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income-tax Officer, Gudur, and Another Vs. Muramreddy SulochanammA. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Appeal Nos. 13 to 22 of 1965
Reported in[1967]64ITR106(AP)
Appellantincome-tax Officer, Gudur, and Another
RespondentMuramreddy SulochanammA.
Excerpt:
.....in the safe. (3) even if the petitioner was assumed to be a legal representative of the deceased, narayana reddi, the notice in question were bad because all the legal representative of the deceased, the narayana reddi, were not given notice; and (4) on going into the facts it will be seen that there is no good ground for reassessing the income of narayana reddi. on the third point, our learned brother found that since notices were not issued to all the legal representatives, the notices issued were bad. shri ramachandra reddy, learned counsel for the respondents, draw our attention to paragraph 8 of the compromise decree wherein there is a provision that as regards the outstanding due from other to the estate of late narayana reddi and the taxes payable thereon to the government and..........have been in possession and enjoyment of the respective shares allotted to them under it. narayana reddis widow died on september 5, 1956. before her death, she bequeathed her share of the properties to her last three daughters. after the death of narayan reddi, the income-tax authorities dealt with the widow of narayan reddi as his sole legal representative. on that basis, the authorities collected from her the tax due on the estate of the deceased, narayana reddi. they also took reassessment proceeding under section 34 of the act and collected the tax amount from her. on march 17, 1962, sulochanamma, who is one of the daughters of narayana reddi and who had obtained a share of the estate of narayana reddi under the compromise decree, was served with the impugned notice under section 34.....
Judgment:

MANOHAR PERSHAD C.J. - These writ appeals are directed against the judgment of our learned brother, Justice Gopalkrishna Nair allowing Writ petitions Nos. 765/1963 and 1716 to 1724/64 and quashing the notice issued by the income-tax department.

The facts leading to these appeals are : One Duvvuri Narayana Reddi of Kota village of Gudur Taluk in the Nellore district was an income-tax assessee for many years. He died on March 26, 1948, leaving behind him his widow, Ramanamma, and five daughters. On Narayan Reddis death, his widow Ramanamma, succeeded to his estate. Subsequently, misunderstanding appear to have arisen between Ramanamma and her daughters. One of the daughters, Sridevamma, instituted O. St. No. 20/1953 in the subordinate judges court, Nellore, for removal of Ramanamma from the management of the estate and for appointment of a receiver. In that suit, a commissioner was appointed to take an inventory. The commissioner went to the house where the widow lived and during the course of taking the inventory, he found an unregistered will dated March 4, 1948, in the safe. Under that will substantial portion of the properties were given to the five daughters by Narayana Reddi and nothing was given to the widow. There was also some provision for certain charitable endowments and also for the maintenance of his (testators) mother. Under the will, two executors (sons No. 20/1953) were appointed. On the discovery of the will, the widow Ramanamma instituted O. S. No. 61/1953 in the subordinate judges court, Nellore, for a declaration that the will was not true and genuine. The husband of the plaintiff in O. S. No. 75/1953 in the sub-court, Nellore, for the administration of the estate of the testator. During the pendency of these three suits, it appears, some persons tried to bring about a compromise between the parties. They succeeded in bringing the parties together and ultimately a compromise memo was filed in O. S. No. 76/1953, and a decree was passed in terms of the compromise on April 15, 1954. As per the compromise decree, the properties was divided by metes and bounds between the mother and the five daughters. It also created certain charities and gave some properties to Narayana Reddys mother, which on her death were to devote on her daughters (i.e., sisters of Narayana Reddi). The compromise also provided for setting apart properties for conducting the charities and kainkaryams in the name of late Narayan Reddi and for that purpose a committee know as Narayans Reddys and for that purpose a committee known as Narayana Reddi and the two sons-in-law who would be marrying his two daughters in future were to constitute themselves into a body with the authority to co-opt three other members and for this purpose a sum of Rs. 75,000 was set apart payable to the trust committee. In pursuance of the compromise decree, the parties have been in possession and enjoyment of the respective shares allotted to them under it. Narayana Reddis widow died on September 5, 1956. Before her death, she bequeathed her share of the properties to her last three daughters. After the death of Narayan Reddi, the income-tax authorities dealt with the widow of Narayan Reddi as his sole legal representative. On that basis, the authorities collected from her the tax due on the estate of the deceased, Narayana Reddi. They also took reassessment proceeding under section 34 of the Act and collected the tax amount from her. On March 17, 1962, Sulochanamma, who is one of the daughters of Narayana Reddi and who had obtained a share of the estate of Narayana Reddi under the compromise decree, was served with the impugned notice under section 34 of the Act as the legal representative of the late Narayana Reddi. On receipt of these notice, she came to this court asking for a writ of prohibition or any other appropriate writ, order or direction under article 226 of the Constitute to prevent the respondents from taking further proceedings. It appears that initially she filed only one writ petition. On the respondents that one writ petition was not sufficient to quash the notices issued in respect of ten assessment years, she filled ten writ petitions for the years 1941-42 to 1949-50. The respondents filed counter only in the first writ petition and did not file any subsequent counters.

The main grounds urged in the writ petitions were : (1) the petitioner is not a legal representative of the deceased, Narayana Reddi; (2) the notice in respect of the assessment year 1949-50 was invalid; (3) even if the petitioner was assumed to be a legal representative of the deceased, Narayana Reddi, the notice in question were bad because all the legal representative of the deceased, the Narayana Reddi, were not given notice; and (4) on going into the facts it will be seen that there is no good ground for reassessing the income of Narayana Reddi. These grounds were resisted by the income-tax authorities on the pleas that the petitioner was the legal representative of the deceased, Narayana Reddi, and that none of the grounds mentioned in the writ petitions was valid and that, therefore, the petitioner was not entitled to the relief sought.

Our learned brother, on the question whether the petitioner was the legal representative of the deceased, Narayan Reddi, or not, found that the petitioner was not the legal representative of Narayana Reddi. On the second point, whether the notice in respect of the assessment year 1949-50 was invalid, found that it was invalid. On the third point, our learned brother found that since notices were not issued to all the legal representatives, the notices issued were bad. On the fourth point, our learned brother did not express any opinion. In the result, as stated earlier, our learned brother allowed the batch of writ petitions. Hence, the appeals on behalf of the department.

Shri Kondaiah, learned counsel for the department, has challenged the order of our learned brother on three grounds. His first argument is thirty the learned judge has erred in holding that the writ petitioner, Sulochanamma, was not the legal representative, when under the compromise decree, she has been given a share as the daughter of the deceased, Narayana Reddi. His second argument is the daughter of the deceased, Narayana Reddi. His second argument is that the mere fact that notice were not issued to the other persons mentioned in the compromise decree will not invalidate the notices issued to the petitioner and her sisters and mother. The third argument was that the notice issued in respect of the assessment year 1949-50 was not invalid. We will now proceed to deal with there above arguments seriatim.

The first question is whether the writ-petitioner in W. Ps. Nos. 765/1963 and 1716 to 1724 of 1964 and the 1st respondent herein is the legal representative of the deceased, Narayana Reddi. What is urged by the learned counsel for the department, Shri Kondaiah, is that under the compromise decree, the petitioner, her four sisters and the widow, their mother, have been given share and the shares given to the daughters are only as he daughters of Narayan Reddi and, when they have been given shares and they are in possession of the properties of the deceased, they have been given shares and they are in possession of the properties of the deceased, they would be the legal representatives of the deceased. The contention of Shri P. Ramachandra Reddi, learned counsel for the respondents, is that the compromise decree does not take into account the will and whatever shares were given to the daughters were only given out of grace by the widow who was the sole heir of the deceased and so the learned judge was right in treating the widow also as the legal representative and not the daughters. It is no doubt the that the compromise decree does not show that the will, which was relied upon by Shridevamma and disputed by the widow, was accepted as genuine or is no clear mention whether the will was genuine or not, it may be noted that the main consideration appears to be the will. Under the will only the daughters did not come forward with any plea, either in favour or against, and the widow was challenging the will. If this will stood, the widow would not be entitled to any property, and if this will was not genuine the daughters in true would not be entitled to any share in the property. It follows, therefore, that there was on the one side the will and the denial by the widow on the other. Placed in those circumstances, the parties probably thought it proper not to go into that question, but divide the properties among themselves, each daughter getting a share and a substantial share being allotted to the widow also. If the will was not the main consideration before the parties, we do not understand why, after dividing the properties into six shares, they should have thought of giving a share to the deceaseds mother and also creating trust for charitable purposes. This was done cause the deceased in the will had given directions to that effect. It follows, therefore, that though there is no clear statement in the compromise that the will was accepted, it appears that for all practical purpose the parties took into account the will and gave due regard to it. Shri Ramachandra Reddy, learned counsel for the respondents, draw our attention to paragraph 8 of the compromise decree wherein there is a provision that as regards the outstanding due from other to the estate of late Narayana Reddi and the taxes payable thereon to the Government and also if any properties pertaining to the estate were found to exist, the widow alone would be entitled to recover the outstandings and enjoy the same with absolute rights and pay the taxes a contended that this would go to show that the widow alone was treated as the sole heir of the deceased and she out of regard for her daughters agreed to give a portion of the estate to them. We do not agree with the contention of the learned counsel. The mere fact that the widow was empowered to cover the outstanding and enjoy the properties, if found to exist subsequently, and pay the taxes would not be sufficient to hold that she was treated as the only heir of the deceased, in view of paragraph 11 of the compromise decree, where there is a provision that the entire remaining properties of late Narayana Reddi shall be taken in equal shares by the daughters and the widow according to the schedules mentioned therein, and the following recital in paragraph 7 of the compromise decree :

'So all of us have wholeheartedly agreed to aside by the terms of the compromise to be effected by them. We have also agreed to settle amicably all the matters in dispute amongst us and to effect a compromise amicably all the matters in dispute amongst us and to effect a compromise in respect of all the suits filed by us in the sub-court, as per the terms mentioned below. Each of us shall not raise any disputes with the other with reference to the properties that may be it by the other and each of us shall, being fully entitled to the properties falling to him, or her, enjoy the same...'

It follows, therefore, that the properties of the late Narayana Reddi were divided between the six claimants -five daughters and the widow - and each of them was given a share, though the widow was given a major share and some properties were allotted to the mother of the deceased and later to his sisters and for charities also. Each of the daughters and the widow have since then been in possession of their respective shares without the interference of the others. All this, as stated earlier, could not have been without reference to the will. Since the daughters and the widow are in possession of the properties of the deceased along with the mother and the charitable institution within the meaning of section 2(11) of the Code of Civil Procedure. Our learned brother while, no doubt observing that the daughters have been given a share, was influenced by the fact that there is no clear statement in the compromise decree whether the will was accept or not, and came to the conclusion that the shares given to the will, there is no reason why they should have made a provision for the mother and for charities. In the view we are taking we cannot agree with our learned brother that the petitioner and her sisters are not the legal representatives of the deceased, Narayana Reddi.

The second point we have to consider is whether he notice issued to Sulochamma is invalid because the several other persons who stand on the same footing as her and who equally represent the estate of late Narayan Reddi have not been served with notice. Shri Kondaiah, learned counsel for the department, contended that notices have been issued not only to Sulochanamma, but also to her four sisters. This fact is admitted by the other side, but the contention of Shri Ramachandra Reddi is that though notices have been issued to Sulochanamma and her sisters, notices have not been issued to the mother of the deceased and the heritable institution who have also been allotted shares from out of the estate of the deceased and the absence of notices to the other legal representatives would vitiate the notice. We find force in the contention of Shri Ramachandra Reddi. The question whether notice to one legal representative is sufficient or not or whether all the legal representatives have to be served with notice had come up before a Bench of the Madras High Court in the case of E. Alfred v. First Addl. Income-tax Officer, Salem and it has been held that in cases where an assessment under the Indian Income-tax Act is sought to be reopened and where the assessee is dead before the issue of a notice under section 34 of the Act, the assessment could be completed only accorded to the provision of section 24B (2) of the Act attached itself on all the legal representative of a deceased on whom notices are served and as such all legal representatives of the deceased on whom notes are served and as such all legal representatives of the deceased assessee are liable to be served with such notice. In the case cited, reliance away placed on the case of Tirtha Lal Dey v. Smat. Bhusan Moyee Dasi, wherein it was observed :

'Ordinary if there area 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 someone refuses to join as plaintiff, he should be joined as a defendant. As pointed out by Sir Shadi Lal C.J. in Muhammed Hassan v. Inayat Hussian. These words mean the representation before the court of the plenary interest of the deceased party. Sometimes that interest may be represented by a single individual, but it may also be represented by number of persons as the case may be. But there should be a complete representation of the interests of the deceased person, where through a single individual or through a number of persons, so that there cannot be a partial representation of that interest. In other words, the expression legal representative mean and includes one persons as well as well as several persons according as they represent the whole interest of the deceased persons.'

To a similar effect is the view of their Lordships of the privy Council in the case of Khiarajmal v. Daim. It should be appropriate to refer to their Lordships observation, which are as follows :

'Ordinarily therefore it is necessary to implead all the legal representatives of the deceased person on the record and a few of them do not represent the whole interest of the deceased and, if all are not made parties to the suit or appeal, it results in the abatement of these proceedings. On similar principles, before an arbitrator can priced further with the reference and given a binding award, he should give notice to all the legal representatives of the deceased party and attempt to make them parties to the reference by notice though he may not be bound to follow the strict procedure of law required for substitution of parties under Order 22 of the Code of Civil procedure.'

The Kerala High Court also had to consider this point in the case of Susella Sadabnandan v. Additional income-tax officer, where A, an assessee, against whom an assessment order had been made, died leaving several heirs and a will by which he made various provisions with regard to the distribution of his estate among the heirs and appointed three persons including B, one of his one, as executors of the will, and a notice for reassessment under section 34 of the Income has Act, 1922, was addressed to 'the late A by legal heirs B and others' and was served on B. On these facts, it was held that 'the notice was not a valid notice under the law as it was not served on all the three executors and the proceedings for reassessment and recovery of tax taken in pursuance of the notice were illegal and void.'

Learned counsel for the department, Shri Kondaiah, contended the this case of the Kerala High Court cannot be relied upon because the supreme court has set aside this judgment. We do not agree with the learned counsel. No doubt, the Supreme Court has set aside the judgment and remanded the case to the High Court for consideration of certain matter, but so far as the case to the High court for consider of certain matter, but so far as the question of issue of note of all the legal representatives is concerned the Supreme Court has not set aside the decision of the Kerala High court. It follows, therefore, that what is required is that notices have to be served on all the legal representative if there are more than one, unless it is shown that any one person represent the entire estate. It is not the case of the department that the entire estate of Narayan Reddi is represented by the daughter and widow. That could not be so is also evident because the department knows full well that under the compromise decree, apart from the daughters and the widow, the mother of the deceased and one charitable institution were also given some properties and unless all these persons are served with notices that would not be sufficient compliance. The contention of Shri Kondaiah, learned counsel for the department, is that the department was not aware of the fact that there were other legal representative besides the daughters and the widow and if the department had knowledge of this fact, these persons also would have been served with notice. We are of that fact, these persons also would have been served with notice. We are not prepared to agree with the learned could, for the simple reason that the department had itself relied upon the compromise decree and from a reading of he compromise decree it would become clear that, a part from the daughters and the widow, the mother of the deceased and charitable institution were given a share. In the face of this, the contention that the department away not aware that there are other legal representatives cannot be accepted. Admittedly, as notices have not gone to the mother of the deceased and the charitable institution represented by the trustees, the notices issued to Sulochanamma and the four sisters would not be laid. Our learned brother has also taken that view and we think rightly too.

Now, the only other matter that remains to be considered is, whether the writ petitioner as a legal representative of the deceased, Narayan Reddi, is liable to pay all the taxes subsequent to Narayan Reddis death. Our learned brother had held that she cannot be held liable to pay. We agree with the view of our learned brother. The taxes cannot be sought to be imposed upon the writ petitioner as a legal representative of Narayana very clear from the two decisions of the Supreme Court in the cases of Commissioner of Income-tax v. Amarchand N. Shroff and Commissioner of Income-tax v. James Anderson. As against these, the learned counsel Shri Kondaiah did not draw our attention to any ruling.

In the result, we do not see any force in these appeals and they are dismissed with costs. Advocates fee Rs. 250 in each or W. As. Nos. 13 and 14/1965. There will be no advocates fee in the rest of the appeals.

Appeals dismissed.


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