M R RADHAKRISHNAN Vs. UNION SAW MILLS

JUDGEMENT

(1.) THE plaintiffs in O.S. No. 50 of 1953 in the Court of the Subordinate Judge of Madurai are the appellants before us. THEy are the sons of the second defendant. THEy filed the suit for a declaration that the properties set out in the schedule to the plaint which according to them were properties belonging to the joint family consisting of them and their father are not liable to be proceeded against for the realisation of the income-tax assessed on their father the second defendant for the assessment years 1945-46, 1946-47 and 1947-48 in so far as it related to their interest in the suit properties. THEy alleged in the plaint inter alia that the family of the plaintiffs and the second defendant was carrying on an ancestral business in textiles, that the second defendant started and conducted several new businesses which were speculative in character, including the import and export in several commodities infringing the control orders in force at the time, and that he never bestowed any control over the affairs of the business nor maintained proper accounts. THE plaintiffs submitted that the levy of assessment could not in law affect their interest in the joint family properties for the following among other grounds, namely, that the assessment on the second defendant was made on an estimate basis because proper accounts had not been maintained regularly and the assessment was made on the footing that several accounts had been suppressed by him and it was by reason of his negligence amounting to criminal omission to submit proper information to the Income-tax Department that he was assessed in a large sum which was far in excess of what would be legitimately payable on the actual income. THE first defendant is the Union of India representing the Income-tax Department.

(2.) THEY denied the material allegations in the plaint and stated that the assessment was made on profits which the second defendant must have made and in any event the assessment could not be questioned in the suit. THEY also took an objection that the plaintiffs had no cause of action against the Government. This plea was evidently a plea that the suit was premature because only certificates had been issued by the Income-tax authorities under section 46(2) of the Income-tax Act. THEY pleaded that in fact the properties sought to be proceeded against were not properties belonging to the joint family The learned Subordinate Judge of Madurai who tried the suit held that the suit properties were joint family properties, that the businesses conducted by the second defendant were not speculative in nature, that the second defendant had not mismanaged the conduct of the business and therefore the liability of the second defendant to pay income-tax was a debt which the plaintiffs as sons were bound to pay from and out of the joint family properties under the doctrine of pious obligation. He further held that this debt could not be held to be tainted with immorality so as to bring it within the category of avyavaharika debts. He also upheld the objection raised on behalf of the Union of India that the suit was premature and hence not maintainable.

(3.) IT cannot be disputed that in execution of a decree against the father the decree-holder can bring to sale the entire family property alleging that the sons are bound by the debt on the foot of which the decree had been obtained. Of course it will be open to the sons to intervene and object to the sale of their shares on the ground that the debt is not binding on them. All that the plaintiffs have done in the suit is that instead of intervening in the course of the sale by the Collector they have themselves brought the suit raising the question whether their shares are also liable to be sold to recover the tax assessed on their father. There is no substance in this contentionThe main contention of Mr. Gopalaswami Aiyangar which requires consideration is that the doctrine of pious obligation would not extend to an obligation to discharge the suit debt, that is, the arrears of tax which the second defendant is liable to pay. This contention is based on the fact that the assessments made on the second defendant were made not on the basis of the return submitted by the second defendant but on an estimate of the income. The reason for the Income-tax Officers adopting this course was that in their opinion the return was not true and complete and several material books of account including day-books had not been produced before them and there was therefore a concealment of the true income. A tax levied on such basis would be in the nature of an avyavaharika debt because the conduct of the second defendant in suppressing the accounts was repugnant to morals. IT is because of the dishonest conduct of the second defendant that a tax far in excess of what was properly leviable had been levied.