Law:

Section:

Sections 3, 4 & 65 - Madras Plantations Agricultural Income-tax Act, 1955 JUDGMENT Shah, J.-S.S. Rajalinga Raja-hereinafter called "the appellant"-owns a cardamom plantation on a fifty-acre estate. For the assessment year 1957-58 he submitted a return under the Madras Plantations Agricultural Income-tax Act, 1955 (5 of 1955), disclosing a net income of Rs. 5,250 from the plantation. On enquiry the Agricultural Income-tax Officer learnt that the appellant had sold stocks of cardamom of the value of Rs. 58,375-9-9 between April 1, 1956, and March 31, 1957. The appellant explained that those sales represented not the produce of the year of account, but accumulated stocks of the past 3 to 4 years. That explanation was rejected by the Agricultural Income-tax Officer and after allowing expenditure estimated at the rate of Rs. 120 per acre, the balance was brought to tax, and a penalty of Rs. 3,000 was levied under section 20(1)(c) of the Act. The order was confirmed in appeal to the Appellate Assistant Commissioner, both as to the levy of tax and penalty. But the Appellate Tribunal was of the view that the average production of cardamom per acre was 40 lbs. and that if the stocks of cardamom sold in the year of assessment be attributed to production of the year, the yield would approximately be 134 lbs. per acre. Holding that an estimate of 40 lbs. per acre would be a "fair estimate" and that an average expenditure of Rs. 145 per acre should be allowed, the Tribunal directed that the assessment be modified, and the order imposing penalty be set aside. 2. The State of Madras then applied to the High Court of Madras in revision. The High Court was of the view that a part of the stock of cardamom sold in the year, though not the whole, was probably accumulated stock out of previous years' production, but since the appellant did not lay before the taxing authorities reliable evidence, his explanation was rightly rejected. The High Court also rejected the contention of the appellant that the income from sales of cardamom stock of previous years was not taxable in the year of account because it had been subjected to tax in those previous years under orders compounding…

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