TMI Blog1965 (8) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, but before he could complete the assessments, Rangalal Jajodia died. Thereafter, he called upon his eldest son, Sankarlal Jajodia, to show cause why he should not be treated as the legal representative of his late father and an assessment made on him accordingly. Sankarlal Jajodia objected to the notice on the ground that his father had under his will disinherited him and he had, therefore, nothing to do with his estate. He also brought it to the notice of the Income-tax Officer that Aruna Devi and Ramkumar Bhuwalka had been appointed by his father under his will as his executrix and executor. But Sankarlal Jajodia not having produced the will in spite of opportunities given to him for the purpose, the Income-tax Officer, apparently on the assumption that Sankarlal Jajodia having performed the obsequies of his father was entitled to act as his legal representative in the assessment proceedings, completed the assessments on February 28, 1947, describing . the assessee as Estate of Sri late Rangalal Jajodia by legal representatives Sri Sankarlal Jajodia, son of Sri Rangalal Jajodia, Srimathi Aruna Devi, wife of Sri Rangalal Jajodia, and her children . But the assessment orders a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke fresh assessments on the two executors, viz., S ri Ramkumar Bhuwalka and Srimathi Aruna Devi Jajodia in accordance with the provisions of section 24B of the Act. It may be seen that the Appellate Assistant Commissioner decided the appeal mainly with reference to the capacity of Sankarlal Jajodia to figure as the legal representative of his father and did not go into the merits of the assessments, which obviously were left open by him. Pursuant to the directions of the Appellate Assistant Commissioner, further proceedings were taken. In answer to the notice of the Income-tax Officer acting under sections 24B, 23(3) and 31, Aruna Devi appeared and asked for copies of the return and notes on examination and enquiry and the letters written by the department to the deceased, so that she could have an opportunity to place her objections; but Ramkumar by his solicitor intimated that he had no desire to serve as executor and that he disclaimed any responsibility in respect of the estate of the deceased. The Income-tax Officer was of the view that as even before the death of Rangalal Jajodia notices under sections 23(2) and 22(4) as well as under section 22(3) had been served and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Rangalal Jajodia. He further thought that as his predecessor in the earlier appeal had not cancelled the assessments that were made on the estate through Sankarlal Jajodia but only set them aside on the view that Sankarlal Jajodia was not the proper legal representative, the reassessments made pursuant to the direction under section 31 and the second proviso to section 34(3) were not barred by time. But on the other contention of the appellant, he was inclined to think that the Income-tax Officer was wrong in denying Aruna Devi an opportunity to place her objections to the assessments and prove that the income that had been returned was correct. On this ground he set aside the assessment orders with a direction that the Income-tax Officer should give an opportunity to the executors to report their objections, if any, to the income that was sought to be assessed and then complete the assessments according to law. Against this order there were appeals by Aruna Devi representing her husband's estate. The Tribunal dismissed them on November 29, 1955, on the view that it was unnecessary to go into the merits as the Appellate Assistant Commissioner had given her a fresh opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been formulated in that way, the substantial points which arise are, as we said at the outset, as to the scope and applicability of sub-section (3) of section 24B and the second proviso to sub-section (3) of section 34. As to the first aspect, Mr. Padmanabhan for the assessee submits that sub-section (3) of section 24B will have no application to the facts of the case, as here the procedure contemplated by the latter half of that subsection had already been complied with during the lifetime of Rangalal Jajodia and that, therefore, the assessment orders are bad. Learned counsel urges that the Act has prescribed no procedure for a situation in which the assessee having submitted his returns and produced his accounts on being called upon to do so and died at a point where all that remained to be done was to make formal orders of assessments, the Income-tax Officer having already formed his opinion in regard to them. It is said that it is only where a person died after furnishing a return which the Income-tax Officer has reason to believe to be incorrect or incomplete and the Income-tax Officer may make an assessment of the total income of the deceased and determine the tax by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e first of which deals with the liability of the executor, administrator or other legal representative 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 which has been assessed on the deceased during his lifetime or which remained to be assessed after his death. While the executor, administrator or other legal representative is made liable to pay tax assessed or to be assessed, such liability is not personal to him but is to be met out of the estate of the deceased and to the extent to which such estate is capable of meeting the charge. The liability to pay tax, which is yet to be assessed, is comprehended by the last words of the first part of the section, viz., or any tax which would have been payable by him under this Act if he had not died. The second and third parts of the section prescribe the procedure for assessment of total income and determination of the tax payable on the basis of such assessment. Sub-section (2) was substituted in its present form by section 29 of the Indian Income-tax (Amendment) Act, 1939. The two sub-sections seem to deal with, as we understand them, practically all kinds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he presence of the legal representative and that the first part of sub-section (3) is of sufficient amplitude to support the legality of the assessment orders. The argument for the revenue is elaborated in this way. Sub-section (3) of section 24B was intended by the legislature to immortalise the assessee, t hat its object is to see that assessment proceedings never abated on account of the death of a person, whether he has or has not returned his income during his lifetime. The whole of section 24B was intended to cover a lacuna in respect of all situations arising out of the death of a person at any stage, before or after filing of returns by him. While liability to pay tax is fixed by sub-section (1), on the procedural matter it is only for purposes of sub-section (2) a legal representative is to be regarded or to be deemed an assessee quoad the estate of the deceased, but not necessarily for the purpose of sub-section (3). In fact, sub-section (3) does not say that a le gal representative, for purposes of assessment, shall be deemed to be an assessee. The first part of sub-section (3) enables the Income-tax Officer to deal with a return submitted by the deceased which he believ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be, as a condition to the validity of assessments in situations within its purview. That is to say, where, as in this case, an assessee died after having filed a return, which the Income-tax Officer believes to be incorrect or incomplete and the assessee during his lifetime being called upon to answer under sections 22(4) and 23 (2) had complied with it, the procedure so far, before the Income-tax Officer passes formal orders of assessments, will have to be reiterated in the presence of his executor, administrator or other legal representative in order to enable him to show that the return filed by the deceased was correct or complete. In such a case, the procedure will have to be gone through de novo. It may be that from the point of view of the revenue reiteration of the procedure may be pointless. But when under sub-section (1) of section 24B a legal representative is sought to be made liable to tax quoad the estate of the deceased, he must necessarily have an opportunity to convince the Income-tax Officer that the return filed by the deceased was correct or complete. In our view, this opportunity to the legal representative is not merely a fo rmal one, but is one of substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the second proviso to sub-section (3) of section 34. The contention for the assessee is that the direction given by the Appellate Assistant Commissioner in his order dated April 30, 1952, falls outside the purview of the second proviso, so that it would not save the bar of time. This is on the assumption that the last date for initiating action or passing of orders of assessment or reassessment would be March 31, 1947, in the case of assessment year 1942-43 and March 31, 1948, in the case of the following assessment year. The Indian Income-tax (Amendment) Act, 1953, came into force only from April 1, 1952, so that the second proviso, according to counsel for the assessee, as amended by that Act will not help the revenue to save time. He contends that even on the assumption that the Amending Act was retrospective, the position would be the same, because Aruna Devi was a stranger so far as the assessment made against Sankarlal Jajodia and the appeal that was taken by him were concerned and that the direction made by the Appellate Assistant Commissioner on April 30, 1952, was unnecessary for the disposal of the appeal of Sankarlal Jajodia. It is also pointed out that the second p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is section shall be made after the expiry, in any case to which clause (c) of sub-section (1) of section 28 applies, of eight years, and in any other case, of four years from the end of the year in which the income, profits or gains were first assessable. This scheme of limitation, in broad outlines, has been more or less maintained in the subsequent stages of amendments of section 34 both in respect of initiating action and passing of orders of assessment or reassessment in particular cases. Then came the Income-tax and Business Profits Tax (Amendment) Act, 1948 (XLVIII of 1948), which considerably expanded section 34. What is material to note is sub-section (2) of section 34 as it stood prior to 1948 was renumbered as sub-section (3), to which two provisos have been added, the first of which was to the effect that where a notice under sub-section (1) had been issued within the time therein limited, the assessment or reassessment to be made in pursuance of such notice might be made before the expiry of one year from the date of the service of the notice, even if such period exceeded 8 years or 4 years as the case may be. The second proviso read as follows : Provided fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , meaning a third party or a stranger to the appeal or revision or a person who is not the assessee and who is not the appellant or the revision petitioner, offended article Hand would, therefore, to that extent, be void. Relying on this ruling of the Supreme Court, learned counsel for the assessee argues that Aruna Devi being a stranger to the appeal of Sankarlal Jajodia, the second proviso was totally inapplicable to this case and the Appellate Assistant Commissioner had no jurisdiction in this appeal to give a finding or a direction to assess her. On the other hand, the revenue contends that the effect of the judgment of the Supreme Court above referred to is not to totally nullify the scope of any person in the second proviso, but it leaves the second proviso unaffected in so far as it relates to a person intimately connected with the assessment under appeal or revision. If this contention is accepted, it would follow that the finding or direction given by the Appellate Assistant Commissioner to assess or reassess Aruna Devi in her ca pacity as legal representative of the deceased would be in order. The question posited by the rival contentions had been considered and settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affect the assessment for the said year on a partner or partners of the firm, member or members of the Hindu undivided family or the individual, as the case may be. In such cases though the latter are not eo nomine parties to the appeal, their assessments depend upon the assessments on the former. The said instances are only illustrative. It is not necessary to pursue the matter further. We would, therefore, hold that the expression 'any person' in the setting in which it appears must be confined to a person intimately connected in the aforesaid sense with the assessments of the year under appeal. Having regard to this view of the Supreme Court, as to the scope of the expression any person in the second proviso, we are clearly of opinion that Aruna Devi, with reference to the appeals of Sankarlal Jajodia, could in no sense be regarded as a person intimately connected with the assessments under appeal, in the sense in which the Supreme Court explained 'intimate connection in the context. Aruna Devi was not one who would be liable to be assessed for the whole or a part of the income that went into the assessment of Sankarlal Jajodia. In fact, his appeal was confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion direction cannot be construed in vacuum, but must be collated to the directions which the Appellate Assistant Commissioner can give under section 31. It was further pointed out: Under that section he can give directions, inter alia, under section 31(3)(b),(c ) or (e) or section 31(4). The expression 'direction' in the proviso could only refer to the directions which the Appellate Assistant Commissioner or other Tribunals can issue under the powers conferred on him or them under the respective sections. Therefore, the expression 'finding' as well as the expression 'direction' can be given full meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and the direction is a direction which the appellate or revisional authority, as the case may be, is empowered to give under the sections mentioned therein. The words ' in consequence of or to give effect to ' do not create any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. If the scope is limited as aforesaid, the said words also must be related to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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