UNION OF INDIA Vs. SAROJINI RAJAH MRS

JUDGEMENT

(1.) THE defendant who was unsuccessful in the court below is the appellant. THE respondent herein filed a suit for repayment of a sum of Rs. 15,37096 from the appellant with interest thereon at 6 per cent. per annum. Her case was that immediately after her husband died on November 30, 1959, she received a number of notices from the income-tax department in respect of the arrears of income-tax stated to be due by her husband, including copies of notices issued to the banks attaching all monies and funds belonging to her husband, that on receipt of those notices, she intimated to the Income-tax Officer that she had no monies or assets of her husband, that a notice of demand dated December 10, 1959, had also been issued to the plaintiff calling upon her to pay a sum of 15,370.96 stated to be the tax due on a provisional assessment made under Section 23B of the Income-tax Act, that she understood the said notice to be one served on her in pursuance of a provisional assessment of her own income and in that mistaken view she had paid the said amount on December 26, 1959. A few days later, on 28th January, 1960, the plaintiff received another demand notice for payment of a sum of Rs. 10,487.47 in pursuance of a provisional assessment on her own income for the same assessment year 1959.60. It was only then the plaintiff realised that the earlier demand was in respect of the provisional assessment made on the return made by her husband. THEreupon, the plaintiff wrote to the Income-tax Officer stating that the payment of Rs. 15,370.96 was made by her under a mistake and requesting him to adjust the said sum against the demand of Rs. 10,487.47, which he declined to do. To avoid penal consequences, the plaintiff paid also the said sum of Rs. 10,487.47. THEreafter, the plaintiff applied to the Commissioner of Income-tax for refund of the said sum of Rs. 15,370.96 which was refused, In the above circumstances the plaintiff filed the suit on June 29, 1963, for refund of the said amount after issuing a notice under Section 80 of the Code of Civil Procedure on the ground that she could not be made liable for the tax due by her husband as she had no assets of her husband and that the collection of the said amount from her and its retention and refusal to refund are not lawful.

(2.) THE defendant, the Union of India, represented by the Commissioner of Income-tax, Madras resisted the suit contending that there could not have been any mistake as alleged by the plaintiff, that the plaintiff could not have understood the notice of demand dated 10th December, 1959, as one issued in pursuance of a provisional assessment made With reference to the return filed by her, that the said notice of demand itself made it perfectly clear that it was being served on the plaintiff as the legal representative of the deceased, that the assets of the deceased having devolved on the plaintiff and others they are liable to pay the tax due by the deceased. According to the defendant the plaintiff paid the suit amount with full knowledge that it was the tax due in respect of her husband's estate and with an intention to discharge the same, that it is not true that there was any mistake and that the mistake was known only on receipt of the demand notice dated January 28, 1960, as alleged, that the plaintiff having voluntarily paid the said amount with the full knowledge of what she was doing and in her capacity as legal representative of her deceased husband she is not entitled to get a refund of the suit amount. It was also contended that the suit is unsustainable under Section 72 of the Contract Act and that it is also barred by limitation as it has been filed more than three years after the payment. THE defendant also raised by way of an additional written statement the plea that the suit is in substance to set aside a provisional assessment made under Section 23B of the Income-tax Act, and, therefore, it is barred under Section 67 of the said Act and that the only remedy open to the plaintiff is to resort to the remedies provided under the Income-tax Act and not to come before a civil court.

(3.) THE plaintiff as P.W. 1 has deposed that on account of the death of her husband she was in distress and not keeping good health in December, 1959, when she received the demand notice exhibit A-1 as well as similar notices, that on a mistaken impression that the demand related to her own assessment and with a view to avoid the levy of heavy penalty as stated in the demand notice, she remitted the suit sum from out of her own funds under the receipt, exhibit A-2, that towards the end of January, 1960, when she received another notice in relation to her own assessment she realised the mistake that the earlier demand related to her husband's assessment, that immediately she wrote to the Income-tax Officer informing him about her bona fide mistake in making the earlier payment as per the demand notice, exhibit A-1, and asking for the refund of the amount paid by her under a mistake. THE court below has accepted the evidence of P.W. 1 as regards the bona fide mistake spoken to by her and there appears to be no reason as to why P.W. 1 should not be believed on this aspect of the case. Her evidence appears to be quite consistent with the other documents in the case. Exhibit A-3 is a letter dated December 12, 1959, from the Income-tax Officer addressed to the plaintiff wherein the plaintiff was informed that the total tax due by her husband in respect of his assessment for the year 1954-55 was Rs. 1,27,323 and that in view of the earlier orders passed by his predecessor, the plaintiff has to pay a sum of Rs. 45,776.31 and also furnish security for the balance amount of Rs. 81,546.82 before December 22, 1959, as a condition for the continuance of the stay, as otherwise, the entire amount would be recovered treating the plaintiff as a defaulter. As soon as the letter was received by the plaintiff, she replied under exhibit A-4 dated December 22, 1959, stating that as the funeral obsequies of her husband were completed only on 13th December, 1959, she had very little time to acquaint herself with the actual state of affairs, his assets and liabilities and that all his monies in the hands of various parties have already been attached, that she is not in possession of any of the assets of her husband, that in case she collects any of his assets she shall hold them in trust for the department and pay over the same towards his arrears of income-tax and that beyond doing that she was not in a position to furnish security to the extent of Rs. 81,546.82 as called upon, as she was in no way liable for the same beyond the amount received by her from the assets of her husband. She also stated that she being one of the legal representatives of the deceased it is not legal or justifiable to treat her alone as a defaulter in respect of the arrears of income-tax or to start recovery proceedings only against her. THE suit amount has been paid three days after the said reply in exhibit A-4. It is inconceivable how the plaintiff who stated that she is not in possession of any of the assets of the deceased and that as such she is not liable to be treated as a defaulter cooly and voluntarily paid the amount due by her husband three days thereafter from and out of her own funds unless it be that she was under the impression that the demand was in respect of her own assessment. It is not the case of the defendant that the plaintiff paid the said sum of Rs. 15,370.96 out of the assets of the deceased.