COMMISSIONER OF INCOME TAX Vs. D N MEHTA

JUDGEMENT

(1.) . -

(2.) THIS is a reference made by the Commissioner of Income Tax on his motion under Section 66 (1), Income Tax Act, 1922, in which he raises two questions, the first one being, in effect, whether Section 24-B, which was added to the Income Tax Act by the Income Tax (Second Amendment) Act of 1933 has retrospective effect so as to apply to the case of a person dying before the Amendment Act was passed, and, secondly, whether, if the Amendment Act has retrospective effect, the Commissioner was justified in taking action against the assessee under Section 34, Income Tax Act.

(3.) THE second question in terms does not arise, but as the subject has been discussed in argument, and the Advocate-General had invited the Court to give some guidance upon it to the Commissioner, I would say that, had I been of opinion that Section 24-B was retrospective, I should still have thought that Section 34 had no application in the present case. Sub-Section (1), Section 24-B makes the estate of a deceased person liable for tax under two heads, first, for tax assessed as payable by such person, and secondly, for any tax which would have been payable by him under the Income Tax Act if he had not died. It is not easy to see what tax falls under that second head, because the deceased would not have become liable for tax merely by continuing to live it would have been necessary to make an assessment of his income. However, whatever the meaning of sub-Section (1) may be, the construction of sub-Sections (2) and (3) to my mind presents no difficulty : sub-Section (2) deals with the case of the deceased person not having been served with a notice under sub-Section (2) of Section 22 or Section 34, as the case may be, the latter section coming into operation where there has been an assessment upon the deceased under Section 22 (2), but some income has escaped assessment, so that if the deceased had lived he would have received a notice under Section 34. In either of those events the sub-section in effect provides that the Income Tax Officer can serve the appropriate notice on the personal representative, and then proceed to assess the total income of the deceased person as if such representative were the assessee. THEn sub-section (3) deals with the case in which a notice has been served on the deceased under sub-Section (2) of Section 22, and the notice has either not been complied with at all, or has been complied with imperfectly.