ORDER
1. This matter has come before the Full Bench in view of the conflicting views expressed by two Division Benches of this Court. Kadirvel Nadar v. State of Madras, (1962) 46 ITR 251 and P.C. Ramaswami Naicker v. State of Madras, (1968) 69 ITR 420, as to the interpretation of Section 34(2) of the Tamil Nadu Agricultural Income-tax Act, 1955 hereinafter referred to as the Act.
2. The petitioner, who is the same in all these writ petitions, is an assessee under the said Act on the file of the second respondent. For the 8 assessment years 1959-60 to 1966-67 the second respondent assessed him to tax on 30-9-1971 in respect of his income from certain lands, overruling his objection that some of the lands ought not to have been included in his holding and assessed in his hand as those lands belonged to a Madrasa. Aggrieved by the said assessments, the petitioner filed revision petitions before the first respondent under Section 34 of the Act on 24-9-1974. Those revision petitions were, however, returned by the first respondent with an endorsement dated 3-10-1974, that as there was no time for him to pass orders on the revision petitions within the period of three years prescribed under Section 34 (2) (c) he was obliged to return the revision petitions. The said action of the first respondent returning the revision petitions has been challenged in these writ petitions on the ground that it is patently wrong, illegal and unsustainable in law.
3. The petitioner’s contention is that once an application for revision is filed under Section 34 within three years from the date of the orders sought to be revised, the revisional authority has to entertain the revision petition and deal with it on merits, that the view taken by the first respondent that final orders in the revision petitions have to be passed within three years is erroneous, and that the said section merely prescribes the time limit for invoking the revisional jurisdiction and not for passing final orders in the revision petitions.
4. The respondents, however, submit that the limitation of three years set out in Section 34 (2) (c) is for passing final orders in the revision petition and not for initiation of revisional proceedings as contended for by the petitioners and that the language of Clause (c) of Section 34 (2) is clear and unambiguous and does not admit of any doubt on this question.
5. The question, therefore, is which of the rival contentions is to be accepted. Section 34 so far as it is relevant is set out below –
“Section 34 (1). The Commissioner may, of his own motion or on application by an assessee, call for the record of any proceeding under this Act which has been taken by any authority subordinate to him and may make such enquiry or cause such enquiry to be made and, subject to the provisions of this Act, may pass such orders thereon as he thinks fit;
Provided that he shall not pass any order prejudicial to an assessee without hearing him or giving him a reasonable opportunity of being heard;
Provided further that an order passed declining to interfere shall not be deemed to be an order prejudicial to the assessee.
(2) The Commissioner shall not revise any order under Sub-section (1) if…(a) …(b)…(c) the order has been made more than three years previously.”
6. Sub-section (1) empowers the Commissioner to revise either on his own motion or on an application by an assessee an order of an authority subordinate to him after making such enquiry or causing such enquiry to be made. Sub-section (2) however, says that an order shall not be revised by the Commissioner acting under this section where the order has been made more than 3 years previously. The revision petitions in these cases have been filed before the first respondent by the peti-
tioner within three years from the date of the orders of assessment and that is not in dispute. The revision petitions have been returned on the ground that as it is not possible for the first respondent to pass final orders within three years from the date of the order, he cannot entertain the same. The first respondent has taken the view that the three year period mentioned in Clause (c) of Section 34 (2) is a limitation on the exercise of the revisional power and that therefore no order in revision could be passed in exercise of the revisional power after the three year period. This view of the first respondent appears to be based on a decision of this Court in M. V. P. C. Ramaswami Naicker v. State of Madras, (1968) 69 ITR 420. The petitioner challenges the correctness of the said view in these writ petitions on the basis of the decision of an earlier Division Bench in Kadirvel Nadar v. State of Madras, (1962) 46 ITR 251, which has held that the period of limitation provided for in Clause (c) of Section 34 (2) is only for initiating or setting in motion the revisional proceedings and not for the termination of the said proceedings. Therefore, we have to see which of the conflicting views is the correct one.
7. It cannot be disputed that the power of revision under Section 34 (1) can be exercised by the Commissioner himself suo motu or on an application by the assessee and the period of limitation provided in Clause (c) of Sub-section (2) is the same for both. Therefore the said clause has to be construed in such a manner as to give full amplitude to the power of revision contained in Sub-section (1) and whatever be the construction it must apply to both kinds of revisions. The nature of the limitation contained in Clause (c) of Sub-section (2) whether it is limitation for the exercise of the revisional power by the Commissioner or for the initiation of revisional proceedings before him by the assessee should be the same in respect of suo motu revision and revision at the instance of the assessee.
8. In Kadirvel Nadar v. State of Madras, (1962) 46 ITR 251 (Mad), an assessee had filed an application for revision under Section 34 before the Commissioner just at the close of the period mentioned in Section 34 (2) (c). That revision petition was dismissed by the Commissioner on the ground that he had hardly any time to call for the records, examine the case and pass orders within the time limit allowed. The order of the Commis-
sioner was challenged before this Court. Jagadisan and Srinivasan, JJ. took the view that it cannot be said that the Commissioner’s revisional powers became extinct after the expiry of the period mentioned in Section 34 (2) (c) and that if the proceedings had been initiated by the Commissioner suo motu or commenced at the instance of the assessee within the period prescribed under the Act, the power of revision subsists till the proceedings are properly terminated. According to them it would be anomalous to hold that the revisional power of the Commissioner becomes extinct after the period fixed, as it may happen that the Commissioner may not deal with the matter for various reasons, either because he had other work to do or because the assessee wanted time to place further materials before the Commissioner or for other causes and therefore the criterion is not the point of time when the application is disposed of or the proceedings are terminated, but the point of time when the proceedings are initiated or the Commissioner’s jurisdiction is invoked.
The learned Judges referred to the analogus provision in Section 33-A (1) under the Income-tax Act, 1922, and pointed out that the difference in language between Section 33-A (1) and 33-A (2) of the Income-tax Act indicated that while the Commissioner’s powers of suo motu revision became extinct if the power is not exercised within the period fixed, his powers of revision on an application by an assessee were not so limited, that the provisions of the Agricultural Income-tax Act did not make such a distinction between cases where the Commissioner exercises his power suo motu and where he exercises revisional powers on an application by an assessee, that therefore, Section 34 of the Act which fixes 3 years as period of limitation applies both to the Commissioner as well as to the assessee, that therefore, so long as the proceedings have commenced within the period fixed, the power of the Commissioner can be exercised at any time thereafter, and that it is not necessary that the power should be exercised within the period. The learned Judges appears to have contemplated a situation where even though an assessee may file an application for revision sufficiently early, the revisional authority may so delay the disposal of the revision petition for a period of three- years and then reject the application on the
ground that no order in revision could be passed after the expiry of the said period and with reference to such a situation they observed that the right of the assessee to obtain relief by applying for revision should not depend on the hazard of the revising authority disposing of the matter within a particular period and cannot be defeated by the failure of the authority to discharge the statutory functions. Thus in this decision the time limit prescribed in Clause (c) of Sub-section (2) has been taken as the period of limitation for initiating revisional proceedings under Section 34.
The same learned Judges in a later decision in Alagappa Chettiar v. State of Madras, (1963) 14 STC 839 (Mad) had to consider the scope of Section 34 of the Madras General Sales-tax Act which said — “The Board of Revenue shall not pass any order under Sub-section (1) if more than four years have expired after the passing of the order.” The learned Judges referred to the difference in the phraseology used in the General Sales-tax Act, and the Agricultural Income-tax Act, and stated that the expressions ‘shall not pass any order’ and ‘shall not revise any order’ have different connotations, that the words ‘pass an order’ referred to the conclusion of the proceedings while the word ‘revise’ contemplates the process of revision and that, therefore, the earlier decision in Kadirvel Nadar v. State of Madras, (1962) 46 ITR 251 (Mad) rendered under the Agricultural Income-tax Act cannot apply to a case arising under the Sales Tax Act. Dealing with the scope of Section 34 of the Agricultural Income-tax Act, the Court pointed out-
“It seems to us that, having regard to the scheme of the Madras Agricultural Income-tax Act, and that of the Madras General Sales-tax Act, there is a notable difference between the word ‘revise’ used in the Agricultural Income-tax Act and the words ‘pass any order’ in the General Sales Tax Act. The word ‘revise’ is certainly of wide amplitude; and it does not denote only the actual passing of the order in revision. It includes the initiation of revision proceedings either by the exercise of suo motu powers of the Commissioner or at the instance of the assessee by an appropriate application. In what sense the word ‘revise’ has been used in the Agricultural Income-tax Act would certainly depend upon the terms of that section and the context in which the said expression occurs. We have
pointed out in our decision in Kadirvel Nadar v. State of Madras, (1962) 46 ITR 251 (Mad) that Section 34 of the Agricultural Income-tax Act compendiously includes both suo motu powers of the Commissioner and the right of the assessee to invoke the Commissioner’s jurisdiction by way of revision. We have pointed out the anomaly that would result if it were to be held that the revising authority became functus officio after the lapse of the period; that is to say, the assessee’s application preferred in time would be easily defeated by mere inaction on the part of the revising authority. In our opinion, such a result would not merely be anomalous but would really be calculated to prejudice the assessee’s rights quite unjustly.”
9. A similar view has been expressed by a Division Bench of the Mysore High Court in Subba Rao v. Commr. of Commercial Taxes, (1967) 19 STC 257. In that case the scope of Section 21(2) and (3) of the Mysore Sales Tax Act. 1957 came up for consideration. Section 21 (2) said-
“The Commissioner suo motu may call for and examine record of any order passed or proceeding recorded under the provisions of this Act by any officer subordinate to him for the purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceeding, and may pass such order with respect thereto as he thinks fit.”
Section 21 (3) said –
“that the power of revision provided for in Sub-section (2) shall be exercisable only within a period of four years from the date of order…….”
10. Construing the said section, Hegde, J. (as he then was) speaking for the Bench observed –
“The power conferred on the Commissioner under Section 21 (2) as could be gathered from its language includes three different facets viz., (1) calling for the records mentioned therein, (2) examination of those records and (3) passing such orders, with respect thereto as he thinks fit. The Commissioner begins to exercise his power under Section 21 (2) as soon as he calls for the records in question and the exercise of that power comes to an end when he passes an order in respect thereto. All that Section 21 (3) says is that the power conferred under Section 21 (2) is exercisable within four years from the date of the order of assessment, that is proposed to
be revised. As mentioned earlier, the exercise of the power under Section 21 (2) commences as soon as the records mentioned therein are called for. If that act is done within the period mentioned in Section 21 (3), then no question of limitation arises”.
According to the learned Judges the revisional power consists of different facets and it is enough if one of the facets of the power has been invoked within the period mentioned in Section 21 (3) and that the expression ‘shall be exercisable’ found in Section 21 (3) refers to the commencement of the exercise of the power and not its completion and that like all periods of limitation, Section 21 (3) also refers to initiation of the proceedings and not its completion.
11. In M. V. P. C. Ramaswami Naicker v. State of Madras, (1968) 69 ITR 420 (Mad) however, a different view has been expressed by another Division Bench of this court. In that case, construing the scope of Section 34 (2) (c) of the Agricultural Income-tax Act, the learned Judges expressed the view that Section 34 (2) (c) placed a restriction by way of time limit for the exercise of the revisional powers by the Commissioner, that from the language employed the plain meaning is that the Commissioner cannot make an order in revision beyond three years of the date of the order of his subordinate, that the language makes no distinction between exercise of power on application and suo motu and that in either case the Commissioner must pass his orders before the expiry of the three years period. According to the learned Judges, Clause (c) provides for limitation for the Commissioner’s exercise of his powers rather than for initiating action under Section 34 by an application. In support of the view that Clause (c) provides for a limitation for the Commissioner’s exercise of his revisional powers, the following observations in Muthiah Chettiar v. Commr. of Income-tax, have been referred to (at p. 205 of AIR):–
“Plausible though this argument may be, so far as Sub-section (1) of Section 33-A is concerned, we are of opinion that it is not sound so far as the right given to the party aggrieved under Sub-section (2) is concerned. In a case falling under Sub-section (1) the Commissioner acts of his own motion. There is no question of the aggrieved party invoking his jurisdiction ……. It may be said that the Com-
missioner’s power to call for the record ceases with the lapse of one year from the date of the order by the subordinate authority. But in a case falling under Sub-section (2) the party aggrieved has got to take the step of applying for revision and he is allowed one year from the date of the order. The provision is, therefore, certainly in the nature of a time limit for the application of revision.”
Referring to the decision of the earlier Bench in Kadirvel Nadar v. State of Madras, (1962) 46 ITR 251, (Mad) the Bench observed:–
“In its opinion, the criterion for purposes of Section 34 (2) (c) of the Madras Agricultural Income-tax Act was not the point of time when the application was disposed of or the proceedings were terminated but the point of time when the proceedings were initiated or the Commissioner’s jurisdiction was invoked. The Court was apparently persuaded to take that view, because as the Bench considered the right of the assessee to apply for revision should not depend upon the hazard of the revising authority disposing of the matter within a particular period and could not be defeated by the failure of the authority to discharge the statutory functions. With due respect, we are not able to share that view and would wish that, if a case like that invoking the revisional power by an application arose, the question will have to be reconsidered.”
In Sale-tax Officer v. Sudarsanam Iyengar and Sons, , the Supreme Court had to consider the scope of Rule 33 (1) of the Travancore Cochin General Sales-tax Rules 1950 which was as follows:
“If for any reason the whole or any part of the turnover of business of a dealer or licencee has escaped assessment to tax in any year or if the licence fee has escaped levy in any year, the assessing authority or licensing authority, as the case may be, subject to the provisions of Sub-rule (2) may at any time within three years next succeeding that to which the tax of licence fee relates determine to the best of his judgment the turnover which has escaped assessment and assess the tax payable or levy the licence fee in such turnover after issuing a notice to the dealer or licencee and after making such enquiry as he considers necessary”.
It was contended on behalf of the assesses in that case that the language employed in the said rule is such as to lead to only one conclusion that the final determination of turnover which has escaped assessment and the assessment of the tax have to be done within three years, that the words ‘determine’ and ‘assess’ have been used with a definite intention to set the limit within which the final order in the matter of assessment should be made. The Supreme Court rejected the said contention holding that the words ‘determine’ and ‘assess’ must be accorded their due signification, that the assessment is a comprehensive word denoting the entirety of the proceedings, and that therefore, despite the phraseology employed in Rule 33, the principle which has been laid in other cases relating to analogous provisions in Sales-tax statutes must be followed as otherwise the purpose of a provision like Rule 33 can be completely defeated by taking certain collateral proceedings and obtaining a stay order or by unduly delaying assessment proceedings “beyond a period of three years. The Supreme Court referred to its earlier decisions in State of Punjab v. Tarachand Lajpat Rai, and State of Punjab v. Muralidhar Mahabir Parshad (3968) 21 STC 29, as laying down the correct principle while dealing with analogous provisions.
12. In State of Punjab v. Tarachand Lajpat Rai, , the court was considering the scope of Sub-section (4) and (5) of Section 11 of the Punjab General Sales-tax Act 1948. It was held in that case that if a dealer furnishes a return under Sub-section (1) or when a notice is issued to him under Section 11 (2) by the assessing authority within the prescribed period, the assessment can be finalised subsequently even after the expiry of the period and no question of limitation would arise. In State of Punjab v. Muralidhar Mahabir Parshad, (1968) 21 STC 29, it was again reiterated that the period of limitation of three years for making the assessment under Sub-section (4) and (5) of Section 11 of the Punjab General Sales-tax Act was only for initiating assessment proceedings and that if the proceedings had been initiated within the period prescribed in the said section the proceedings whenever completed will be valid.
13. The decision in Kadirvel Nadar v. State of Madras, (1962) 46 ITR 251 (Mad) has been referred to with approval in a decision of the Gujarat High Court in State of Gujarat v. Jamnagar Motor Service, (1974) 33 STC 353. In that case, the interpretation of Section 57 of the Bombay Sales-tax Act came up for consideration. That section enabled the Commissioner of Sales-tax of his own motion within five years from the date of any order passed by any officer appointed under Section 20 to assist him, may call for and examine the record of any such order and pass such order thereon as he thinks fit and proper. In that case the final orders in revision were passed by the Commissioner after a period of five years, though he had invoked his revisional powers by calling for the records within the said time limit. When the revisional order was questioned on the ground that it has been made beyond time, the court expressed that as the period of five years referred to in Section 57 refers to the initiation of revisional proceedings it is not necessary that the entire process of revision must be completed within the said period, that as the revisional power under Section 57 can be exercised in favour of the State or in favour of the assesses the argument that the entire process of revision including the passing of the final order must be completed within the period of five years, if accepted, would lead to many anomalies and defeat the very purpose for which the section had been enacted, that it will result in injustice to the assessee because the order of assessment which is apparently erroneous so far as he is concerned cannot be revised and that it is anomalous to hold that the revisional power becomes ineffective after the period of five years as it may happen that the Commissioner may not deal with the matter for various reasons.
14. We are inclined to agree with the view expressed in N. V. S. Kadirvel Nadar v. State of Madras, (1962) 46 ITR 251 (Mad), and Alagappa Chettiar v. State of Madras, (1963) 14 STC 839 (Mad), in preference to view expressed in M. V. P. C. Ramaswami Naicker v. State of Madras, (1968) 69 ITR 420, which in our view is not correct. As already stated, Section 34 (1) provides for revision at the instance of both the He-venue and the assessee. Though the phraseology used in Section 34 (2) (c) can be interpreted to provide a time limit for
finalisation of the assessment by the Commissioner in exercise of his power of suo motu revision, such interpretation fails in the matter of revision at the instance of the assessee. Take a case where the assessee files a revision on the next day after the order sought to be revised was passed. The revisional authority for some reason or other keeps the matter pending for a period of three years and thereafter he dismisses the revision on the ground that the period of three years has expired. The re-visional authority can thus easily defeat the assessee’s remedy by way of revision by delaying the matter till the three years period expires. Here, for reasons beyond the control of the assessee, the remedy by way of revision is lost to him by the revisional process getting delayed or prolonged. Perhaps, it is for this very reason the statutes dealing with Income-tax and General Sales-tax make two separate provisions for limitation, one for suo motu revision and another for revision at the instance of the assessee and the suo motu revision has to be completed within a certain time from the date of the order, and a revision by an assessee has to be initiated within a particular period. The difficulty in this case has arisen because a composite provision has been made applicable both to the suo motu revision as well as revision at the instance of the asseseee. Though similar words occurring in Section 33-A (1) of the Income-tax Act has been construed as providing a limitation for the exercise of the revisional power and not for initiation of the proceedings by calling for records etc., it is not possible to give the same interpretation to Section 34 (2)(c) of the Agricultural Income-tax Act having regard to the different scheme adopted in this Act. Unlike the Income-tax Act, Agricultural Income-tax Act provides a period of limitation both in relation to suo motu revision as well as a revision at the instance of the assessee. Therefore, any interpretation given must be consistent with this scheme of the Act. If the similar interpretation as has been given to Section 33-A (1) of the Income-tax Act is given to Section 34 (2) (c) of the Agricultural Income-tax Act, the section will be unworkable and work hardship on the assessees who have to be at the mercy of the revisional authority for an effective disposal of their revision petitions, for the revisional authority can always defeat the assessee’s remedy of revision
by postponing its disposal beyond three years. It is well established that in interpreting a section of a taxing Act, which deals merely with the machinery of assessment and does not impose a charge on the subject, that construction should be preferred which makes the machinery workable ut res valeat potius quam pereat. It is also well established that a construction so unreasonable ought not to be preferred when another construction is open and that an interpretation to be placed on the words of the section must be one which harmonises with the context and promotes in the fullest manner the policy and object of the Legislature. Therefore, without giving proper effect to the scheme of the Act, we cannot construe Section 34 (2) (c) in the context of the provisions of the Income-tax Act which provides for a different scheme of revision.
15. Further the word ‘revise’ in Section 34 (2) is a comprehensive expression and it does not merely denote the passing of the order in revision. The word ‘revise’ cannot be understood to mean ‘pass an order in revision’. Revision is a legal process and does not denote the final act of passing an order terminating the legal process. The legal process consists of various steps such as calling for the records of the proceedings, making an enquiry by the revisional authority or causing an enquiry to be made thereon, and passing final orders thereon as the revisional authority thinks fit. Therefore, the entire process commencing from the calling of the records and ending with the passing of the final order has been termed as revision in the said section. Each one of the steps in the process is a revisional process. Therefore, if any one of the steps in the process has been initiated within the period of limitation, there is no further limitation on the exercise of the power. Therefore, if the assessee has invoked the revisional power within the period of three years as provided for in Section 34 (2) (c) or if the revisional authority has exercised his suo motu revisional power by calling for the records of the proceedings within the said period, final order in the revision can be passed at any time thereafter. In this view, the orders impugned in these writ petitions returning the revision petitions filed by the petitioners cannot be sustained and hence the writ petitions are allowed. The respondent is directed to entertain the revision petitions and dispose at
them according to law. The petitioner is given two week’s time from today for representing the revision petitions returned to him. The assessee will have his costs. Counsel’s fee Rs. 250 — one set.