TMI Blog1970 (10) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... Sadanandan, it was necessary to call for a supplemental statement of the case. The supplemental statement of the case has now been received, and, hence, the reference is before us for determination of the fifth question. The facts giving rise to the reference have already been stated by us in our earlier judgment and it is, therefore, not necessary to rehearse them over again but in order that the discussion of the arguments which have been advanced before us may be intelligible, it would be desirable if we state a few facts bearing directly on the fifth question. The notice issued by the Income-tax Officer for reopening the assessment of the deceased, Chooharmal Wadhuram, for the assessment years 1946-47 and 1947-48, under section 34(1)(a) were addressed to "Chooharmal Wadhuram, legal representatives-Daulatram and others" and though there were admittedly apart from Daulatram, other legal representatives of Chooharmal Wadhuram, namely, three other sons and a widow named Lilavati, the notices were served only on Daulatram and were not served on the other legal representatives. On these facts the assessee contended that, since the notices were not served on all the legal representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending, the proceedings could not be continued and the assessment could not be made after the person's death. This lack of machinery for assessment of income of a deceased person was remedied by the legislature by section 24B, which reads as follows: "24B. Tax of deceased person payable by representative.- (1) Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to which the estate is capable of meeting the charge the tax assessed as payable by such person, or any tax which would have been payable by him under this Act if he had not died. (2) Where a person dies before the publication of the notice referred to in sub-section (1) of section 22 or before he is served with a notice under sub-section (2) of section 22 or section 34, as the case may be, his executor, administrator or other legal representative shall, on the serving of the notice under sub-section (2) of section 22 or under section 34, as the case may be, comply therewith, and the Income-tax Officer may proceed to assess the total income of the deceased person as if such executor, administrator or other legal repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Officer may make the assessment of the total income of such deceased person, and determine the tax after serving such notices, as may be required under section 22 or section 23, upon the legal representative of the deceased person to produce the accounts, documents or other evidence. We are concerned here with sub-section (2) of section 24B, since Chooharmal died before service of the notices under section 34(1)(a) and we must, therefore, closely examine the language of that provision. Section 24B, sub-section (2), is founded on the principle which has been stated in the following words by Salmond on Jurisprudence, twelfth edition, at page 120: "The rights which a dead man thus leaves behind him vest in his representative. They pass to some person whom the dead man, or the law on his behalf, has appointed to represent him in the world of the living. This representative bears the person of the deceased, and therefore has vested in him all the inheritable rights, and has imposed upon him all the inheritable liabilities of the deceased. Inheritance is in some sort a legal and fictitious continuation of the personality of the dead man, for the representative is in some sort ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y represent the whole interest of the deceased person." Their Lordships of the Privy Council also expressed a similar view in Khiarajmal v. Daim. In that case one Naurez had died and in a suit brought against his estate, Amirbaksh, by a guardian, Alahnawaz, was impleaded as the legal representative. Amirbaksh was one of the heirs of Naurez but in no other sense his legal representative. Alahnawaz was not in any legal sense his guardian. It was contended that Naurez's heirs were bound by the proceedings in the suits and that his share of the property, whatever it was, was effectively sold in the suit, or at any rate that the share of Amirbaksh himself passed by the sale. Their Lordships held that the estate of Naurez was not represented in law or in fact in the suit and the sale of the property was without jurisdiction and null and void. It was further held that the share of Amirbaksh in his father's estate was not bound. Their Lordships expressed the opinion that this was not a mere question of form, but one of substance. It would, therefore, seem clear that where a person dies leaving more than one legal representative, the Income-tax Officer must proceed to assess the total inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer must proceed against all the legal representatives of a deceased person by serving a notice on them, it does not mean that the rule must be applied with unmitigated rigour in all kinds of cases irrespective of their peculiar facts. There may be cases where, though there are several legal representatives, one may represent the whole interest of the deceased and in such a case there being complete representation of the interest of the deceased before the Income-tax Officer, the assessment made would bind the estate of the deceased. Such casts may arise, for example, where one legal representative is managing the entire estate of the deceased and he, therefore, completely represents the interest of the deceased. This was the exception which the Supreme Court had in mind when it said in First Addl. Income-tax Officer v. Mrs. Suseela Sadanandan that: "If it had been established that E. D. Sadanandan had alone been managing the entire estate, the court could have come to the conclusion that he was the legal representative of the deceased and, therefore, represented the estate in the assessment proceedings." Then there may be cases where though one legal representative is served, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a result of such inquiry ascertained to be the legal representatives ? If the Income-tax Officer does this, it is all that as a reasonable man he can be expected to do and the legal representatives who are served would sufficiently represent the estate of the assessee: vide First Addl. Income-tax Officer v. Mrs. Suseela Sadanandan. These are some kinds of cases where the assessment would be valid even if one or some only of the legal representatives are served with notice. They constitute exceptions to the general rule which requires that where an assessee dies leaving more than one legal representative, the Income-tax Officer must procesd to assess the income of the deceased by serving notice on all the legal representatives. These exceptions proceed on the same principle on which the general rule is based, namely, that there must be complete representation of the estate of the deceased in the proceedings before the Income-tax Officer and it is because in the cases falling within the exceptions one or more legal representatives completely represent the estate of the deceased that it is held that service on them is enough to bind the estate of the deceased. Now turning to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new that there were other legal representatives, there was no occasion for him to make any inquiry and there was, therefore, no inquiry, much less a diligent and bona fide inquiry. It is, therefore, not possible to hold that service of the notices on Daulatram alone was sufficient to bind the estate of Chooharmal Wadhuram. Daulatram did not completely represent the estate of the deceased, the estate was only partially represented and, therefore, the assessment of the income of the deceased, Chooharmal Wadhuram, was not in compliance with the requirements of section 24B, sub-section (2). The revenue, however, contended that even if service of the notices on Daularam alone was not sufficient to bind the estate of the deceased in the sense that the order of assessment could not be enforce against the other legal representatives who were not served with the notices, it was valid as against Daulatram since Daulatram was a legal representative of the deceased and he was served with the notices. This contention overlooks the basic principle that in order to assess the income of a deceased person the assessment must be made on all those who represent his interest or estate wholly and com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the revenue on the decision of the Supreme Court in Additional Income-tax Officer v. E. Alfred, but we do not see how this decision is of any help to us in determining the question before us. The only point which fell for determination before the Supreme Court in this case was whether a legal representative who was served with notice under section 22(2) and against whom the proceedings were initiated for assessing the income of a deceased person was an "assessee" on whom penalty could be imposed under section 46(1). The Supreme Court held that, since a legal representative is deemed to be an assessee under section 24B(2), the fiction must be carried to its logical conclusion and the legal representative must be held to be an assessee also for the purpose of applicability of sections 45 and 46(1). There was no question before the Supreme Court whether service of notice on only one of the legal representatives was sufficient for valid initiation of proceedings. It was assumed before the Supreme Court as before the revenue authorities, the Tribunal and the High Court, that the assessment proceedings were validly initiated and the amount of tax validly determined and the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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