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TMI Blog1965 (11) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... the period between April 1, 1957, to August 17, 1957. The respondents submitted that the Act did not apply to Mahendrasinghji because he had died before the date on which the Act came into force, and on that account the respondents as executors of his will were not liable to submit the return demanded. By letter dated November 19, 1959, the Expenditure-tax Officer rejected the contention raised by the respondents. The respondents then filed a petition in the High Court of Bombay under article 226 of the Constitution praying that the proceedings started by the Expenditure-tax Officer for assessing and levying tax on the expenditure incurred by the late Mahendrasinghji during the previous year be quashed and that the officer be restrained by an injunction from taking further steps or proceedings under the Act. The High Court held that the charge under the Act in respect of expenditure incurred in the relevant previous year to the assessment year 1958-59 was not on the estate of any individual or any Hindu undivided family : it was on the individual or the Hindu undivided family incurring the expenditure, and as it was imposed for the first time on April 1, 1958, unless the unit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 14 enables a return to be made, if it is not furnished within the time allowed, or to be modified, at any time before the assessment is made. Section 15 confers power upon the Expenditure-tax Officer to assess tax. If the officer is satisfied without requiring the presence of the assessee or production by him of any evidence that a return made under section 13 or section 14 is correct and complete ; he must assess the taxable expenditure of the assessee and determine the amount payable by him as expenditure-tax. If the Expenditure-tax Officer is not so satisfied, he may serve a notice on the assessee requiring him either to attend in person or to produce any evidence on which the assessee may rely in support of his return. By sub-section (3) of section 15 the Expenditure-tax Officer is authorised to determine the taxable expenditure of the assessee and the amount payable by him as expenditure-tax. By sub-section (5) the Expenditure-tax Officer is authorised to make the assessment to the best of his judgment and to determine the amount payable by the person as expenditure-tax on the basis of such assessment. Section 18 provides : " (1) Where a person dies, his executor, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r after submitting a return, but before the assessment is completed. It confers powers upon the Expenditure-tax Officer exercisable against the legal representatives which, but for the death of the person liable, may have been exercised under section 13(2) and section 15 against such person. Sub-section (3) which makes the provisions of sections 13, 14 and 15 applicable to legal representatives as they apply to any person referred to in those sections clearly indicates that the legal representatives of a person who had died are under the same obligations as the deceased was to make a return under section 13(1), and that the tax officer is invested with power to call for a return from the legal representative of a deceased person and to assess, which could have been exercised against that person, if he had not died. The scheme of section 18 is that by sub-section (1) liability of the estate of a person who dies, to satisfy the tax liability if his expenditure in the previous year exceeds the amount which renders him liable to the expenditure-tax, is declared, and by sub-sections (2) and (3) the Expenditure-tax Officer is invested with power to require a return to be made by the lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent said that section 18 of the Expenditure-tax Act does not bring within the net of taxation cases of persons who died before the Act was brought into force : it only sets up machinery for enforcing liability against the estate of a person dying after the Act is brought into force. Counsel placed strong reliance upon Commissioner of Income-tax v. D. N. Mehta, decided by the Bombay High Court, and submitted that Parliament having adopted the same phraseology as was used in section 24B(1) of the Income-tax Act, it may be inferred that it was intended to give legislative recognition to the interpretation of section 24B in so far as it is applicable to the Expenditure-tax Act. In D. N. Mehta's case one Avabai died on May 6, 1932, after she was served with a notice requiring her to make a return of her income under section 22(2) of the Indian Income-tax Act, 1922. Section 24B was thereafter inserted in the Income-tax Act on September 11, 1933. In proceedings for assessment of income-tax against her legal representatives, it was contended that Avabai had died before the date on which the amendment was made, her estate was not liable to be taxed under the machinery incorporated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... death of the person liable after the Act was brought into force : and read with the remaining clauses in the context of sub-sections (2) and (3), it is clear that Parliament intended to attract the entire charge to tax and machinery prescribed by sections 13 and 15 so as to render the estate of a person dying before the Act liable to satisfy the tax or other liability which could have been assessed or imposed upon him if he had not died. In the context, of the declared liability under sub-section (1) and the provisions of sub-section (3) of section 18, which make sections 13, 14 and 15 of the Expenditure-tax Act applicable to the executor, administrator or legal representative, as they apply to any person, it would be difficult to hold that the legislature has not expressed its intention clearly, so as to render the estate of a deceased person liable to be assessed to expenditure-tax merely because he had died before the date on which the Act was brought into force. The argument of inconvenience has no substance. A person who has rendered himself liable to pay tax on the expenditure incurred by him in the previous year may, not being aware of the proposal to enact a statute like ..... X X X X Extracts X X X X X X X X Extracts X X X X
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