TMI Blog1961 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 1948, leaving a registered will dated June 23, 1948. A copy of the will has been marked in these proceedings as exhibit P-1. The petitioner is the widow of the late Sri S.P. Sadanandan. Some reference will have to be made regarding the nature of the directions given by the testator constituting executors for administration of the estate. As mentioned earlier, Sri S.P. Sadanandan died on 10th July, 1948. Though an assessment for the particular years in question had already been made, it appears that the Income-tax Officer, Special Circle, Coimbatore, who is in charge of the assessment in question, started proceedings under section 34 of the Indian Income-tax Act for purposes of making reassessment for the years 1945-46 to 1949-50 both inclusive. The relevant notice that has been issued, though not actually marked before us, is evident from the files produced by the learned counsel for the revenue. That notice is dated March 20, 1954, and addressed to the late S.P. Sadanandan by legal heirs, E.D. Sadanandan and others, Kozhikode . A return also appears to have been sent and the name of the assessee in the return sent shows the late S.P. Sadanandan by legal heirs, E.D. Sadananda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, three daughters and one grandson. It is further stated that over and above these persons there were also two beneficiaries under the will and the will appoints three persons as executors, namely, Mrs. Suseela Sadanandan, Earnest Devadas Sadanandan and Mr. Paramasivan, a chartered accountant of Kozhikode. The appellant therein further says that the officer should have proceeded against the executors under section 34, read with section 24B, sub-section (2), of the Indian Income-tax Act, and it is all the more necessary because the sons of the deceased were college students at the time of his death. It is further reiterated that the officer, not having proceeded in accordance with the express and mandatory provisions of section 34 and section 24B(2), the proceedings initiated are entirely irregular and void and have to be set aside. This ground is again reiterated later in the memorandum of grounds to the effect that, having failed to issue notice under section 34 to the all the legal representatives of the deceased as detailed in the will, the appellant submits that the proceedings initiated may be declared void in that the officer went wrong when making the assessment, against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding the circumstances under which the demand is sought to be made and finally she seems to have gathered some information to the effect that proceedings by way of reassessment under section 34 of the Act have been taken by the income-tax authorities. The petitioner quite naturally taking up the position, that she is not in any way liable for payment of the amount demanded, took steps to challenge these two notices that were received by her. That challenge was made in O.P. No. 43 of 1956-K in this court and the main relief asked was for quashing the two notices as well as any assessment that have been made by the Income-tax Officer concerned. But when the matter came before a learned judge of this court, evidently the learned judge proceeded on the basis that because an appeal by Sri E.D. Sadanandan was pending before the Appellate Tribunal, Madras, it was not necessary to go into the controversy at that stage and in this view the learned judge, by his order dated March 27, 1957, dismissed the application giving liberty to the petitioner therein to move the court again, if so advised, at a later stage. Subsequently, as we mentioned earlier, the Appellate Tribunal also by its o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnection, the learned counsel, K.V. Suryanarayana Iyer, placed reliance upon the wording of section 24B(2) read also along with section 34 of the Act. The learned counsel has also drawn our attention to certain decisions bearing upon this aspect and also certain decisions of the Supreme Court to the effect that any assessment made on the basis of an invalid notice not satisfying the conditions of the section 34 will be illegal and totally void. We will advert to these decisions a little later. So far as the statement of facts is concerned, as we mentioned earlier, there does not appear to be any serious controversy regarding these matters. In fact, in the counter-affidavit filed by the first respondent in these proceedings, the execution of the will and also the fact that there are three persons who have been appointed as executors under the said will are all admitted. But the aspect that is pressed in the counter-affidavit is that a notice was issued under section 34 in the names of the heirs and legal representatives of the deceased, S.P. Sadanandan, and such a notice was arrived on the eldest son, E.D. Sadanandan, and he entered appearance and also filed a return and it is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 assets the total income of the deceased person as if such executor, administrator or other legal representative were the assessee. (3) Where a person dies, without having furnished a return which he has been required to furnish under the provisions of section 22, or having furnished a return which the Income-tax Officer has reason to believe to be incorrect or incomplete, the Income-tax Officer may make an assessment of the total income of such person and determine the tax payable by him on the basis of such assessment, and for this purpose may, by the issue of the appropriate notice which would have had to be served upon the deceased person had he survived, require from the executor, administrator or other legal representative of the deceased person any accounts, documents or other evidence which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, S.P. Sadanandan was dead even before a notice under section 34 was issued by the Income-tax Officer concerned. Therefore, under sub-section (2) of section 24B, it is necessary that the notice is to be served on the executor, administrator or other legal representative of the deceased person and the said sub-section also says that the Income-tax Officer may therefore proceed to assess the total income of the deceased person as if such executor, administrator or other legal representative were the assessee. Sri K.V. Suryanarayana Iyer urges that though the words used executor, administrator other legal representative are in singular the actual scheme of the section will clearly show that there is nothing there to indicate that, when there is more than one executor, administrator or legal representative, the representation of the deceased person can be said to be complete without notice being issued to all the executors or all the administrators or all the legal representatives of the deceased person. In this connection it is also desirable to refer to two sections of the Indian Succession Act, namely, section 211(1), which has been relied upon by Mr. K.V. Suryanarayana Iyer, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considerable importance is to be seen from the decision of the Supreme Court in Narayana Chetty v. Income-tax Officer, Nellore [1959] 35 I.T.R. 388; [1959] Suppl. 1 S.C.R. 189; A.I.R. 1959 S.C. 213. At page 215, Mr. Justice Gajendragadkar, speaking on behalf of the court, observes: The argument is that the service of the requisite notice on the assessee is a condition precedent to the validity of any reassessment made under section 34; and if a valid notice is not issued as required, proceedings taken by Income-tax Officer in pursuance of an invalid notice and consequent orders of reassessment passed by him would be void and inoperative. In our opinion, this contention is well founded. The notice prescribed by section 34 cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assessee as required that the Income-tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid then the validity of the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalid notice would be illegal and void. That is the view taken by the Bombay and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding the procedure adopted by the income-tax department, it was perfectly open also to the legal representatives or executors of the deceased to raise all the objections based upon non-compliance with the provisions of section 34. Again, that the provisions of section 34 have to be very scrupulously complied with, is emphasised by a more recent decision of their Lordships of the Supreme Court in Calcutta Discount Co. Ltd. v. Income- tax Officer, Calcutta [1961] 41 I.T.R. 191; [1961] 2 S.C.R. 241; A.I.R. 1961 S.C. 372. At page 375, Mr. Justice Das Gupta, delivering the judgment on behalf of the Bench, observers: To confer jurisdiction under this section to issue notice in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year, two conditions have therefore to be satisfied. The first is that the Income-tax Officer must have reason to believe that income, profits or gains chargeable to income-tax have been under-assessed. The second is that he must have also to believe that such 'under-assessment' has occurred by reason of either (i) omission or failure on the part of an assessee to make a ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Act must be a proper notice and one in accordance with law and, if the notice is defective in any particular respect, the proceedings taken by way of assessment would be illegal and void. Therefore, the question is whether in this case the proceedings taken for reassessing, by issuing notice only to one of the heirs, namely, E.D. Sadanandan, in any way invalidated because of the non-issue of the notice to the other legal heirs including all the executors of his estate. That the department must have been well aware of the existence of the other executors is clear from the statements contained in the counter-affidavit itself. We are not prepared to accept the statement in the counter-affidavit that the department has bona fide produced on the basis that E.D. Sadanandan sufficiently represents the estate of the deceased. In fact, we have already referred to the fact that even the original notice under section 34 dated March 20, 1954, clearly states that it is issued to the late S.P. Sadanandan by legal heirs, S.D. Sadanandan and others. That clearly shows that the department was well aware of the existence of other legal heirs of the deceased. Again, the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious other legal representatives of deceased assessee. In the case before the learned judges it is seen that one Ebenezer died intestate on 22nd November, 1945, leaving as his legal representatives a son and eight daughters four of whom were minors. So far as the particular aspect is concerned, it will be seen that the Income- tax Officer called upon only the son, who is only one of the legal representatives of the deceased, Ebenezer, proposing to make a reassessment for the particular period in question under section 34 of the Act. The son on receipt of the notice objected to proceedings being taken under section 34 and also pointed out the existence of the other legal representatives of the deceased. No doubt, this objection was overruled by the Income-tax Officer and when an appeal had been taken to the Appellate Assistant Commissioner the son moved the High Court under article 226 for quashing the entire proceedings sought to be taken by the income-tax department. Rajagopalan J. observes at page 13: It cannot be doubted that the liability imposed by section 24B(2) on the legal representative of a deceased attaches itself to all the legal representatives of the deceased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that case, cannot be sustained. No doubt, actually no writ was issued because their Lordships were informed that a departmental appeal was pending against the assessment itself and, therefore, after expressing their opinion that the assessment cannot be sustained, their Lordships left it there. Mr. G. Rama Iyer has not been able to place before us any decision to the effect that under such circumstances it is open to the department to choose one of the executors or legal representatives and proceed with the assessment under section 34. So far as we could see, the decision of the Madras High Court referred to above has not in any way been disapproved or dissented from in other jurisdictions. We are in respectful agreement with the reasoning of the learned judges adopted in the decision referred to above. Therefore, it will follow the proceedings taken in this case by the department by issuing notice only to one of the executors in question under section 34 is invalid and it further follows, on the basis of the decision of the Supreme Court in Narayana Chetty v. Income-tax Officer, Nellore [1959] 35 I.T.R. 388; [1959] Supp 1 S.C.R. 189, that the further orders of assessment based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e circumstances as against the petitioner. The contention of Mr. Suryanarayana Iyer is that the petitioner cannot certainly be considered to be an assessee as understood under the provisions of the Indian Income-tax Act; and the provisions of section 46(2) relate only to an assessee and not to any other person and, therefore, the summary proceeding provided under section 46(2) cannot be put into operation as against the proceeding. No doubt, the learned counsel has drawn our attention to certain decisions which have, at any rate, considered the scope of the expression assessee in section 46(1) an have held that it will not take anybody else but the assessee pure and simple. No doubt, Mr. G. Rama Iyer, learned counsel for the revenue, urged that there are other decisions where the expression assessee has been understood to include also a legal representative and recognising a right of appeal against the order passed under the Act. But we are not inclined to embark upon an enquiry regarding that controversy in these proceedings because our decision on the first point completely concludes the case as against the department and in favour of the assessee. Therefore, so far as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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