UNION OF INDIA Vs. CASAM MOHMAD AJAM ISMAIL

JUDGEMENT

(1.) THIS appeal has been filed by the original defendants as the appellate Court had reversed the trial Court's decree dismissing the plaintiff's suit and had decreed the plaintiff's claim by holding that the assessment order and the recovery certificate in question were invalid and without jurisdiction and by further restraining the defendants from recovering the sum of Rs. 4,743 12 0 on account of income tax of the estate of the deceased, Mohmad Azam Ismail, for the asst. year 1942 43, on the strength of the assessment order and the recovery certificate in question.

(2.) THE short facts which have given rise to this appeal are as under : One Mohmad Azam Ismail, who was a resident of Rander, died at Rander on 25th March, 1945, leaving as his heirs four sons and one daughter. The IT Department had assessed him for his income tax for the year 1941 42 during his life time, but did not take any step for the recovery of the amount of tax as it was barred by limitation. After his death, proceedings were taken against the plaintiff, who was one of the heirs, being the son of the deceased, to assess the estate of the deceased for the asst. year 1942 43 for the period from 1st April, 1941, to 31st March, 1942. The assessment proceedings were started in 1947 against the plaintiff. By the order passed at exhibit 65 on 23rd March, 1947, the income was assessed at Rs. 21,347 and the plaintiff was asked to pay Rs. 4,743 12 0 on account of income tax for the said year. As the plaintiff did not pay the tax, recovery certificate under S. 46 of the Indian IT Act, 1922 (hereinafter referred to as "the Act"), was issued and sent to the Collector for the recovery of the tax as arrears of revenue. In pursuance of this certificate, the plaintiff's bungalow known as " Bage Azam" in the village, Dumas, and which he had inherited from his father and which had fallen to his share under partition in 1950 was sought to be attached. The plaintiff, therefore, gave statutory notice, exhibit 27, on 14th Dec., 1953, and filed the present suit for a declaration that the said order of assessment and the said recovery certificate were illegal and without jurisdiction and for the consequential injunction restraining the Union of India, and the other defendant, the Collector of Surat, from recovering the said amount from the plaintiff on the basis of the said assessment order and the said recovery certificate. The plaintiff had challenged the order of assessment on various grounds including, inter alia :

(3.) AS regards the first point, there is no dispute that the present case is covered by the decision of the Supreme Court in Addl. ITO, Circle I, Salem vs. E. Alfred (1962) 44 ITR 442 (SC). In that case the Supreme Court had in terms held that the generality of the definition of the "assessee" in S. 2 (2) of the Act was sufficient to include even a legal representative who was to pay the tax, though out of the assets of the deceased person. Under S. 24B(2), where a person died before the publication of the notice referred to in sub s. (1) of S. 22 or before he was served with a notice under Sub S. (2) of S. 22 or S. 34, his legal representative shall on the serving of the notice under s. 22(2) or under S. 34 comply therewith and the ITO might proceed to assess the total income of the deceased person as if such legal representative were the assessee. The Supreme Court also held that this fiction did not come to an end after the assessment, so that the legal representative remained a mere debtor thereafter to the Department. The original assessee being dead before the notice, either general or special to him, he could not be treated as an assessee, and the process of the Act was, by the fiction, made available against a different person like a legal representative who was fictionally deemed to be an assessee for purposes of assessment. It was in that sense that the legal representative became an assessee by the fiction and it was this fiction which had to be fully worked out, without allowing the mind "to boggle". Such a legal representative, who, by fiction, was deemed to be an assessee, therefore, came within the definition of the term "assessee", because he was the person by whom income tax was payable, though out of the assets left by the deceased person. The assessment of the legal representative was made under S. 23 of the Act and he had a right to appeal under S. 30, which he would not have, if he ceased to be an assessee after the determination of the tax. So far as Sub S. (2) was concerned, the fiction was clearly attracted. Under S. 45, therefore, if a notice of demand was issued under S. 29 on the assessee and was not complied with, the assessee would be deemed to be in default and under s. 46(1), if the assessee was in default, a penalty could be imposed. It was, therefore, held that such a legal representative, who was a deemed assessee qua the assets and liabilities to pay the tax of the deceased, was clearly an assessee in default and liable to the imposition of penalty for that default. In view of this settled position of law, the appellate Court was clearly wrong in holding that the plaintiff could not be considered to be a defaulting assessee for the purposes of S. 46 of the Act.