This is a writ petition under article 226 of the Constitution.
The prayers contained in the petition are that a writ of certiorari may be issued quashing the orders dated February 24, 1956, March 7, 1956, February 15, 1956, imposing penalty in respect of the assessment years 1944-45, 1946-47 and 1950-51 and further that a writ of mandamus may be issued restraining the respondents from realizing the amount of penalty imposed under the said orders.
The material facts are that Ram Bharose, father of the petitioner, was assessed to income-tax for the assessment year 1944-45 by assessment order dated March 28, 1949. Ram Bharose had paid some amount during his lifetime, but a balance of Rs. 17,867 remained to be paid. For the assessment years 1946-47 and 1950-51, the petitioner was assessed under section 24B, on the income of his father, during those two years, were Rs. 11,803-15-0 and Rs. 8,494 respectively.
Appeals were filed against the assessment orders in respect of the three years and the tax liability was reduced as a result of those appeals. The amounts of tax, which remained due and payable were Rs. 7,512-9-0, Rs. 8,941-0 and Rs. 8,498 respectively, making total of Rs. 24,951-14-0. On January 25, 1956, a notice was issued to the petitioner to pay the arrears by January 31, 1956. It is stated in paragraph 10 of the affidavit that the petitioners father was a partner with his kith and kin in certain firms, who made a request to the Income-tax Officers. By the impugned orders dated February 24, 1956, March 7,1956, and February 15, 1956, penalties of Rs. 2,000, Rs, 3,000 and Rs. 1,000 were imposed under section 46(1) in respect of the years 1944-45, 1946-47 and 1950-51 respectively. The petitioner filed appeals against the penalty orders, but as the taxes outstanding in respect of which the penalties were imposed had not been paid till the date of the filling of the appeals, the appeals were dismissed as not being entertainable by a consolidated order of the Appeals Assistant Commissioner dated February 4, 1957. Thereafter, the petitioner filed appeals before the Income-tax Appellate Tribunal but those appeals were also dismissed by a consolidated order dated July 26, 1957, as being not maintainable. On October 21, 1957, this writ petition was filed in this court. No counter-affidavit has been filed in the writ petition on behalf of the income-tax department.
Two points have been argued before me by the learned counsel for the petitioner.
'1. That the penalty orders having been passed against a dead person were a nullity; and
2. That having regard to the provisions of section 24B, no penalty order can be passed against a legal representative in respect of a tax demand against a deceased.'
So that as the first point is concerned, it is completely devoid of any substance. The dates on which the impugned penalty orders were passed have been given above. These orders were passed, not against the deceased, but against the petitioner, who was very much alive, Accordingly, the orders cannot be said to have been passed against a dead person. Its follows, that the orders are not a nullity on this ground.
In support of his second point, learned counsel for the petitioner relied upon a decision of the Madras High Court in E. Alfred v. Additional Income-tax Officer, Salem. In this decision, it was laid down as follows :
'A legal representative assessed under the provisions of section 24B(2) of the Income-tax Act on the income of his deceased predecessor-in-interest is not an assessee within the meaning of section 29, nor an assessee in default within the meaning of section 45 or section 46(1). He cannot, therefore, be penalised under section 46(1) even though the tax demanded in the notice issued to him under section 46(1) even though the tax demanded in the notice issued to him under section 29 is not paid within the time allowed.'
The decision undoubtedly supports the submission of learned counsel. This decision was followed in another decision of that court reported in Abdul Kassim v. First Additional Income-tax Officer, Karaikudi. In this case the principle in Alfreds case was extended and applied section 46(2) and it was held that a legal representative was not an assessee within the meaning of that section. The decision in Alfreds case was also followed by the Kerala High Court in Commissioner of Income-tax v. Abdul Rahiman Sait. With the utmost respect however, I do not share the view of the learned judges of the Madras and the Kerala High Court in these cases.
It is well settled that the words 'assessment' and 'assessee' are not used in the same sense throughout the Income-tax Act, and some times, not even in the same section in that Act. This was pointed out by the Judicial Committee of the Privy Council in the decision in Commissioner of Income-tax v. Khemchand Ramdas. The dictum has since been approved by the Supreme Court. Apart from the authority of the highest court, the word 'assessee' as defined in section 2(2) of the Act, at the material time meant 'a person by whom income-tax is payable.' Therefore, to my mind, nothing very much turns upon the separate mention of the words 'assessee' and 'every person liable to pay such tax, penalty or interest' in section 29 or the use of the word 'assessee' alone, in sections 45 and 46(1) of the Act.
Tautology is not unknown to legislative practice. I find the rule of interpretation stated by high authority as follows :
In Yorkshire Fire and Life Insurance Co. v. Clayton, Lord Vessel M. R. observed at page 424 as follows :
'It may not leeways be possible to give a meaning to every word used in an Act of Parliament and many instances may be way of precaution.'
In Income Tax Commissioners v. Pemsel, Lord Macnaghten at page 589 observed as follows :
'Nor is surplusage or even tautology wholly unknown in the language of the Legislature.... It is not so very uncommon in an Act of Parliament try find special exemptions which are already covered by a general exemption.'
In that very case, it was observed by Lord Herschell at page 574 as follows :
'Such specific exemptions are often introduced ex majors cautela to quiet the fears of those whose interest are engaged or sympathies aroused in favour of some particular institution, and who are apprehensive that it may not be held to fall within a general exemption.'
The same propositions were laid down by Lord Jessel M. R. in Fryer v. Morland and by Lord Brett M. R. in Hough v. Windus.
In In re Bank of London, Lord Hatherley said :
'Nor do I attach much importance to the exception of insurance companies in sec. 27 of the Act of 1857 (20 & 21 Vict. C. 14). I think it is merely surplusage; and unfortunately, such surplusage is not uncommon in Acts of Parliament.'
Apart from this I have also discovered authority for the proposition that that the word 'assessee' in section 24B(2) is an 'assessee' not merely for the purposes of that sub-section alone but for all the purposes of the Act. Reference may be made to the decision of a Division Bench of the Calcutta High Court in Sukumar Mukherjee v. Commissioner of Income-tax. In this case it was held that penalty could be imposed upon the assessee himself. This was so held upon the terms imposed upon the assessee himself. This was so held upon the terms of section 28. From thus it follows that a legal representative is not an assessee merely for the purpose of section 24B(2). Reference may be made to a case of the Andhra Pradesh High Court in Rajah Manyam Meenakshamma v. Commissioner of Income-tax. In this case it was held that a combined reading of section 2(2) and section 24B indicated that legal representative is an assessee as define in the Act (not merely as mentioned in section 24B) and could file appeals to the Income-tax Appellate Tribunal under section 33 against orders under section 28 or section 31.
In Commissioner of Income-tax v. James Anderson a Bench of the Bombay High Court observed as follows at page 705 of the report :
'Section 24B casts a liability upon the executor or the administrator to pay tax which the testator would have been liable to pay if he had not done so. But section 24B does not limit the liability of the administrator or the executor is an much an assessee under the Act as any other individual.'
The point to notice is that contrary to what was held in Alfreds case it was held in the above case that the liability of legal representative was not limited to the case in section 24B. This decision of the Bombay High Court was approved by the Supreme Court in James Anderson v. Commissioner of Income-tax. At page 126 of the report it was observed by the Supreme Court that 'the view of the Bombay High Court that section 24B does not limit the liability of the arbitrator or the executor to the cases referred to under that section is correct because the appellant (the legal representative) is as much an assessee under the Act as any other individual....'
In Sheik Abdul Sattar v. District Collector, Masulipatam, the Andhra High Court referred to the two Madras cases at page 30 and went on to observe that in two decisions of that court (Andhra High Court) a contrary view had been taken. One of these cases is Rajah Manyam Meenakshamma v. Commissioner of Income-tax, which has already been dealt with by me above. The other case which took the same view is Maddula Appa Rao v. Income-tax Officer, Eluru.
In C. A. Abraham v. Income-tax Officer, Kottayam the Supreme Court examined all the section in Chapter IV including section 23B and at page 429 observed that the word 'assessment' in Chapter IV had been used in its widest connotation, intended not merely to declare the liability to computation of income, but also for application of tax liability as well as to the machinery thereof. It follows that in the case of an assessee under section 24B the liability is not merely to assessment but also to enforcement of that liability under the relevant provisions of the Act including liability to penalty under section 46(1) and to enforcement of liability under section 46(2).
The Madras judges also emphasised what they characterised as the limited scope of the legislative fiction imposing vicarious liability in section 24B. Here again with the utmost respect I cannot see my way to assent to the putting of limits on that fiction.
It has been laid down, on him authority, that the full legal consequences of a legal fiction should be allowed to be worked out, and the fiction should not be cut down to what is expressly enacted. In this connection reference may be made to the decision of the Court of Appeal in East End Dwellings Company Ltd. v. Finsbury Borough Council in which Lord Asquith observed at page 132 as follows :
'If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it.... The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.'
This statement has been cited with approval by the Supreme Court in the case of State of Bombay v. Pandurang Vinayak Chaphalkar.
It may further be stated that the default, by reason of which a penalty was imposed under section 46(1) on the petitioner in this case and the legal representative in the Madras case, was not the default of the deceased in the payment of income-tax dues, but it was the default in the Madras case, as it is here, of the legal representative himself. To my mind, therefore, there is nothing illogical or illegal in a penalty for such default being imposed on the person whose default it is.
Lastly, I may observe that section 46 is a collecting section. It is well settled, on high authority, that the collecting section, even though it may occur in a taxing statute, must be liberally construed. In this in which Lord Parker observed as follows :
'This section is a collecting section and not a taxing section, and there is no reason in principle why it, should not receive a liberal interpretation'
and the other case, Whitney v. Commissioners of Inland Revenue, in which Lord Dunedin observed at page 110 as follows :
'My Lords, I shall now permit myself a general observation. Once that it is fixed that there is liability, it is antecedently highly improbable that the statute should not go on to make that liability effective. A statute is designed to be workable, and the interpretation thereof by a court should be to secure that object, unless crucial omission or clear direction makes that end unattainable.'
The result, therefore, is that a penalty can be properly imposed under sub-section (1) of section 46 on a legal representative where the tax due under an assessment made on his deceased predecessor or under an assessment made against him under section 24B(2) is not paid and default is committed by the legal representative in regard to the payment of such tax. I may mention that I am supported in this view by the learned authors of the treatise on The Law and Practice of Income-tax by Sir Jamshedji Kanga and Palkhivala. It follows that there is no force in the second point of the learned counsel also and it must be overruled.
For the reasons stated above the writ petition fails and is dismissed with costs.