GOBINDLAL BANGUR Vs. INCOME TAX OFFICER CENTRAL

JUDGEMENT

(1.) One Ramkumar Bangur died some time in the year 1961 having made and published his will dated the 26th day of June, 1941. Under the said will he appointed his nephew, Gobind Lal Bangur, as the executor and the trustee and declared that as he was childless he had taken his another nephew, Gokul Chand Bangur, to be his adopted son. The testator directed his executor and trustee to pay all his debts outstanding at the time of his death and to pay his funeral and testamentary expenses including the amount necessary for his sradh. The movable properties already made over to the testator's wife were declared to be her personal property. The will further directed the executor and trustee to set apart and hold a sum of Rs. 4 lakhs out of certain amounts lying in the account of Ramnarayan Ramkumar and to enable the testator's wife to utilize the said sum for charity, for religious expenses, for making pilgrimages and for making gifts or otherwise to relations with certain limitations. The testator bequeathed the residue of his estate, both movable and immovable, to his adopted son, Gokul Chand Bangur, absolutely. Up to the assessment year 1963-64, for which the corresponding accounting year was the period 8th November, 1961, to 27th October, 1962, the assessment in respect of the estate of the deceased was made on Gobind Lal Bangur as the executor of the estate of Sri Ram Kumar Bangur, deceased. The said assessment was made on the 30th September, 1967. It is alleged in the petition and not denied in the affidavit-in-opposition that the petitioner, Gobind Lal Bangur, has not yet made over the said sum of Rs. 4 lakhs to the widow of the testator nor has he been able to obtain the probate of the will as the estate duty payable in respect of the estate of the deceased has not yet been paid though such duty had been paid on a provisional assessment on the basis of the return filed. On the 3rd May, 1968, the respondent-Income-tax Officer addressed a letter to the petitioner to be furnished with certain particulars and information's. The letter further states that from the will of the deceased the respondent finds that the executor had been entrusted with making the following payments, viz., (a) the meeting of funeral and testamentary expenses ; (b) payment of all debts outstanding at the time of death ; (c) payment of Rs. 4 lakhs to the widow of the testator; and (d) handing over of the estate to Gokul Chand Bangur for his absolute benefit. The respondent went on to say that item No. (a) had already been paid and there were no debts or liabilities outstanding as mentioned in item No. (b). According to the respondent, estate duty was not a debt outstanding at the time of the death of the deceased and in any event it was payable by the persons liable to pay the same under the Act. In any event as the provisional duty as per the return had been paid and the estate had adequate assets there was no reason why the amount of Rs. 4 lakhs due to the widow had not yet been paid. The respondent further stated that, in the circumstances, he considered that the execution of the will was already complete and that Gobind Lal Bangur was holding the assets not as an executor but as a trustee for the benefit of the widow to the extent of Rs. 4 lakhs and to the extent of the remaining estate for the benefit of Gokul Chand Bangur. The respondent, therefore, proposed to complete the assessment for the years 1964-65 and 1965-66 under section 160 and not under section 168 and further informed 1he petitioner that the income would be subjected to tax at the same rate and it would have suffered tax in the hands of the beneficiaries if directly assessed. By his letter dated the 13th May, 1968, the petitioner objected to the course intended to be taken by the respondent and pointed out that as the estate duty payable had not yet been assessed it was not possible to make a provision for the amount of such duty. Unless the duty was paid probate of the will could not be obtained and the duty payable in respect of such probate proceedings had yet to be met out of the estate. Further, the legacy of Rs. 4 lakhs to the widow of the deceased had not yet been paid or assented to by the executor and, consequently, the administration of the estate is not yet complete and no assessment could be made of the income of the estate under Section 160 of the Income-tax Act, 1961. This rule was obtained on the 30th May, 3968, and an interim injunction restraining the respondents from proceeding with the threatened assessment was obtained.

(2.) In the affidavit-in-opposition affirmed on behalf of the respondent-Income-tax Officer it is stated that the non-completion of the administration of the said estate is due to the dilatory attitude of the petitioner. After various references to the records and the provisions of the Income-tax Act the respondent denied that it was in any way incumbent on him to make separate assessment under Section 168 of the Income-tax Act as claimed in the petition or that the decision of the respondent to complete the assessment for the aforesaid years under Section 160 of the Act was in any way illegal or void or of no effect.

(3.) One would have thought that on the averment made in paragraph 5 of the affidavit-in-opposition that the administration of the estate had not yet been completed due to the dilatory attitude of the petitioner, the intended action of the respondent in making the assessment under Section 160 would be entirely without the sanction of law.