1. Wealth consisting of house properties at Middleton Row and Camac Street has been assessed to wealth-tax by the WTO for the assessment years 1970-71 to 1976-77 in the hands of Smt. Manjusree Biswas, legal representative to the trustees to the estate of late Jitendra Nath Mookerjee. Validity of these assessment orders were challenged in appeal before the Commissioner (Appeals) who by consolidated order dated 21-9-1983 for all these seven years cancelled the assessments.
The department is, therefore, in appeal for all these seven years which we propose to dispose of by this common order.
2. For proper appreciation of the controversy these relevant facts need notice. Late J.N. Mookerjee left a will dated 14-2-1938. He died on 3-10-1939. The legatees of the said will were his widow Smt. Prova Mookerjee, son Robindra Nath Mookerjee, daughter Smt. Shephali Chatterjee and pre-deceased daughter Maduri's son Shri Amarendra Nath.
Smt. Prova Mookerjee, Shri Robindra Nath Mookerjee and Shri Birendra Nath Mookerjee were appointed executors and trustees of the said will.
After death of Shri J.N. Mookerjee, the will was probated and in terms thereof Smt. Prova Mookerjee, Shri Robendra Nath Mookerjee and Shri Birendra Nath Mookerjee were appointed as executors of the estate of Late J.N. Mookerjee. Thereafter, the executors purchased the two house properties in question from the assets of Late J.N. Mookerjee. A family arrangement was arrived at between the legatees of the will, viz., Smt.
Prova Mookerjee, Shri Robindra Nath Mookerjee, Smt. Shephali Chatterjee and Shri Amarendra Nath on the one hand and the executors and trustees of the will of Late J.N. Mookerjee on the other vide deed of family arrangement dated 22-4-1947. According to the said arrangement, each of them, i.e., Smt. Prova Mookerjee, Shri Robindra Nath Mookerjee and Smt.
Shephali Chatterjee took one-third share in the said houses. It was agreed between them that on payment of Rs. 2,18,000 to each of Smt.
Prova Mookerjee and Smt. Shephali Chatterjee by Shri Robindra Nath Mookerjee both the houses should be conveyed by the trustees to Shri Robindra Nath Mookerjee. It was also agreed that the said conveyance should be subject to the right of residence of Smt. Prova Mookerjee in the said premises during her lifetime. Out of other assets of Late J.N.Mookerjee, provisions for maintenance of Smt. Prova Mookerjee, Srnt.
Shephali Chatterjee, Shri Amarendra Nath and for education of sons of Shri Robindra Nath Mookerjee and Smt. Shephali Chatterjee were made with which we are not concerned in this case. Thereafter, Smt. Shephali Chatterjee died in the year 1953. Smt. Prova Mookerjee died in the year 1971 and Robindra Nath Mookerjee died in the year 1975. Shri Robindra Nath Mookerjee was survived by his legal heirs, widow Smt. Mohamaya Mookerjee and daughters Smt. Jayasree Mookerjee, Smt. Manjusree Biswas and Smt. Gayatri Mehra and son Shri Raja Mookerjee. After death of Smt.
Prova Mookerjee and Shri Robindra Nath Mookerjee, Birendra Nath Mookerjee only survived as executor and trustee of the will. He executed a document dated 6-8-1976 in favour of the legal heirs of Shri Robindra Nath Mookerjee transferring legacy in respect of the said two houses. He thereafter died on 4-11-1982.
3. The WTO issued notices under Section 17 of the Wealth-tax Act, 1957 ('the Act') for all the seven years to Shri Birendra Nath Mookerjee as the sole surviving trustee to the estate of Late J.N. Mookerjee. Shri Birendra Nath Mookerjee had informed the WTO by letter dated 23-3-1979 that as executor and trustee of the estate of Late J.N. Mookerjee assessments were completed by the ITO on 17-8-1948 in which the ITO had concluded that the estate had been liquidated and the assets had been distributed amongst the legatees. Shri Birendra Nath Mookerjee, therefore, disclaimed his liability as trustee to the said estate to file any return in respect of wealth-tax payable. On the death of Shri Birendra Nath Mookerjee on 3-11-1982, the WTO issued notices under Section 16(4) of the Act to Smt. Manjusree Biswas holding them as legal representatives to the trustees. No documents were filed by them.
Eventually the WTO completed the assessments ex parte.
4. The Commissioner (Appeals) cancelled the assessments mainly on the ground that there was no property in the hands of the trustees and valid notices were served upon the trustees.
5. Contention of the learned departmental representative is that the learned Commissioner (Appeals) wrongly assumed that the estate of Late J.N. Mookerjee consisting of the aforesaid two properties was distributed amongst the legatees and nothing remained in the hands of the trustees. According to him the deed of conveyance dated 6-8-1976 is the strongest evidence of the fact that the said two properties were under the management of the trustees and they were conveyed by the sole surviving trustee Shri Birendra Nath Mookerjee in favour of the legal heirs of Shri Robindra Nath Mookerjee. Further it is urged by the learned departmental representative that notice under Section 17 was validly served upon Shri Birendra Nath Mookerjee and after his death notices under Section 16(4) were served on the persons who were in actual enjoyment of the properties and as such were liable to account for the wealth on behalf of the trustees.
6. The learned representative for the assessee, on the other hand, supported the order of the Commissioner (Appeals).
7. It appears that the words 'executors' and 'trustees' have been loosely used in the will of Late J.N. Mookerjee and the tax authorities below have not interpreted them in proper perspective. It is not uncommon that identical persons are appointed as trustees and executors under will but no trust fund arises until the estate is fully administered and until the residue is ascertained. In the instant case probate was given by the Hon'ble Calcutta High Court in favour of Shri Birendra Nath Mookerjee, Shri Robindra Nath Mpokerjee and Smt. Prova Mookerjee for administration of the estate of Late J.N. Mookerjee and as such till completion of their executorial duties they were executors and not trustees. There was nothing in the terms of the will that the legatees were not entitled to immediate possession of the properties bequeathed, except that condition for Shri Robindra Nath Mookerjee to be rightful legatee was that he should marry within his own caste. It appears that the said condition was fulfilled before 22-4-1947 when the family arrangement took place. Thus, the said family arrangement was a step in performance of executorial duties of the executors of the will.
The estate was mostly distributed amongst the legatees by the said deed of family arrangement. The said deed made provision for maintenance of Smt. Prova Mookerjee, for maintenance and education of Shri Amarendra Nath, for education of sons of Shri Robindra Nath Mookerjee and Smt.
Shephali Chatterjee and to that extent the executors became trustees of the funds out of which these provisions were to be met with. Clause II of the said deed mentioned that on payment of Rs. 2,18,000 by Shri Robindra Nath Mookerjee to each of Smt. Prova Mookerjee and Smt.
Shephali Chatterjee, the trustees would convey the said properties to Shri Robindra Nath Mookerjee. This was only a formal act of executorial duty of the executors remained to be done. But for this formal act nothing remained for the executors to be done and they had become trustees in respect of the funds out of which provisions for Smt. Prova Mookerjee, Shri Amarendra Nath, Smt. Shephali Chatterjee and sons of Shri Robindra Nath Mookerjee and Smt. Shephali Chatterjee were to be met with.
8. The deed of conveyance dated 6-8-1976 was executed by the sole surviving executor and not trustee in token of his assent to complete legatees' title as is required by Section 332 of the Indian Succession Act, 1925. It has been held by the Hon'ble Calcutta High Court in the case of Khagendra Nath Mukherjee v. Khetra Nath Pal alias Khetra Mohan Pal AIR 1923 Cal. 21 though on the assent of the executor full title passes to the legatee the assent create no new title ; it merely perfects the title under the will. The executors in the instant case had completed their duty in the year 1947 when by virtue of deed of family arrangement properties were allotted to the legatees. Only a formal act of assent was necessary to be done and it was done on 6-8-1976. By giving mere assent it cannot be said that the executors or the sole surviving executors, Shri Birendra Nath Mookerjee was managing the estate of Late J.N. Mookerjee. He was not an executor vis-a-vis the two house properties which were already allotted to the trustees of the legatees subject to the terms and conditions to be carried out by them.
His role as trustee of the funds for carrying out the wishes of the testator is not in issue in this case.
9. Thus, issue of notice to Shri Birendra Nath Mookerjee as trustee of Late J.N. Mookerjee was not valid. Even if notice as executor was issued to Shri Birendra Nath Moolcerjee that would have been of no consequence since there was no estate in his hands. After service of notice on Shri Birendra Nath Mookerjee he filed reply. The WTO did not act upon it. Thus, service of notice on Shri Birendra Nath Mookerjee and initiation of proceedings against him were infructuous, since there cannot be any legal representative of an executor appointed by the Court. On death of an executor if there is still necessity of a new executor he is appointed by the Court. The subsequent proceedings were, therefore, inconsequential. The legal heirs of Shri Robindra Nath Mookerjee who were in actual possession of the properties as owner could well be liable to account for the properties in their own capacities but certainly not as legal representatives of the trustees of the estate of Late J.N. Mookerjee.
10. In view of above discussion we agree with the conclusion of the Commissioner (Appeals).