SUKUMAR MUKHERJEE Vs. COMMISSIONER OF INCOME TAX CALCUTTA

JUDGEMENT

(1.) One Sri B. Mukherjee used to carry on a proprietary business under the name and style of Mill Stores and Belting Company and used to be assessed to income-tax as the proprietor of that concern. He died on the 16th of June, 1943, leaving him surviving an only son of the name of Sri Sukumar Mukherjee. Thereafter, on the 11th of September, 1943, the Income-tax Officer issued a notice under Section 22 (2) of the Income-tax Act addressed to the proprietor, Mill Stores and Belting Company and requiring him to submit a return of his income for the accounting year 1942, relative to the assessment year 1943-44. The notice was served on Sri Sukumar Mukherjee on the 13th of September, 1943. In compliance with that notice, Sri Sukumar Mukherjee submitted a return, showing an income of Rs. 13,2427- and along with that return he filed copies of a balance-sheet and Profit and Loss account, said to have been prepared by a firm of Auditors during the lifetime of his father. On the examination of the books of account, however, the Income-tax Officer found substantial omissions in the return and when he brought them to the notice of Sri Sukumar Mukherjee, he submitted a revised return in which a sum of Rs. 56,000/- was added to the previously declared income. The Income-tax Officer was not satisfied that the entire income had been disclosed and upon a further examination of the accounts, he made an assessment on an income of Rs. 79,106/-. The assessment was made on Sri SuKumar Mukherjee, described as the legal representative of the late Bibhutibhusan Mukherjee proprietor of Mill Stores and Belting Company. No question with regard to the validity of that assessment arises in these proceedings.

(2.) The Income-tax Officer, however, also thought that Sri Sukumar Mukherjee had deliberately furnished inaccurate particulars of the income with respect to which he had been required to file a return and, in that view, he initiated a penalty proceeding under Section 28 of the Act. The plea taken by Sri Sukumar Mukherjee in that proceeding before the Income-tax Officer was that the return initially filed by him had been prepared on the basis of a draft return, drawn up by his father before his death and that as soon as the inaccuracies in that return had been pointed out to him, he had submitted a revised return. It appears also to have been contended that the notice served on him was bad in fact and in law as the previous approval of the Inspecting Assistant Commissioner had not been obtained and communicated to him. Apart from the ground of law which I have just mentioned, taken by him, the entire defence put forward by Sri Sukumar Mukherjee appears to have been a defence on the facts. The Income-tax Officer was not impressed by that defence and held that there had been a deliberate concealment of income. Accordingly, he imposed a penalty of Rs. 40,000/- on Sri Sukumar Mukherjee under Section 28(1) (c) of the Act.

(3.) In the appeal to the Appellate Assistant Commissioner which Sri Sukumar Mukherjee preferred, he, for the first time, raised the question of law which falls to be decided in this Reference. He submitted that the Income-tax Officer had misapplied Sections 28 and 24B of the Income-tax Act in holding him liable for a penalty in respect of inaccuracies in a return filed by him as the legal representative of his father. According to his submission, there was no provision in the Act for the imposition of a penalty on the heir or legal representative of a deceased person, because the liability for assessment was only a vicarious liability and the expression 'his income', occurring in Section 28 (1) (c) could have no reference to the income shown by a person in a return filed by him in a representative capacity. The contention thus formulated by Sri Sukumar Mukherjee did not find favour with The Appellate Assistant Commissioner. He held that Section 24B (2) of the income-tax Act, which was the section applicable to the case, provided that the Income-tax Officer might proceed to assess the total income of the deceased person as if the "legal representative were the assessee". The implication of that provision, according to the Appellate Assistant Commissioner, was that the legal representative was to be taken as the asses-see for all purposes and the income which was to be assessed in his hands was to be treated as his income. The appeal was in that view dismissed. On further appeal, the Income-tax Appellate Tribunal before whom the same contention was repeated, rejected it on the same grounds and they upheld the imposition of the penalty. The Tribunal placed it on record that the appellant's Counsel had not pressed the legal objection very seriously. "Wisely," observed the Tribunal, "the learned Counsel for the appellant did not lay too much stress on the above legal grounds raised by Mm."