Skip to content


Estate of Late Shri Maneklal A. Vs. Fourth Wealth-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Mumbai
Decided On
Judge
Reported in(1985)12ITD300(Mum.)
AppellantEstate of Late Shri Maneklal A.
RespondentFourth Wealth-tax Officer
Excerpt:
.....to the assessment years 1970-71 to 1975-76. we are concerned in these appeals with the estate of shri maneklal a. mehta, who died on 27-6-1969. he had executed a will and had appointed his wife, smt. hirabai m. mehta, as an executrix of the said will. the revised return for the assessment year 1970-71 was filed on 29-3-1979, in the name of smt. hirabai m.mehta, the executrix of the will of shri maneklal a. mehta (deceased).the returns for the assessment years 1971-72 to 1973-74 were filed on 21-3-1974, while the returns for the assessment years 1974-75 and 1975-76 were filed on 30-9-1975 ; all these returns were filed in the name of smt. hirabai m. mehta, the legal heir and executrix of the will of shri maneklal a. mehta (deceased). notices dated 12-2-1980 and 5-3-1980, issued by the.....
Judgment:
1. These six appeals, by the assessee, have been heard together and are being decided by this common order. The appeals relate to the assessment years 1970-71 to 1975-76. We are concerned in these appeals with the estate of Shri Maneklal A. Mehta, who died on 27-6-1969. He had executed a will and had appointed his wife, Smt. Hirabai M. Mehta, as an executrix of the said will. The revised return for the assessment year 1970-71 was filed on 29-3-1979, in the name of Smt. Hirabai M.Mehta, the executrix of the will of Shri Maneklal A. Mehta (deceased).

The returns for the assessment years 1971-72 to 1973-74 were filed on 21-3-1974, while the returns for the assessment years 1974-75 and 1975-76 were filed on 30-9-1975 ; all these returns were filed in the name of Smt. Hirabai M. Mehta, the legal heir and executrix of the will of Shri Maneklal A. Mehta (deceased). Notices dated 12-2-1980 and 5-3-1980, issued by the WTO under Section 16(2) of the Wealth-tax Act, 1957 ('the Act'), were directed against Smt. Hirabai M. Mehta, the executrix and widow of Shri Maneklal A. Mehta, and were served on her.

Smt. Hirabai M. Mehta died on 12-3-1980. The assessments were completed a fortnight thereafter on 28-3-1980. In the assessment orders, the assessee was described as 'late Smt. Hirabai M. Mehta, executrix of the will of late Shri Maneklal A. Mehta by legal heirs, Maneklal A. Mehta Bungalow, Navroji Lane, Ghatkopar, Bombay'.

2. On 1-7-1980, the WTO passed orders under Section 35 of the Act, stating as follows : It is seen that there is a mistake in calculation. Similarly, the status of the assessee is wrongly taken as AOP instead of an 'individual'. The mistake being apparent from records is hereby rectified. Issue fresh demand notice.

3. The Commissioner formed an opinion that the above assessment orders, including the rectification orders, were erroneous so far as they were prejudicial to the interests of the revenue. According to him, these orders were 'basically not supported by law and no proper demand could be raised on the basis of the same'. He, therefore, issued notices to show cause why those orders be not revised and brought in conformity with law.

4. The main contention raised on behalf of the assessee before the Commissioner was that the assessment orders were null and void, and as such, they could not be revised. This objection was overruled by the Commissioner. According to him, the orders were not null and void ; only an error had crept in while framing the same and that the said error could be corrected by exercise of powers under Section 25 of the Act, so that the orders come in conformity with the provisions of law.

According to him, a wrong name has been mentioned in the assessment orders in respect of the assessee, with the result that difficulty had arisen in realisation of taxes payable under the said assessment orders. He, therefore, set aside the assessment orders as well as the rectification orders and directed the WTO to make fresh assessments in accordance with law, after affording reasonable opportunity of being heard, to the parties concerned. The assessee has now come in appeals before us and the grounds raised in the memorandum of appeals are identical.

5. The first ground raised in the memorandum of appeals is that the orders of the WTO were not revisable in view of the fact that appeals against the said orders were pending before the Commissioner, on the date on which the orders under Section 25 were passed. Reliance was placed in the grounds of appeals on the proviso to Section 25(1), which reads as follows : Provided that the Commissioner shall not revise any order...** ** ** (b) where the order is subject of an appeal before the Appellate Assistant Commissioner or the Commissioner (Appeals) or the Appellate Tribunal ; 6. This ground appears to be wholly untenable. In view of the decision of the Bombay High Court in Jagmohan Das Gokaldas v. CWT [1963] 50 ITR 578, wherein it has been held that an order can be said to be subject of an appeal within the meaning of proviso (b) to Sub-section (1) of Section 25, which prohibits the Commissioner from revising order where the order is the subject of an appeal to the Assistant Commissioner, etc., only if the appellate court had considered the order on merits.

There is no bar to the exercise of revisional powers by the Commissioner under Section 25(2). We, accordingly, reject the said ground raised in the memorandum of appeal. We may mention here that no arguments were addressed to us by the learned Counsel for the assessee regarding this ground.

7. The next ground raised is about the validity of the notices issued by the Commissioner. It is said that notices were addressed as under : Estate of late Shri Maneklal A. Mehta comprising of late Smt.

Hirabai M. Mehta, Dhirubhai M. Mehta and others.

It is contended that it was not specified in the notices as to who 'and others' were and that no notice had been given to 'and others', and, as such, the notices were bad in law. We are unable to accept this contention. The mere fact that the notices contain the words 'and others' would not render the notices invalid. The next contention was that in the assessment orders, the name of the assessee is mentioned as 'late Smt. Hirabai M. Mehta, the executrix of the will of late Shri Maneklal A. Mehta by legal heirs'. While in the notices under Section 25, the description was different and that for this reason, notices were bad in law. This contention also cannot be sustained. It is to be noted, that what has been assessed is the property of Shri Maneklal A.Mehta, who died on 27-6-1969. The assessment was to be made on the executrix, Smt. Hirabai M. Mehta. However, the said Smt. Hirabai M.Mehta died after the hearing was completed but before the assessment order was passed, and in the assessment order she was described as late Smt. Hirabai M. Mehta. The mistake which had occurred in the assessment order had to be corrected by an order under Section 25. Consequently, notices had to be issued on the persons, who represented the estate of late Shri Maneklal A. Mehta after the death of Smt. Hirabai M. Mehta.

Shri Dhirubhai M. Mehta was the son of Shri Maneklal A. Mehta and Smt.

Hirabai M. Mehta. He was the legal heir of late Smt. Hirabai M. Mehta and Shri Maneklal A. Mehta. He represented the estate of Shri Maneklal A. Mehta. Whether he represented the estate solely or whether he represented the same jointly with others, is a different question, but he certainly was one of the persons who represented the estate of Shri Maneklal A. Mehta. He was the eldest son of Shri Maneklal A. Mehta. The notice was received by him. He engaged Shri Mulla to represent the estate before the Commissioner. In the circumstances, it cannot be said that the notice was bad in law. No other heir has raised an objection that Shri Dhirubhai M. Mehta was not representing the estate of deceased, Shri Maneklal A. Mehta, after the death of Smt. Hirabai M.Mehta. In the circumstances, proceeding before the Commissioner cannot be said to be without jurisdiction on this score.

8. Another argument was that the description that the estate comprised of late Smt. Hirabai M. Mehta, Shri Dhirubhai M. Mehta and others was unintelligible. An error of this type in the description cannot render the whole proceeding void. In substance, the notice has been issued to Shri Dhirubhai M. Mehta, who was the eldest son of Shri Maneklal A.Mehta and Smt. Hirabai M. Mehta, and who was also one of their heirs.

He was the eldest of three sons of Smt. Hirabai M. Mehta. He represented the estate of Shri Maneklal A. Mehta in the circumstances of the present case. As already stated, he engaged an advocate to represent the estate and contested the proceedings. Consequently, the proceeding before the Commissioner could not be said to be void as contended. Our attention was drawn to the observation of the learned Commissioner in his order, where he has stated that the assessment orders have been made in wrong name and in wrong status. It was submitted that it followed from those observations that the assessment was on a non-existing person and was, therefore, a nullity, with the result that the Commissioner was not competent to correct the error in the said assessment orders. We are unable to accept this contention.

The mere fact that the assessment order mentioned the name of the assessee as 'late Smt. Hirabai M. Mehta, the executrix of the will of late Shri Maneklal A. Mehta by legal heirs', would not render the assessment orders as null and void. There is difference between an assessment on a dead person and an assessment wherein the name of the dead person is mentioned due to inadvertent error, committed by the assessing officer. This was not an assessment on a dead person. What was being assessed was the estate of late Shri Maneklal A. Mehta in the hands of the executrix Smt. Hirabai M. Mehta. Notices were duly served on the said executrix in the course of the assessment proceedings.

After the hearing was completed, the said executrix died. The date of hearing was 12-3-1980 and the assessment orders were passed on 28-3-1980. It is mentioned in the assessment order for the assessment year 1970-71 that the WTO had been informed that the executrix had died on 12-3-1980. It was further mentioned that legal heirs had been brought on record and the status was treated as AOP. The assessment for the assessment year 1970-71 was made along with the assessment for the other assessment years, on the same facts regarding the death of the executrix. In the circumstances, it cannot be said that there were assessments on a dead person. In these cases, the name of dead person is wrongly mentioned in the assessment orders. This was an irregularity which has crept in the assessment orders. In the circumstances, it cannot be said that all the assessment orders were null and void and that they were not amenable to the powers of revision under Section 25(2).

9. The decision of the Gujarat High Court in CIT v. Sumantbhai C.Munshaw [1981] 128 ITR 142 is significant. That case pertains to the income-tax assessments, but the basic principle is the same. In that case, after the death of the assessee, the assessment proceedings continued in the name of the deceased assessee and the notices were also issued in the said name. The assessment orders were also passed in the name of the deceased. However, the legal representative had voluntarily attended the assessment proceedings. It was held that the assessment proceedings were not null and void. This decision is an authority in the proposition that mere fact that the name of the deceased appears in the assessment order, would not render the assessment proceedings null and void. One of the legal heirs of Shri Maneklal A. Mehta, who was his eldest son (Shri Dhirubhai M. Mehta), had been admittedly appearing before the WTO as representative of the estate of the deceased. Consequently, the estate was being represented by the said Shri Dhirubhai M. Mehta. In the circumstances, it cannot be said that the assessment was on a dead person. The assessment was in respect of the property of the dead person and that in the assessment proceedings, the estate of the deceased was being represented by legal representative. The assessment proceedings were, therefore, not null and void.

10. It is to be noted that the order sheet, dated 18-3-1980, before the WTO indicates that two of the three sons of Shri Maneklal A. Mehta, viz., Shri Dhirubhai M. Mehta and Shri Hiralal M. Mehta, had appeared before the WTO and had informed that the executrix had died on 12-3-1980. They had also placed a list of legal heirs. Subsequently, on 19-3-1980 the eldest son, Shri Dhirubhai M. Mehta, had appeared with the advocate, Shri Gulanikar, and discussed the case. From the conduct of the eldest son of the deceased (Shri Dhirubhai M. Mehta), it was obvious that he was representing the estate and was guarding the interests of the estate. Thus, the estate was duly represented before the WTO. In the circumstances, it is immaterial that the third son, Anil Kumar, had not appeared. The circumstances of the present case prima facie indicate that the estate was duly represented by the persons who were in possession of the properties. For this reason also, the assessments cannot be said to be null and void. All that can be said is that there was irregularity and such irregularity could be corrected by revisional orders. We shall now briefly deal with the three decisions, on which strong reliance was placed on behalf of the asses see. The first decision is the First Addl. ITO v. Mrs. Suseela Sadanandan [1965] 57 ITR 168. In that case, the Supreme Court had set aside the order of the High Court and remanded the matter to the High Court for fresh disposal after considering the questions of fact on the following points, viz., 1. Whether the person on whom the notices were served was in possession and management of the entire estate of the deceased, and if so, whether he would be the legal representative 2. Even if he intermeddled only with a part of the estate, whether the ITO bona fide treated him as representative of the estate 3. Whether, he in fact, represented the estate and the other executors or representatives expressly or impliedly accepted his representation 4. Whether the first respondent, who was not a party to the assessment proceedings, could question the enforceability of the final assessment order against the person on whom notice was served All these crucial questions were left open by the Supreme Court. The basic principle laid down by the Supreme Court was that the estate should be fairly represented for making valid assessments. We have already held in the present case that the estate had been fairly represented and as such there was no question of assessments being null and void.

11. The next decision, on which reliance is placed, is Sahasrangshu Kanta Acharya v. Collector of Malda [1963] 47 ITR 754 (Cal.). In that case, the assessment was made in the name of 'the successor-in-interest to the late A'. It was held that the assessment was not valid. The assessment was, therefore, quashed in exercise of powers of issue of writ under article 226 Of the Constitution of India. This decision is not an authority for the proposition that the assessment on the facts, as obtained in our case, is null and void. This is not also an authority for the proposition that the mistake of this nature cannot be corrected in exercise of revisional or appellate powers. In fact, there was an argument in the said case on behalf of the revenue that the mistake that had occurred, could have been corrected in further proceedings under the Income-tax Act, 1961. However, no opinion was expressed by the High Court on that aspect. The order was quashed because it was not in accordance with law. The order was not quashed on the ground that it was a nullity.

12. The last decision on which reliance is placed is Jai Prakash Singh v. CIT [1978] 111 ITR 507 (Gauhati). The broad proposition laid down at this decision is that if only one of the several legal heirs is served with notice, the estate of the deceased cannot be said to have been duly represented and, as such, the assessment order would be null and void. In our case, the estate of the deceased, Shri Maneklal A. Mehta, was duly represented by the executrix Smt. Hirabai M. Mehta and after her death on 12-1-1980, the estate was duly represented by two of the three sons of the deceased, viz., Shri Dhirubhai M. Mehta and Shri Hiralal M. Mehta. In the circumstances, the ratio of the said decision would not be applicable.

13. In this connection, we may refer to the decision of the Supreme Court in Guduthur Bros. v. ITO [1960] 40 ITR 298. That decision is an authority for the proposition that if the initiation of proceeding is in accordance with law, then any illegality which supervened subsequently, would not vitiate the whole proceeding and that the proceeding can be continued from the stage at which the illegality supervened. In that case, the AAC set aside the order of penalty as defective and directed refund of the penalty. The infirmity in the proceeding was that reasonable opportunity of being heard had not been granted. After the order of the AAC, the ITO issued further notice and granted opportunity of being heard. It was held that since the illegality, which vitiated the proceedings, had occurred after the proceedings were lawfully initiated, it was open to the ITO to take up the matter at the point at which the illegality supervened and to correct the proceedings. The ITO, therefore, had jurisdiction to continue the proceedings from the stage at which the illegality had occurred. In the present cases also, the assessment proceedings had been initiated lawfully. Illegality has occurred, subsequently, in the course of the proceedings. Consequently, the proceedings could be corrected from the stage at which the illegality had occurred. The error would be considered as procedural and not one affecting the jurisdiction. Such an error could be corrected by the Commissioner in exercise of revisional powers.

14. The next submission made on behalf of the assessee was that against the present assessment orders, the assessee could have filed revision application under Section 25(1) and, hence, the Commissioner could not exercise powers under Section 25(2). This contention cannot be accepted. The assessment orders are partly in favour of the assessee and partly against the assessee. The assessee could file revision application under Section 25(1) and the Commissioner could also exercise powers under Section 25(2), so far as those orders are erroneous and prejudicial to the interests of the revenue. In the present cases, no valid demand could have been raised because of the fact that the description of the assessee given in the assessment orders was erroneous. Similarly, the status of the assessee shown in the assessment orders was erroneous. These errors were prejudicial to the interests of the revenue. Consequently, powers of revision under Section 25(2) could be validly exercised. In this connection, the decision of the Gujarat High Court in Addl. CIT v. Mukur Corpn. [1978] 111 ITR 312 is significant. That decision pertains to the powers under Section 263 of the Income-tax Act. The provisions of Section 263 of the Income-tax Act are in part materia with those in Section 25(2) of the Wealth-tax Act. The words used are the same, viz., 'prejudicial to the interests of the revenue'. It was held by the High Court that those words had not been defined but they would cover within the ambit even those cases, where the orders of assessment are not in accordance with law, in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. In the present case, the lawful revenue due from the estate of the deceased, Shri Maneklal A. Mehta, cannot be realised because of the fact that the names of the legal representatives, who represented the estate at the time of the assessment orders, have not been specifically mentioned and that the name of the deceased is wrongly mentioned. Consequently, an error of this nature would be an error prejudicial to the interests of the revenue and as such, would be corrected by exercise of revisional powers under Section 25(2). We, therefore, reject the contention of the assessee to the effect that the Commissioner had no jurisdiction to pass order to correct the errors in the present cases, in exercise of powers under Section 25(2).

15. For the reasons given above, we uphold the order of the Commissioner setting aside the assessment and directing the WTO to make fresh assessments in accordance with law after giving the assessee reasonable opportunity of being heard.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //