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TMI Blog1956 (2) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... endency of the appeal a penalty of ₹ 250 was first levied on the petitioner under section 46(1) of the Act. Subsequent to the termination of the appeal, when the time finally granted for the payment expired on 15th December, 1951, the Income-tax Officer, imposed a further penalty of ₹ 10,000 on 8th March, 1952. It was the validity of these orders imposing the penalties under section 46(1) of the Act that the petitioner challenged by an application under article 226 of the Constitution for the issue of a writ of certiorari. Proceedings were also taken under section 46(2) of the Act for the recovery of the arrears of tax. Though that was also challenged in the application as filed by the petitioner, the arguments before us were confined to the validity of the levy of penalty. The validity of the assessment itself under section 24B(2) of the Act was never in issue, and we were not called upon to consider that. The only question for our determination is: where the income of a deceased person was assessed to tax under section 24B(2) of the Act, can the legal representative of that deceased person be penalised under section 46(1) of the Act for failure to pay that tax withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly with the notice of demand issued under section 29 of the Act is one of the primary conditions to be satisfied before section 45 can apply. Obviously, when section 46(1) refers to "an assessee in default," it is the assessee who is in default within the meaning of section 45 that is meant. A penalty can be imposed under section 46(1) only on such an assessee in default. The contention of the learned counsel for the petitioner was, that the petitioner was not himself the assessee within the scope of section 29, but that he fell into the other category specified by section 29, and that he was only "the other person liable to pay such tax," As the petitioner was not himself the assessee, the argument ran, he could not be treated as an assessee in default within the meaning of section 45 or section 46(1). It should be remembered that the petitioner was not taxed on his income. It was his father's computed income that was taxed. The father was dead before the tax could be assessed. The assessment was under the provisions of section 24B(2) of the Act. It was by the fiction enacted by section 24B(2) that the petitioner was the assessee for the assessment on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required from the deceased person. In section 24B(3), the executor, administrator or other legal representative is not treated as an assessee even for completing the assessment of the income of the deceased. Section 24B(2) has to be invoked where a person liable to be assessed to income-tax dies before the publication of the notice under section 22, where the death takes place before any step is taken for setting the machinery of assessment in motion. The relevant portion of section 24B(2) runs: "Where a person dies, before the publication of the notice referred to in sub-section (1) of section 22..............the executor, administrator or other legal representative shall, on the serving of notice under sub-section (2) of section 22..........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 representative were the assessee." Thus section 24B(1) comes into play after the assessment has been completed, and where only the assessed tax or any portion thereof remains to be collected. Section 24B(3) has to be invoked to complete the assessment. Section 24B(2) has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) and (3), the assessment itself of the income of the deceased person had to be provided for. That was provided for without any express provision in either of these two sub-sections for collection of the assessed tax. If through all the three sub-sections the same principle runs, that the extent of the liability of the executor, administrator or other legal representative of the deceased person is limited by the possession of the assets of the deceased person, there should be little difficulty in placing the executor, administrator or other legal representative of the deceased person, who comes within the scope of either section 24B(2) or section 24B(3) of the Act in the category of persons referred to in section 29 of the Act as "other person liable to pay such tax", as distinct from the "assessee". For the purpose of section 29, therefore, it is the deceased that would be the assessee, and the executor, administrator or other legal representative, in whose presence the income of the deceased is assessed either under section 24B(2) or under section 24B(3), would be not the assessee but merely a person liable to pay the assessed tax. We have already pointed ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessed tax. Section 24B is not the only provision in the Income-tax Act for the imposition of vicarious liability whether it be for the purposes of assessment, or for purpose of collection, or for purpose of assessment and collection of the income-tax. Under section 4(2) and under section 16(1)(c), the legal fiction enacted is that for the purposes of taxation, the income of a given person is deemed to be the income of another person, on whom the incidence of taxation falls. Since by the fiction the income itself becomes the income of the person taxed for the purposes of the Income-tax Act, the person taxed would be the assessee for all purposes under the Act, without any need to say so expressly. Section 18(7) applies where the person liable to deduct the tax due from his employee at source does not deduct it, or after deducting it fails to pay the tax. In such cases the employer is deemed to be an assessee in default in respect of that tax. Section 18(7) has only to provide for collection; and though the primary liability itself lay upon the employer, his failure to discharge the liability made him "assessee in default" only because of the fiction expressly en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustify an inference, that by necessary intendment the fiction enacted by section 24B(2) was totally different in its scope from what section 24B(1) or section 24B(3) provided for, and that when section 24B(2) directed that the legal representative should be treated as the assessee, it also enacted by necessary intendment that the legal representative should be treated as the assessee for purposes of collection also, principally for section 45 and section 46(1) with which we are now concerned. The learned counsel for the department contended that the Legislature could not have intended to provide only for a limited application of the fiction enacted in section 24B(2), since section 24B(2) itself did not provide for the machinery for collection of the assessed tax. We are unable to accept that contention. That would appear to overlook the specific provision, section 29 of the Act. The legal representative would be a person liable to pay the tax even though he is not the assessee. Further, section 46(2) refers only to "arrears" and "an assessee", and not to "an assessee in default." It is not necessary for us to discuss at this stage the precise scope of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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