1. Mr. A. A. Mandagi, who was the Assistant Government Pleader in the State of Bombay, died in March, 1956, and after his death one of his four sons, Mr. N. A. Mandagi, produced a return in August, 1960, disclosing an income of Rs. 48,999 during the assessment year 1956-57. This income represented the fee which he received as Government Pleader for conducting civil and criminal cases in the High Court of Bombay. The Income-tax Officer made an order of assessment treating the income as an income from other sources to which section 12 of the Indian Income-tax Act, 1922, refers. Mr. N. A. Mandagi, who produced the return, appealed to the Appellate Assistant Commissioner and contended that the assessment was illegal since not all the legal representative of his deceased father had been brought on record and since there was no compliance with the provisions of section 24B. He challenged the correctness of the view taken by the Income-tax Officer that the income was an income from other sources. The Appellate Assistant Commissioner dismissed the appeal pronouncing against the appellant on all the questions raised before him.
2. But in the further appeal preferred to the Appellate Tribunal, the assessment was set aside. The Tribunal expressed the view that issue of a notice under section 24B(2) of the Act was a condition precedent to the exercise of jurisdiction by the Income-tax Officer for an assessment with respect to the income of the deceased. It was said that, since no such notice was issued, the assessment could not be supported. The Tribunal accepted the contention that the income was derived by the exercise of a profession and not from other sources.
3. The Commissioner of Income-tax asked for a statement of the case to this court under section 66(1), and on that application the Tribunal has referred the following two questions for our decision :
'(1) Whether the service of a notice prescribed in sub-section (2) of section 24B of the Indian Income-tax Act, 1922, is a condition precedent to the commencement of proceedings for exercising jurisdiction to assess the estate of the deceased
(2) Whether the income could be assessed under the head 'other sources' ?'
4. It will be observed that the first question is not as clearly worded as it should have been. But there can be no doubt that the question of law posed by that question is whether, on the facts and circumstances before us, the Income-tax Officer could not have made an assessment under section 24B without in the first instance having served a notice under section 22(2) as required by section 24B(2).
5. Now, the Appellate Tribunal was of the view that, since the notice to which section 24B(2) refers should have been served on all the legal representatives of the deceased and there was no such service, the fact that only one of those legal representative produced a voluntary return before the Income-tax officer did hot clothe the Income-tax Officer with the power to proceed to maker as assessment on the basis of that voluntary return.
6. The real question before us is whether the order of assessment made by the Income-tax Officer without having served the notice required by section 24B(2) on all the legal representatives is without the authority of law as stated by the Appellate Tribunal.
7. Mr. Rajasekhara Murthy, appearing for the Commissioner, and Mr. Venkataramiah, appearing for Mr. N. A. Mandagi, both agree that that is the real question of law which has been referred to us by the Tribunal and that the import of the first question has to be understood in that way.
8. The elucidation made by the Supreme Court in Kusumben D. Mahadevia v. Commissioner of Income-tax makes it clear that, although section 66 of the Income-tax permits this court to decide only the question of law which had been referred to it, if the question of law involves different approaches for its solution, this court may amplify the question to take in all those approaches so long as the question which is to be answered by us was before the Tribunal and was decided by it.
9. We were, therefore, asked by both sided to decide whether, in the case before us, it was incumbent on the Income-tax Officer notwithstanding the voluntary return submitted by N.A. Mandagi to serve notices on all the legal representatives as required by section 24B(2) before he could proceed to make an assessment.
10. It was submitted for the Commissioner on the basis of the pronouncement of the Federal Court in Chatturam v. Commissioner of Income-tax that the issue of a notice under the Income-tax Act is not the foundation of the jurisdiction of the Income-tax Officer to make the assessment or of the liability of the assessee to pay the tax which is founded on sections 3 and 4 of the Act which are the charging sections and that section 22 and the other sections are the machinery sections to determine the amount of the tax. Kania J., as he then was, observed :
'The Income-tax assessment proceedings commence with the issue of a notice. The issue or receipt of a notice is not, however, the foundation of the jurisdiction of the Income-tax Officer to make the assessment or of the liability of the assessees to pay the tax. It may be urged that the issue and service of a notice under section 22(1) or (2) may affect the liability under the penal clauses which provide for failure to act as required by the notice. The jurisdiction to assess and the liability to pay the tax, however, are not conditional on the validity of the notice. Suppose a person, even before a notice is published in the papers under section 22(1), or before he receives a notice under section 22(2) of the Income-tax Act, gets a form of return from the Income-tax office and submits his return, it will be futile to contend that the Income-tax Officer is not entitled to assess the party or that the party is not liable to pay any tax because a notice had not been issued to him.'
11. Mr. Rajasekhara Murthy urged that since Mr. N. A. Mandagi submitted the return of the income of his father even without the service of a notice on him as required by section 24B(2), the production of that return dispensed with the necessity of any such notice and made it possible for the Income-tax Officer to proceed to make the assessment.
12. To the argument maintained in that way, there could perhaps be very little criticism if nothing else could be said about it. If, as directed by section 24B(2), it became necessary for the Income-tax Officer, after the death of Mr. A. A. Mandgi, to issue notices under section 22(2) to his legal representatives and if even before any such notice was served upon them the legal representatives produced the return which the notice under section 22(2) can call upon them to produce, it would be unmeaning for anyone to contend that notwithstanding the production of the return, the legal representatives who produced it should still be served with that notice. Insistence upon the service of such notice would be a vain and empty formality, the omission to do which cannot divest the Income-tax Officer of his competence to make the assessment since the stage which could be reached by the issue of the notice had already been reached by another process.
13. But the Appellate Tribunal thought that the Income-tax Officer could not dispense with the notice under section 24B(2), since the person who produced the return was only lone of the five legal representatives, there being three other sons of Mr. A. A. Mandagi, and his widow, who did not join in the production of the return. It is obvious that the Tribunal was of the view that, before the Income-tax Officer could make assessment, there was a duty which section 24B(2) imposed upon him, to serve notices on those other legal representatives who did not join in the production of the return.
14. It is manifest from the provisions of section 24B that when a person dies and an assessment has to be made with respect to his income, his estate must be properly represented before the Income-tax Officer, and there could be such representation only if all his legal representatives are served with the notice enjoined by that section. That the expression 'legal representative' occurring in that section, when there is a plurality of legal representatives, has reference to all those legal representatives is clear from Tirtha Lal v. Bhusan Moyee Dasi, in which Mahajan J. (as he then was) observed that, if there be more than one legal representative, all those legal representatives should be impleaded in order to make the representation of the estate complete in a suit in which such representation is necessary. He said thus :
'Ordinarily, if there are two or more legal representatives of a deceased person, all must be impleaded to make the representation of the estate complete, otherwise the suit or appeal abates. The expression 'legal representative' must, when there are two or more legal representatives, be read in the plural. All legal representatives must be brought on the record and if some one refuses to join as plaintiff, he should be joined as a defendant.'
15. It seems to us that this exposition made in the context of a suit has equal application to a proceeding under section 24B.
16. In E. Alfred v. First Additional Income-tax Officer, Salem, the High Court Madras expressed the view that in the case of an assessment under section 34 of the Income-tax Act, with respect to the income of an assessee who died before the notice is served on him, all the legal representatives of the deceased should be impleaded as parties to the reassessment proceedings. This, according to the learned judges, was the clear meaning of section 24B(2) of the Income-tax Act.
17. With this enunciation, we respectfully agree.
18. It is true that Mr. N. A. Mandagi produced a return after the death of his father. But that return was not produced on behalf of the estate which he alone could not represent. It may be that in a proper case there may be the representation of the estate by only one of the legal representatives, and that if that be so, an assessment in proceedings in which only one of the legal representatives participated may bind the other legal representatives and the estate. But it was not supposed by anyone that in the case before us there was any such representation and the assessment was not made on any such supposition.
19. So it was necessary for the Income-tax Officer, notwithstanding the return produced by one of the legal representatives, to proceed to serve notices on the others before he could proceed to make the assessment. Any other view would produce the incongruous result that the assessment would not bind those other legal representatives who were not served with notices or the estate.
20. The view that we take receives support from a more recent decision of the High Court of Madras in Muniyammal v. Third Additional Income-tax Officer, Salem, in which the question for decision was whether only one of the legal representatives amongst the many legal representatives of a deceased person could under section 54 of the Income-tax Act claim to be entitled to make an inspection of the proceedings relating to the assessment of a deceased assessee. In reaching the conclusion that he could not, Ramachandra Iyer J. explained that the word 'legal representative' in section 24B would mean all the legal representatives collectively if there were more than one.
21. The question formulated by the Appellate Tribunal asks us to decide the question whether the service of notice prescribed by section 24B(2) is a condition precedent to the commencement of the proceedings for the assessment of the estate of the deceased. The Tribunal thought that such service was a condition precedent for the exercise of such jurisdiction. We are not willing to subscribe to any such broad statement of the law, since in a case where all the legal representatives produce a return, even without having been served with a notice required by section 24B(2), the service of such notice would be unnecessary. We are concerned in this case only with the question whether, after the production of the return by one of the legal representatives, it was possible for the Income-tax Officer to proceed to make an assessment without service of notices on the other legal representatives. Our answer to this question is that the Income-tax Officer could not, on the facts of the case before him, make the assessment without service of such notices, since the service of such notices was, in the circumstances of the case, imperative and indispensable. This is our answer to question No. 1.
22. The second question is whether the income of Mr. A. A. Mandagi was income from other sources to which section 12 refers. Mr. Mandagi was a Government Pleader and his income, which was assessed, represented the fee which he received from the Government of Bombay for services rendered by him in the cases in which he appeared for the State. It is obvious that the income which he earned in that way was income which he derived from the exercise of his profession and not from other sources. Our answer to the second question is that the income of Mr. A. A. Mandagi could not be assessed as income from other sources.
23. The Commissioner must pay the costs of this reference. Advocate's fee, Rs. 250.