TMI Blog1974 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... r her husband died on November 30, 1959, she received a number of notices from the income-tax department in respect of the arrears of income-tax stated to be due by her husband, including copies of notices issued to the banks attaching all monies and funds belonging to her husband, that on receipt of those notices, she intimated to the Income-tax Officer that she had no monies or assets of her husband, that a notice of demand dated December 10, 1959, had also been issued to the plaintiff calling upon her to pay a sum of 15,370.96 stated to be the tax due on a provisional assessment made under section 23B of the Income-tax Act, that she understood the said notice to be one served on her in pursuance of a provisional assessment of her own income and in that mistaken view she had paid the said amount on December 26, 1959. A few days later, on 28th January, 1960, the plaintiff received another demand notice for payment of a sum of Rs. 10,487.47 in pursuance of a provisional assessment on her own income for the same assessment year 1959-60. It was only then the plaintiff realised that the earlier demand was in respect of the provisional assessment made on the return made by her husband. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isional assessment made under section 23B of the Income-tax Act, and, therefore, it is barred under section 67 of the said Act and that the only remedy open to the plaintiff is to resort to the remedies provided under the Income-tax Act and not to come before a civil court. The plaintiff has later amended her plaint on 14th September, 1966 alleging that the issue of the demand notice setting out the penal consequences dated December 10, 1959, and the collection of the suit amount from her was also under coercion. As a result of this the defendant filed another additional written statement stating that the notice of demand was issued in the appropriate form prescribed under rule 23B of the Income-tax Rules, that the same only mentions the statutory consequences of default in payment of tax, that such demand does not amount to coercion unless it is followed up by actual threat or coercive steps and that, therefore, the plea of coercion is not only false but also inconsistent with her plea of mistaken payment. On these rival contentions the court below held that the payment in question by the plaintiff was under a mistaken impression that the demand related to her own assessment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is in respect of the provisional assessment under section 23B. It is not, however, made clear whether the provisional assessment related to her own return or to the return submitted by her husband. However, the address portion as originally written on the top of the notice reads : " Srimathy Sarojini Rajah, Widow of H.D. Rajah, and other legal heirs of late H. D. Rajah." According to the plaintiff as the body of the notice appeared to be as one issued to her demanding payment of the income-tax provisionally assessed on the basis of her return regarding her own income, she understood the demand as relating to her own assessment. According to the defendant, however, the address portion of the notice would make it is clear that it has been served on the plaintiff in respect of the provisional assessment made on the basis of the return submitted by H. D. Rajah regarding his income while he was alive, and the G.I.R. number given in the notice would also indicate that the demand was in respect of the return filed by the deceased, H. D. Rajah, and, in any event, the notice having been received by the auditor on behalf of the plaintiff the auditor would have explained to the plai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he shall hold them in trust for the department and pay over the same towards his arrears of income-tax and that beyond doing that she was not in a position to furnish security to the extent of Rs. 81,546.82 as called upon, as she was in no way liable for the same beyond the amount received by her from the assets of her husband. She also stated that she being one of the legal representatives of the deceased it is not legal or justifiable to treat her alone as a defaulter in respect of the arrears of income-tax or to start recovery proceedings only against her. The suit amount has been paid three days after the said reply in exhibit A-4. It is inconceivable how the plaintiff who stated that she is not in possession of any of the assets of the deceased and that as such she is not liable to be treated as a defaulter cooly and voluntarily paid the amount due by her husband three days thereafter from and out of her own funds unless it be that she was under the impression that the demand was in respect of her own assessment. It is not the case of the defendant that the plaintiff paid the said sum of Rs. 15,370.96 out of the assets of the deceased. The learned counsel for the appellant w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is seen that it specifically indicates as one relating to the assessment of H. D. Rajah for the year 1954-55. The subsequent conduct of the plaintiff also indicates that the payment of the suit amount made by her on December 23, 1959, could have been only under a mistake that the demand under exhibit A-1 related to her own assessment. Subsequent to the payment of the suit amount the plaintiff received exhibit A-6, a demand notice relating to her own assessment. She immediately informed the Income-tax Officer about the mistake committed by her with reference to exhibit A-1, by her letter, exhibit A-7. If the plaintiff had paid the suit amount voluntarily and without any such bona fide mistake as per the demand, exhibit A-1, there is no necessity or reason to suddenly change her attitude regarding her liability and call back the amount. The plaintiff's demand for repayment of the amount is only consistent with her stand that the payment has been made by mistake. We have to, therefore, hold that the plaintiff has established her case that the payment in question was made under a bona fide mistake that the demand, exhibit A-1, related to her own assessment. As regards the plea of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to cut off the water supply for non-payment of the rate, the supply of water has not been cut off nor the authority had threatened to do so, nor any legal proceedings for the recovery of the rent had been taken. The county court held the payment to be a compulsory one, as the defendants had the power to cut off the water even though they might not have threatened to do so for non-payment of the tax. But the appellate court held that the payment was a voluntary payment. Cave J., referring to the view of the county court, expressed : " The learned judge held that the payment, on the ground that the corporation had the power to stop the water supply on non-payment of the rate and that seems to be the ground taken by the learned judge, as he says in his note, 'the corporation has power to stop water supply for non-payment of the rent, and I hold that the payment was, therefore, not a voluntary payment.' There is no case which lays it down that a payment under these circumstances is a compulsory payment. If it were so, the consequence would be very far reaching ; if that were so no payment of rent to a landlord would be a voluntary payment. It was also set up that the payment wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the terms for the purpose of section 72 should be found in section 15, it might have been expected that the definition should find a place in section 2, which is the interpretation clause, and section 15 would not have contained the 12 words with which it concludes." According to the learned judge the essential elements of duress and coercion are : (1) putting the person in such fear that he is bereft of the quality of mind essential to the making of a contract, (2) that the contract was thereby obtained, and duress may be exercised by : (a) personal violence or a threat thereof, or (b) imprisonment or threat of imprisonment, or (c) threats of physical injury, or of wrongful imprisonment or prosecution of a husband, wife, children or other near relative, or (d) threats of wrongfully destroying, injuring, seizing, or withholding land or other things, or (e) any wrongful acts, that compel a person to manifest apparent assent to a transaction, without his volition, or cause such fear as to preclude him from exercising free will and judgment in entering into a transaction. The above cases show that to make the pavment involuntary or one under coercion it must, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in Sales Tax officer v. Kanhaiya Lal Makund Lal Saraf, held that the said provision is wide enough to cover not only a mistake of fact but also a mistake of law. The true principle enunciated therein is that if one party under a mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise that money must be repaid, that once it is established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law, the party is entitled to recover the same and the party receiving the same is bound to repay or return it and that no distinction can, therefore, be made in respect of tax liability and any other liability on a plain reading of the terms of section 72 even though such a distinction had been made in America. The court had observed : " On a true interpretation of section 72 of the Indian Contract Act the only two circumstances there indicated as entitling the party to recover the money back are that the moneys must have been paid by mistake or under coercion. If mistake either of law or of fact is established, he is entitled to recover the moneys and the party receiving the same is bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here there is a legal and subsisting liability on the date of payment. The question to be considered, therefore, is whether section 24B of the Income-tax Act imposes an absolute legal liability on the legal representative of a deceased person to pay the tax assessed on the deceased when he was alive. According to the learned counsel, section 24B fastens a liability on the legal representative to pay the tax assessed on the deceased though the enforcement is limited to the assets of the deceased in the hands of the legal representative, and when a legal representative chooses to pay the tax assessed on the deceased without waiting for the realisation of the assets of the deceased, the payment cannot be said to be towards a non-existing liability so as to enable the legal representative to invoke the provisions of section 72 of the Contract Act, and such payment cannot be recovered even when he finds that he is not in a position to get any of the assets of the deceased. The decision of the Supreme Court in Additional Income-tax Officer v. E. Alfred is relied on. Dealing with the scheme of section 24B, their Lordships of the Supreme Court have stated that it covers all situations and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the appellant does not in fact dispute the proposition that the personal properties of the legal representatives cannot be proceeded against for recovery of the tax due by the deceased by invoking section 24B except in a case where it is found that the assets of the deceased have come into their hands and they have not properly accounted for the same. It is true that the legal representative will come under the definition of an assessee as defined in the Act. But the liability of the legal representative has only to be determined with reference to section 24B. Therefore, in this case, we are not in a position to say that there was a legal liability on the plaintiff to pay the tax demanded under exhibit A-1 without reference to the assets of the deceased, if any, in her hands. The plaintiff has deposed that she was not possessed of any of the assets of the deceased on the date when the payment was made, that in fact there was no legal liability on her to pay the amount and that her liability to pay out of her own funds will arise only when she comes into possession of any of the assets of the deceased and is not able to account for the same. In this view, we have to hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be said that they suffered from any defect of jurisdiction or other causes of a like nature and were, therefore, rejected for that reason. The court below has taken the view that section 14 cannot be invoked in this case so as to enlarge the period of limitation under article 96 and we are inclined to agree with that view for the reasons stated above. If the suit were to be taken as one for recovery of the amount paid under coercion, the question may arise as to what is the proper article of the Limitation Act that is applicable. According to the plaintiff the residue article 120 alone is applicable, while the defendant contends that article 62 is the proper article to be applied. If article 120 were to apply the suit can be filed within six years from the date of payment and if article 62 were to apply, the suit should have been filed within 3 years from the date of payment. In this case the suit has been filed more than three years after the date of payment but before six years. Therefore, the controversy is as to which of the two articles is applicable to this case. The learned counsel for the appellant could contend that the decision in A. Venkata Subbarao v. State of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically stated that a case of recovery of tax over-paid may come under article 130, for in that case the right to get refund of the excess amount arises only after the completion of the assessment and in such a case the defendant cannot be said to have received the amount for the benefit of the plaintiff and the cause of action in such cases would arise only when the payment is found to be excess and not on the date of payment. Tilokchand Motichand v. H. B. Munshi, after reaffirming its earlier decision in A. Venkata Subbarao v. State of Andhra Pradesh proceeded to consider the appellant's claim in that case that article 120 of the Limitation Act giving a period of six years should be applied. This is how they proceeded : " But taking the most favourable view of the petitioner's case article 120 of the Limitation Act of 1908 giving a period of six years for the filing of a suit would apply to the petitioner's claim, the period of six years would have expired some time in 1966 ......" Then the learned judges proceed to state that even if the petitioner is entitled to the benefit of section 30(a) of the Limitation Act of 1963, the period of limitation for a suit which was formerl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act specifically bars a suit of this kind. Section 67 is as follows : " 67. No suit shall be brought in any civil court to set aside or modify any assessment made under this Act, and no prosecution, suit or other proceeding shall lie against any officer of the Government for anything in good faith done or intended to be done under this Act." We are not able to see how this suit is one to set aside or modify any assessment made under the Income-tax Act. This is a simple suit for recovery of money said to have been paid under a mistake or under coercion. The plaintiff does not seek to set aside or modify any assessment made under the Act against her husband. What she states is that she is not liable to satisfy the demand under exhibit A-1 payment of tax due by her husband from out of her personal funds and, therefore, the collection made from her should be refunded. In Inderchand v. Secretary of State for India an assessee claimed certain amount as refund due to him from the income-tax department by filing a suit when his claim was denied by the income-tax department. The suit was contested by the income-tax department contending, inter alia, that the civil court has no jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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