as aforesaid      for tea  gardens shall  be computed  in accordance with      clause (b) of sub-section (2).           (2) (a)  Subject to  such deductions in respect of      agricultural  calamities  as  may  be  prescribed,  the      income from  the land  shall be deemed t-o be an amount      equal to  its rent  multi plied  by such  multiple  not      exceeding 12  1/2 as  the Land Reforms Commissioner may      fix, and different multiples may be fixed for different      districts or  portions of  district and  for  different      classes of groves and orchards:           Provided that  the Land  Reforms Commissioner  may      direct that  the multiple  for calculating  income from      land  newly  brought  under  cultivation  shall  for  a      specified number  or years  be such lower figure as may      be prescribed.           Explanation.-In this  section rent shall be deemed      to be  an amount  calculated at  the latest  sanctioned      rent rates  applicable to  hereditary  tenants  of  the      highest class  of soil  in the  village in  the case of      orchards and  groves and  of similar  class of  soil in      other cases.           (b) the income shall be the gross proceeds of sale      of all the produce of the land subject to the following      deductions.           (Here   followed   sub-clauses   (i)   to   (XIII)      specifying the deductions) .           (3) If  the assessing  authority is satisfied that      the proceeds  of sale  have not been correctly shown by      the assessee or that any portion of the produce has not      actually been  sold, he  may assess  the value  of  the      produce for  purposes of  clause (b) of sub-section (1)      of Section  2  by  determining.  to  the  best  of  his      judgment, the  amount of  produce and  the market value      thereof." 120      The amended Rule S as it now stands runs thus:           "5. An  assessee shall,  along with  his return of      income, file a declaration in Form A.I.T.-2 indicating"      his option under sub-section (1) of Section 6."

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The Form  No. A.I.T.-2  of declaration  of  the  option  for computation of income under s.6 reads thus:           "In pursuance  of Section  6(1), I,..  do here  by      declare that  I have  elected the method of computation      of   agricultural    income   provided    by    Section      6(2)(a)/6(2)(b)   and    Lave   computed    my   income      accordingly."      It seems  to us  clear that  s. 6  as originally framed gave  an   assessee  the   right  to  exercise  the  option, unfettered, only  once after  the commencement of the Act if he once  selected one  method of computation of agricultural income he could not vary it subsequently in any year without the permission  of the  Board of  Revenue  which  was  given absolute discretion  to grant  or to refuse such permission. At any  rate, that was how the original unamended provisions were  authoritatively  interpreted  by  the  Allahabad  High Court. Relying  upon the deletion of the original proviso to s.6(1) of  the Act by the Amending Act XVIII of 1954 and the deletion of  the word  "first" which  occurred originally in Rule S  as also  the deletion  of Rules 6 and 7, counsel for the appellant  contended that  whatever may  have  been  the position under the original s. 6 and original Rules 5, 6 and 7, under  the amended  s.6 read  with the  amended Rule 5 it would  be   clear  that  there  is  no  restriction  on  the assessee‘s right  to change  the option and it would be open to an assessee not merely to change his option  every  year but  even to change his option during. the year by filing  a fresh  return or  a revised return for the same year indicating  the change  in the declaration accompanying such fresh  return or revised return provided, of course, it is done  before the assessment is completed by the Assessing Authority. In  our view, there is considerable force in this contention for  the reason  that whatever  restrictions  had been imposed on the change of option by the original proviso to s.6(1) have been removed and the concept of "first return deleted from  Rule 5.  That being  so, the  expression  "his return of  income" occurring in Rule 5 would apply to any of returns contemplated  under s.15  of the  Act, namely, (1) a return filed  in pursuance  of the general notice issued and published by the Collector under s.15(1): (2) a return filed by the  Principal officer  of a  Company under section 15(2) read with  s.  21;  (3)  a  return  filed  in  pursuance  of individual notice  served upon  an assessee by the Assessing Authority under 121 s.15(3) and  (4) a  return or  a revised  return filed by an assessee A  under s. 15(4), provided that in the first three cases the  return is  filed within  time  specified  in  the notice or  the rule  or within  the extended time granted by the Assessing  Authority and  in the  last case  the revised return is filed on account of discovery of a wrong statement in the previous return and is filed before the assessment is complete. In  fact,  Rule  5  is  obligatory  and  makes  it incumbent upon  an assessee to file along with his return of income a  declaration in  Form No.  A.I.T.2  indicating  his option under  s. 6(1) of the Act and as such the exercise of such option  including a  change of  the option indicated in the declaration  filed along  with a  subsequent return or a fresh return  or a revised return will be valid provided the return itself  is validly  submitted. In  this view  of  the matter it is not possible to accept the view of the Division Bench of  the High Court that if once option is exercised by an assessee  by filing  the requisite declaration along with his return  for a  particular year  he will have no right to change his  option by  filing a  fresh return  or a  revised

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return before the assessment is made for that year.      Turning to  the factual  aspects in  the case  the main question that  arises is  whether the  return filed  by  the appellant on November 8, 1958 was in pursuance of the notice served by  the Assessing  Authority upon the appellant under s.15(3) of  the Act or whether it was a revised return filed under  s.15(4)   of  the   Act  and   his  question  assumes significance because  it was along with this return that the assessee  had   filed  a  declaration  in  Form  No.A.I.T.-2 indicating a  change in  the option  and  praying  that  the computation of  its agricultural  income should  be made  in accordance  with  s.  6(2)  of  the  Act  instead  of  under s.6(2)(b) as  mentioned in  the declarations filed alongwith two earlier  returns dated  November 27,  1954 and  April 4. 1955. t is obvious that if the return dated November 5, 1958 was filed  under s.  15(4) then  in order  to avail  of  the change of the option the appellant will have to show that it was really  a revised  return in the sense that the same had been filed  because of  a wrong  statement discovered in the earlier returns filed by him. The Division Bench of the High Court G has rightly taken the view that a wrong statement in the earlier  returns does  not mean  selection  of  a  wrong option by  the assessee;  in other  words, the assessee does get the right to file a revised return under s. 15(4) merely because he  wishes to  change the  option. Counsel  for  the appellant, however, contended that the fresh return filed by the appellant  on November  8, 1958 was not a revised return under s.15  (4) at all but was a return filed in response to the  notice  that  was  served  upon  it  by  the  Assessing Authority on April 7, 1955 under 9-817SCI79 122 s.15(3)  of   the  Act.  In  this  behalf  counsel  for  the respondent did  make a grievance before us that there was no material on  record to  show whether,  in fact,  the  return filed on  November 8,  1958 was  in response  to the  notice served under  s.15(3) and  if so, whether the same Was filed within time  or the  extended time,  if any,  granted by the Assessing  Authority.   The  hearing   of  the  appeal  was, therefore, adjourned to enable both the parties particularly the Revenue  which will be possessing the records to produce material in that behalf and at the resumed hearing though no material by  way of  assessment re  cords of  files  in  the custody of  the Assessing  Authority  was  produced  by  the Revenue, the appellant placed on record a copy of the return dated November 7, 1958 (which was filed on November 8, 1958) together  with  a  copy  of  the  declaration  in  the  Form No.A.I.T.-2 and the forwarding letter. The forwarding letter dated November  7, 1958  clearly shows  that the  return was filed in  response to  the notice dated April 7, 1955 served upon the appellant under s.15(3) of the Act. The said letter in terms  referred to  the notice  dated April 7, 1955 under s.15(3) as  also to the statement of provisional estimate of agricultural income  for the  relevant previous year 1953-54 (1361 Fasli) prepared under s. 6(2) (a) read with s. 15(3-B) accompanying  the   notice  and   further  stated  that  the appellant had  decided, in  order to avoid further prolonged litigation,  to   accept   the   provisional   estimate   of agricultural income  under s.  6(2)  (a)  (subject  only  to necessary corrections  as regards area and classification of soil etc.)  and to  suffer agricultural  income tax: on that basis and  requested the Assessing Authority to complete the assessment in accordance with s. 6(2) (a) of the Act. It is, therefore, clear  that the  return filed by the appellant on November 8,  1958 was  in response to the notice served upon

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it by  the Assessing  Authority under s.15(3). Moreover, the said return  was rejected  by the Assessing Authority not on the ground  that it  had been  filed beyond  time but on the ground that  the appellant had no right to change its option which clearly  suggests that  the return  was treated by the Assessing Authority as having been filed within time but the same was  rejected on  merits holding that the appellant was not entitled to change its option. It is thus clear that the return filed  by the  assessee on November 8, 1958 was not a revised return  under s.15  (4) but  a  fresh  return  filed within time  in response to notice under s.15(3) served upon it by  the Assessing Authority and as such the appellant was entitled to  change its  option and  have computation of its agricultural income  made in  accordance with  s.6(2) (a) of the Act.  The fact  that the  appellant  had  produced  some evidence in  pursuance of  notice received  under s.16(2) in relation to  its earlier  returns or that it took inspection of the records of the Assessing Authority can- 123 not and  does not  amount to  acquiescence or  waiver of its right to  file a,  declaration indicating its option a fresh long with  the return  validity filed  in  response  to  the notice served under s. 15(3) of the Act.      Apart from the aforesaid position there is yet one more aspect to  which we  would like  to refer in relation to the question raised  before us  in these appeals and that arises in view  of the provisions of s.16(4) of the Act under which the Assessing  Authority makes its best judgment assessment. In this  connection ss.15(3), 15(3-B) and 16(4) the Act will have to be considered together. Section 15(3) runs thus:           "15(3) In  the case  of  any  person  whose  total      agricultural income is, in the opinion of the assessing      authority. such  amount as to render such person liable      to payment  of agricultural  income-tax in any year, he      may serve in hat year . a notice in the prescribed form      requiring such  person to  furnish within  such period,      not being  less than thirty days as may be specified in      the  notice,  a  return  in  the  prescribed  form  and      verified  in   the  prescribed   manner  setting  forth      (alongwith such  other particulars  as may  be provided      for in  the  notice),  his  total  agricultural  income      during the previous year:           Provided that  the assessing  authority may in his      discretion extend the date for delivery of the return." Section 15(3-B) runs thus:           "15(3-B) Alongwith  the notice  under  sub-section      (3) the  assessing authority  shall  send  a  statement      showing a  pro visional  estimate of  the  agricultural      income which  in his  opinion  accrued  to  the  person      during  the   previous  year.  The  estimate  shall  be      prepared in  accordance with  the provisions  of clause      (a) of sub-section (2) of Sec ion 6 and be in such form      and contain such particulars as may be prescribed." In the  instant case,  as we  have said  above, notice under s.15(3) was  served by  the  Assessing  Authority  upon  the appellant and as required by s.15(3-B), alongwith the notice the Assessing  Authority had  sent a  statement showing  the provisional estimate of the agricultural income which in its opinion accrued  to the  appellant during  the previous year 1953-54 which  estimate was  prepared in accordance with the provisions of s. 6(2) (a). Admittedly, the change of opinion sought to  be exercised by the appellant was denied to it by the  Assessing   Authority  and   the  Assessing   Authority proceeded with the assess- 124

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ment of the agricultural income of the appellant-assessee in accordance with s.6(2)(b). Admittedly further, the Assessing Authority had  issued a  notice under  s.16(2) requiring the appellant to  produce evidence  in support  of  its  earlier returns. On  September  29,  1955  the  Assessing  Authority served a  further notice  upon the  appellant in forming the latter that  agricultural income  to the tune of Rs. 38,947/ had escaped  assessment  and  invited  objections  from  the appellant whereafter  it seems  that the Assessing Authority not being  satisfied  with  the  evidence  produced  by  the appellant proceeded  to make  its best  judgment  assessment under s. 16(4). Section 16(4) runs thus:           "16(4) If  the principal officer of any company or      other   person fails to make a return under subsections      (2) or  (3) of  Section 15,  as the  case may  be,  or,      having made  the return,  fails to  comply with all the      terms of  the notice  issued under  sub-section (2)  of      this section  or to produce any evidence required under      sub-section (3)  the assessing authority shall make the      assessment lo  the best of his judgment with due regard      to the  statement, if any, sent under sub-section (3-B)      of Section  15, notwithstanding  any  option  exercised      under sub-section (1) of section 6." It will  appear clear from the aforesaid provision contained in s.16(4) that whenever the Assessing Authority proceeds to make the  assessment to the best of its judgment the same is required to  be made  "with due  regard to the statement, if any, sent  under sub-section  (3-B) of s. 15 notwithstanding any option  exercised under  sub-s. (1)  of s.6.  lt is thus clear that  irrespective of  whatever option might have been exercised by  the assessee  the best judgment assessment has to be  made by  the Assessing Authority by having due regard to the  statement of  provisional estimate  of  agricultural income made  in accordance  with s.6(2)(a)  of the  Act. The non-obstante  clause   leaves  it   open  tc  the  Assessing Authority to  select whatever  basis it consider appropriate for computing  and determining  the true agricultural income of the  assessee; it  may adopt  any one  of  the  bases  in respect of  the entire  agricultural area or adopt one basis in respect  of one  part of  agricultural area and the other basis in  respect of another part, the only obligation being to have  "due regard"  to the statement under s.15(3-B). The scheme of  s.16(4) clearly  shows that in regard to the best judgment assessment  there is  nothing sacrosanct  about the option exercised  by the  assessee under s. 6(1) of the Act, equally it  can be  said that in regard to assessments other than best  judgment assessments  under the  scheme  of  s.15 there is  nothing sacrosanct  about  the  particular  option previously exercised by the assessee and he need 125 not be  held bound  by it  provided he changes the option by filing a   subsequent  or a  fresh or  a revised  return  in accordance with the applicable provisions contained in s.15, the object  being to  determine his true agricultural income for  the  relevant  previous  year,-though  so  far  as  the Assessing  Authority   is  concerned   such  option  whether original or subsequent, would indisputably be binding on it.      In view  of the  aforesaid discussion we are clearly of the view that the learned Single Judge of the Allahabad High Court  was  right  in  his  conclusion  that  the  appellant assessee  was  entitled  to  have  tho  computation  of  its agricultural income  for the  previous  year  1953-54  (1361 Fasli) relevant  to the  assessment  year  1954-55  done  in accordance with s. 6(2) (a) of the Act.      The appeals  are, therefore,  allowed, the order of the

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Division Bench  dated September  27, 1965  in Special Appeal No. 95  of 1962  is set aside and that of the learned Single Judge dated October 13, 1961 in Civil Misc. Writ No. 1382 of 1960 is restored.      The appellant  will  get  the  costs  of  Civil  Appeal No.1946(NT) of  1972 from  the respondents  while each party will bear  and pay  its own  costs of  Civil Appeal No. 1249 (NT) of 1968. P.B.R.                                       Appeal allowed. 126