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TMI Blog1974 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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. Thereupon, the plaintiff wrote to the Income-tax Officer stating that the payment of Rs. 15,370.96 was made by her under a mistake and requesting him to adjust the said sum against the demand of Rs. 10,487.47, which he declined to do. To avoid penal consequences, the plaintiff paid also the said sum of Rs. 10,487.47. Thereafter, the plaintiff applied to the Commissioner of Income-tax for refund of the said sum of Rs. 15,370.96 which was refused. In the above circumstances the plaintiff filed the suit on June 29, 1963, for refund of the said amount after issuing a notice under section 80 of the Code of Civil Procedure on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued 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, that in any event, the payment should be taken to have been made under coercion and that, therefore, the plaintiff is entitled to invoke section 72 of the Indian Contract Act and recover the suit amount. The court below also held that the suit is maintainable in a civil court for the reliefs claimed and that section 67 of the Income-tax Act is not a bar. It further held that the suit is not barred by limitation as the claim for refund on the ground of coercion would fall under article 120 of the Limitation Act of 1908, though it expressed the view that if the suit is taken as one for refund of the tax paid on the ground of a mistak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 plaintiff the true position as regards the demand as to whether it related to her assessment or to the assessment of her husband. The plaintiff as P.W. 1 has deposed that on account of the death of her husband she was in distress and not keeping good health in December, 1959, when she received the demand notice exhibit A-1 as well as similar notices, that on a mistaken impression that the demand related to her own assessment and with a view to avoid the levy of heavy penalty as stated in the demand notice, she remitted the suit sum from out of her own funds under the receipt, exhibit A-2, that towards the end of January, 1960, when she recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 would, however, point out that the demand notice, exhibit A-1, has been received by the auditor and he has forwarded the same to the plaintiff with an endorsement to pay the tax within a particular date and the auditor could not have made that endorsement without knowing as to whose assessment it relates. The plaintiff in her evidence had deposed that the notice, exhibit A-1, was received by her direct though she is not able to explain as to how the auditor's signature finds a place in the office copy of the notice. The Income-tax Officer as D.W. 1 identifies the signature of the auditor. Even assuming that the auditor has received this noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 coercion put forward by the plaintiff, it is seen that P.W. 1 has only deposed that she not only paid the amount on the basis of a bona fide mistake but also with a view to avoid the levy of penalty which has been referred to in exhibit A-1. Therefore, the plea of coercion is mainly based on the contents of the demand notice exhibit A-1. The question, therefore, is whether the issue of the demand in the form prescribed which refers to the imposition of the statutory penalty in the event of the non-payment of the amount would amount to coercion. This question is somewhat important in this case inasmuch as the contentions advanced on either side ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 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 was a compulsory payment on other grounds." Wills J., the other learned judge said : " In my opinion, the payment in this case was a voluntary payment. The respondent gave way and paid. It seems to me in these circumstances that it is idle to say that there is anything like duress -there was nothing in the nature of a threat used ; it is simply the ordinary case of a person raising a contention when a demand is made upon him. This is not sufficient to constitute duress, so as to prevent a payment being a voluntary one." The said decision in Chairman, Municipal Council, Rajahmundry v. Subba Rao was also relied on. In that case the assessee paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 fact, be so and that the mere fact that a statutory body conceiving itself justified under the circumstances in making a demand in the form prescribed, the demand containing the warning that if it is not satisfied, legal process for realisation will be put into force, cannot take the payment in pursuance of such a notice out of the category of voluntary payments. The learned counsel for the respondent, however, relies on the decision of Krishnan Pandalai J. in Municipal Council, Tuticorin v. Ralli Brothers, wherein the learned judge has stated that the character of a payment is to be judged from the real nature and the circumstances in which it was made whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 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 bound to repay or return them irrespective of any consideration whether the moneys had been paid voluntarily, subject however to questions of estoppel, waiver, limitation or the like. If once that circumstance is established the party is entitled to the relief claimed. If, on the other hand, neither mistake of law nor of fact is established, the party may rely upon the fact of the moneys having been paid under coercion in order to entitle him to the relief claimed and it is in that position that it becomes relevant to consider whether the payment has been a voluntary payment or a payment under coercion. The learned counsel for the appellant, however, contends tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 contingencies and makes the liability absolute, limited, however, to the extent to which the estate of the deceased is capable of meeting the charge. But we are not able to understand the said observations as holding that the liability of the legal representative to pay the tax assessed on the deceased is absolute without reference to the estate of the deceased in his hands. If the deceased has not left any asset, the liability of the legal representative has to be " nil ". On the other hand if the deceased has left assets valued more than the amount of tax due by him, then the liability of the legal representatives will be to pay the tax in full. In our view, sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiff 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 the plaintiff is entitled to invoke section 72 of the Contract Act to seek recovery of the amount on the ground that she paid the amount though it is not legally due by her. On the fourth question as to whether the suit is barred by limitation, the learned counsel for the appellant contends that if the suit is taken as one for refund of the money paid under a mistake, article 96 has to apply to which event the suit will be clearly barred by time, for the plaintiff admittedly became aware of the mistake on January 28, 1960, and the suit was filed on June 29, 1963. This is also the view taken by the court below. Though the learned counsel for the respondent does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle 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 Andhra Pradesh is conclusive on the point and that as per the said decision all suits for refund of tax illegally collected except those where the taxes have been paid under a mistake will be governed by article 62. But according to the learned counsel for the respondent the decision in Tilokchand Motichand v. H. B. Munshi strikes a different note and holds that wherever relief is claimed on the ground of coercion, article 120 has to be applied. We have already held that the payment in question cannot be said to have been made under coercion. But we shall assume for the sake of argument that the suit is one for refund of an amount paid under coercion, and consider the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears 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 formerly covered by article 120 of the 1908 Act would in a case like this be covered by article 113 of the new Act and the suit in that case would have to be filed by the 1st January, 1967, and that as the petition having been presented in February, 1968, his claim would be barred. It can, therefore, be seen that this decision does not run counter to the decision in A. Venkatasubba Rao. v. State of Andhra Pradesh, and it merely considered the contention of the petitioner in that case that article 120 of the Limitation Act should be applied to his case and held that even if that article were to apply the petitioner's claim was barred by limitation. It cannot, therefore, be constru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 jurisdiction to entertain the suit. It was held in that case that since the assessee did not seek to set aside or modify any assessment within the meaning of section 67 of the Act and the only question to be decided being whether the plaintiff is entitled to the refund, the suit was not barred under section 67. No particular provision of the statute was referred before us as affording any relief to the petitioner to get back the amount paid by her. It is true, if a statute imposes a liability and creates an effective machinery for deciding questions of law or facts arising in regard to that liability, it may by necessary implication bar a civil suit in respect of the said liability. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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