PRAHLAD RAI BAIROLIYA Vs. UNION OF INDIA

JUDGEMENT

(1.) THE important question that is prominently involved and that has been with great stress canvassed at the Bar in this appeal, which has been brought by the plaintiffs, is as to whether a claim for money assessed either under the Income-tax Act or under the Bihar Sales Tax Act against a Hindu undivided family as an assessee or dealer thereunder may at all be realised in execution by arrest and detention in prison of any junior member of that family, the karta or manager of the Joint family in the meantime having died.

(2.) THE plaintiffs in this case are the three sons of Gokul Chand Bairoliya. Gokul Chand Bairoliya died some time in November, 1950. It is the admitted case of the parties that in the lifetime of Gokul Chand Bairoliya the Hindu undivided family composed of him and his three sons, who are the plaintiffs-appellants in this Court, had a business which was run under the name and style of "Prahlad Rai Sagarmal" at Jainagar within the district of Darbhanga. This business, it appears, ceased to exist sometime before the death of Gokul Chand Bairoliya. While, however, Gokul Chand Bairoliya was alive and the aforesaid business had not cased to exist, certain assessments had been made under the Indian Income-tax Act against the Hindu undivided family for the income received from that firm. The total amount of such assessments for the period from 1944 to 1951 came to a sum near about Rs. 56,000 out of which a part was paid and the balance of about Rs. 33,562 was left unpaid. Similarly, under the Bihar Sales Tax Act also some assessments were then made against that Hindu undivided family for the period from October, 1942, to October, 1949, and the total amount assessed under that Act during that period was near about Rs. 11,500 out of which a part payment was made and the balance of Rs. 5,642-1-9 was left unpaid. On the death of Gokul Chand Bairoliya, the Income-tax Department as well as the Sales Tax Department issued requisitions for the aforesaid unpaid amounts and sent them to the Collector of Darbhanga for their realisation under the Public Demands Recovery Act. The certificate office on the receipt of those requisitions started proceedings against all the three sons of Gokul Chand Bairoliya, namely, (1) Prahlad Rai Bairoliya, (2) Sagarmal Bairoliya, and (3) Pursottam Das Bairoliya, and in those proceedings the certificates were ordered to be executed by their arrest and detention in prison on default of their payment of the dues under them. The plaintiffs in the meantime having come to know of the aforesaid actions taken against them by the Certificate Department brought the action under appeal. The allegations made in the plaint were that due to the sudden death of Gokul Chand Bairoliya in his native place in Rajputana, they "remained completely in dark about the liquid assets or liabilities left by their father" and that he did not leave any immovable property nor the plaintiffs ever came in possession of any immovable property belonging to their father or the Hindu undivided family, and, therefore, the dues against the Hindu undivided family could not be realised by their arrest and detention in prison. The suit was contested both by the Union of India representing the Income-tax Department and the State of Bihar representing the Sales Tax Department. Their case was that though the assessee both under the Income-tax Act and the Bihar Sales Tax Act was the Hindu undivided family and though the assessment against it was made in the lifetime of Gokul Chand Bairoliya, the then karta of that family, the plaintiffs being members of that Hindu undivided family were as much liable for the payment of the tax as that Hindu undivided family or its then karta, and, therefore, in law they could be arrested and put into prison in the proceedings taken against them for the realisation of the dues under the certificates issued by the aforesaid Departments. They further pleaded that the suit as framed was not maintainable and that the court-fee paid was also not sufficient. On these pleadings of the parties, the trial Court framed the following issues :

(3.) IT has been conceded by all the parties before us that for the purposes of the Income-tax Act and the Bihar Sales Tax Act the position of a Hindu undivided family is that of a legal entity. In our opinion this point is firmly established both on principle and by authorities. Under the Income-tax Act we get a full support of this view from the wordings of sections 2(2), 2(9), 3 and 14(1) as also from the authorities laid down in Bejoy Singh v. Commissioner of Income-tax ([1933] 1 I.T.R. 135), Kotha Govindarajulu Chettiar v. Commissioner of Income-tax ([1944] 12 I.T.R. 97), Commissioner of Income-tax v. Visheswar Singh ([1935] 3 I.T.R. 216) and Commissioner of Income-tax v. Sanichar Sah Bhim Sah ([1955] 27 I.R.R. 307). Likewise, the Bihar Sales Tax Act under sections 2(c), 4, 13 and 20 leads to the same conclusion. That being so, the only question, as already stated above, that deserves some consideration in this connection is as to whether if an assessee under these Acts is a Hindu undivided family, which as in this case still continues to exist, can the execution for the realisation of the amounts assessed against that unit in the lifetime of the then karta be levied on his death by arrest and detention in prison of the junior members of that family. Both the Income-tax Act and the Bihar Sales Tax Act lay down that the dues for the non-payment of taxes assessed under them may be realised by the issue of requisitions to the Collector and that the collector on the receipt of those requisitions shall recover them as if they were arrears of land revenue. In the Income-tax Act the mode of recovery is dealt with in section 46(2) while in the Bihar Sales Tax Act it is dealt with in section 14(4) and (6). But it has, however, been made clear in each of them that in the course of the execution the certificate shall be issued only in the name of the assessees though in the case of the Income-tax Act the powers given to the Collector for the realisation of the requisitions appear to be wider than those given in the Bihar Sales Tax Act. Section 46(2) of the Income-tax Act reads :-