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Peter Elizabeth Vs. Agricultural Income-tax Officer and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberOriginal Petition No. 1938 of 1968
Judge
Reported in[1970]77ITR683(Ker)
ActsKerala Agricultural Income Tax Act, 1950 - Sections 30, 43(3) and 52(2); Travancore-Cochin Revenue Recovery Act, 1951 - Sections 41(3); Code of Civil Procedure (CPC) , 1908 - Order 21 - Rule 22
AppellantPeter Elizabeth
RespondentAgricultural Income-tax Officer and ors.
Appellant Advocate C.K. Viswanatha Iyer, Adv.
Respondent AdvocateGovernment Pleader
Cases ReferredSahu Rajeshwar Nath v. Income
Excerpt:
.....agricultural income-tax act,1951 and order 21 rule 22 of code of civil procedure, 1908 - whether notice issued under section 30 to petitioner who was widow of defaulter assessee was competent - if petitioner is legal representative of assessee and represents his estate then petitioner liable by virtue of section 52 (2) - petitioner can raise objections under rule 22 of order 21. - - butexhibit p-1 revenue recovery notice dated january 29, 1968, was issued to the petitioner as well as the other heirs of george peter stating that the properties mentioned in the notice will be proceeded against for recovery of the tax. 3. in order to answer the questions raised by counsel, it is necessary to refer to the definition of the term 'assessee' in the act in section 2(d) as well as sections..........of the assessee. the court has also held that the amount was due though the period granted by the notice issued under section 156 of the income-tax act, 1961, for payment of the tax had not expired when notice under section 226(3) was issued to the debtor of the assessee. the notice was sustained. no point seems to have been made before the supreme court on the wording of section 226(3) of the income-tax act, 1961, which uses the words 'to pay the amount due by the assessee in respect of arrears' and there is no discussion in the judgment as to whether any amount could be said to be in arrears when the period stated in the notice of demand had not expired. the pronouncement seems to support counsel on behalf of the revenue that section 41(3) of the act must be understood in the same.....
Judgment:

Govindan Nair, J.

1. The question raised by the widow of a deceased assessee under the Agricultural Income-tax Act, 1950 (hereinafter referred to as 'the Act'), is whether a notice, exhibit P-l, issued by the second respondent, the Deputy Tahsildar of Revenue Recovery, Shertallai, under Section 7 of the Travancore-Cochin Revenue Recovery Act, 1951, to her is incompetent or not. After the death of the original assessee, George Peter, who it is admitted was a defaulter as envisaged by Section 30 of the Act, no notice was issued to the petitioner, the widow of George Peter, under Section 30 of the Act, and, therefore, it is contended that the petitioner is not a defaulter. Consequently, it is urged that no certificate could have been issued under Section 41(3) of the Act to the Revenue Recovery Officer for recovery from the petitioner of the tax due from the said George Peter.

2. George Peter was assessed on December 12, 1963, for the assessment year 1963-64. A notice under Section 30 of the Act was admittedly fssued to him. He did not pay the tax. He died on April 3, 1967. Thereafter, no notice under Section 30 of the Act was issued to the petitioner. Butexhibit P-1 revenue recovery notice dated January 29, 1968, was issued to the petitioner as well as the other heirs of George Peter stating that the properties mentioned in the notice will be proceeded against for recovery of the tax. A certificate dated June 26, 1964, had been issued to the second respondent stating that a sum of Rs. 776.79 was due from the said George Peter. After his death another certificate dated January 16, 1968, was issued to the second respondent stating that the identical amount was due from the petitioner, the widow of the said George Peter, and the other legal heirs, seven in number, mentioned in that certificate.

3. In order to answer the questions raised by counsel, it is necessary to refer to the definition of the term 'assessee' in the Act in Section 2(d) as well as Sections 24, 30 and 41. I shall extract the definition as well as the sections.

'2. (d) 'assessee' means a person by whom agricultural income-tax is payable.'

'24. Tax of deceased person payable by representatives.--(1) Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge the agricultural income-tax assessed as payable by such person or any agricultural income-tax which would have been payable by him under this Act if he had not died.

(2) Where a person dies before the 1st June in any year or before he is served with a notice under Sub-section (2) of Section 17 or under Section 35, as the case may be, his executor, administrator or other legal representative shall, on the serving of the notice under Sub-section (2) of Section 17 or under Section 35, as the case may be, comply therewith, and the Agricultural Income-tax Officer may proceed to assess the total agricultural income of the deceased person as if such executor, administrator or other legal representative were the assessee.

(3) Where a person dies without having furnished a return which he has been required to furnish under Section 17, or having furnished a return which the Agricultural Income-tax Officer has reason to believe to be incorrect or incomplete, such officer may make an assessment of the total agricultural income of such person and determine the agricultural income-tax payable by him on the basis of such assessment, and for this purpose may, by the issue of the appropriate notice which would have had to be served upon the deceased person had he survived, require from the executor, administrator or other legal representative of the deceased person any accounts, documents or other evidence which he might under Section 17 or Section 18 have required from the deceased person.'

'41. Mode and time of recovery.--(1) When an assessee is in default in making a payment of agricultural income-tax, the Agricultural Income-tax Officer may in his discretion direct that, in addition to the amount of the arrears, a sum not exceeding that amount shall be recovered from the assessee by way of penalty.

(2) For the purposes of Sub-section (1), the Agricultural Income-tax Officer may direct the recovery of any sum less than the amount of the arrears and may enhance the sum so directed to be recovered from time to time in the case o| a continuing default, so however that the total sum so directed to be recovered shall not exceed the amount of the arrears payable.

(3) The Agricultural Income-tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee and the Collector, on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land revenue :

Provided that without prejudice to any other powers of the Collector in this behalf, he shall for the purpose of recovering the said amount have the powers which under the Travancore or Cochin Code of Civil Procedure a civil court has for the purpose of the recovery of an amount due under a decree.

(4) No proceeding for the recovery of any sum payable under this Act shall be commenced after the expiration of three years from the latest day fixed for payment in the notice of demand served under Section 30 or where the assessee has been treated as not being in default under the proviso to Section 40 pending his appeal, after the expiration of three years from the date on which the appeal is decided.'

4. The petitioner has a case that she has not come by any estate of the deceased person and that, therefore, Section 24 will have no application and she has no liability to pay the tax. This question cannot be resolved in these proceedings, and in the view I am taking which will be stated hereafter will have to be decided by the Revenue Recovery Officer, the second respondent.

5. Counsel for the petitioner has urged that though the petitioner is an assessee within the meaning of the definition in Section 2(2) already referred to, the petitioner is not an assessee in default and that it cannot be said that there is any arrears of tax due from the petitioner. He, therefore, urged that no certificate at all could have been issued for the recovery of any amount by way of arrears of tax from her and the second respondent has no jurisdiction to issue exhibit P-l notice. Reliance was placed on Kanga's Commentary to Sections 222 and 223 of the Income-tax Act, 1961, corresponding to Section 46 of the Indian Income-tax Act, 1922, at page 938 and therulings referred to therein. I do not think it is necessary to decide this question in this petition.

6. It is not urged by the revenue that the petitioner is an 'assessee in default'. The argument is that Section 41(3} unlike Section 41(1) does not speak of an 'assessee in default' but only of an assessee. Reliance was placed by counsel on the ruling of the Supreme Court in Third Income-tax Officer, Mangalore v. M. Damodar Bhat, [1969] 71 I.T.R. 806 (S.C.)wherein, dealing with the interpretation of Section 226(3} of the Income-tax Act, 1961, the wording of which Section is very similar to that of Section 41(3) of the Act, the Supreme Court held that the wording of section 226(3) does not justify the contention that there should be 'an assessee in default' before a notice under Section 226(3) of the Income-tax Act, 1961, is issued to the debtor of the assessee. The court has also held that the amount was due though the period granted by the notice issued under Section 156 of the Income-tax Act, 1961, for payment of the tax had not expired when notice under Section 226(3) was issued to the debtor of the assessee. The notice was sustained. No point seems to have been made before the Supreme Court on the wording of Section 226(3) of the Income-tax Act, 1961, which uses the words 'to pay the amount due by the assessee in respect of arrears' and there is no discussion in the judgment as to whether any amount could be said to be in arrears when the period stated in the notice of demand had not expired. The pronouncement seems to support counsel on behalf of the revenue that Section 41(3) of the Act must be understood in the same manner as Section 226 of the Income-tax Act, 1961, was understood by the Supreme Court.

7. The proceedings contemplated by Section 226(3) of the Income-tax Act, 1961, and by Section 41 of the Act are entirely different, and I, therefore, do not wish to pronounce on the question as to whether a certificate can be issued in the absence of a demand notice under Section 30 of the Act or if there is one before the exiry of the period mentioned in that notice for payment of the money since Section 41(3) speaks of arrears. I leave this question open, for the case can be disposed of on another ground.

8. That ground is based on the contentions raised by counsel on behalf of the revenue that the Collector by virtue of the proviso to Section 41(3) has the powers of a civil court and that therefore the Collector can take action against the legal representatives of an assessee in default. George Peter was admittedly an assessee in default. There was a valid certificate issued for the collection of arrears of tax from him dated April 26, 1964. After his death the Collector, who will have the powers of a court under the Code of Civil Procedure, can rely on Section 52(2) read with Rule 22 of Order 21 of the Code of Civil Procedure and can issue notice to the legal representatives of the assessee in dafault. The Civil Procedure Code beingmade applicable, it must apply mutatis mutandis and so it is not difficult to visualise that the legal representatives of an assessee in default can be proceeded against by virtue of the power under Section 52(2) as well as Rule 22 of Order 21 of the Code of Civil Procedure. Counsel for the petitioner has brought to my notice Rule 12 of Order 22 and by virtue of this Rule, it is unnecessary to bring any legal representatives on record. The only question then is whether there should be something in the nature of a fresh execution application in the form of a request from the Income-tax Officer to the Collector to proceed against the legal representatives of the original defaulter. I do not think this is necessary. In fact in the case in Sahu Rajeshwar Nath v. Income-tax Officer, [1969] 72 I.T.R. 617 (S.C.). a very similar question arose and their Lordships of the Supreme Court held that by virtue of the powers which must be taken to be vested in the Collector under the proviso to Section 46(3) of the Indian Income-tax Act, 1922, the Collector can take steps for realisation of the arrears of tax due from an unregistered firm which was assessed under the Income-tax Act from the partners of the firm at the relevant time. In that case there was no fresh request by the Income-tax Officer that the tax may be collected from the person who was a partner of the firm during the relevant period, i.e., during the period the income was earned. Their Lordships relied on the provisions in Rule 50 of Order 21 of the Civil Procedure Code and this provision, it was ruled, was attracted by virtue of the proviso to Section 46(3) of the Indian Income-tax Act, 1922.

9. The second respondent herein had a valid certificate before him, the one dated April 26, 1964. The person mentioned therein had died and the petitioner is his widow. If the petitioner is a legal representative of George Peter in the sense that she represents the estate, to whatever extent it be of the deceased, then, she is liable by virtue of Sub-section (2) of Section 52 of the Civil Procedure Code read with the proviso to Sub-section (3) of Section 41 of the Act. If the principle of the ruling in Sahu Rajeshwar Nath v. Income-tax Officer is made applicable, the Collector is enabled to proceed against the petitioner. But there has been no notice under the Code of Civil Procedure as visualised by Rule 22 of Order 21 which is an imperative provision before proceeding against the legal representative. It is clear that there should be compliance with this provision. The notice, exhibit P-l, does not even purport to be one under the Civil Procedure Code. In fact it specifically is one under the Revenue Recovery Act and which is the certificate the Collector relied on before issuing exhibit P-l; whether the one dated April 26, 1964, or the later certificate dated January 16, 1968, is not clear. But if an inference is possible, I am inclined to draw the inference that he must have relied on the latter certificate. Notwithstanding the above defects, one of which at least is vital, counsel for the revenuehas suggested that the powers of the Collector on the admitted facts are indisputable. He submits that the notice, exhibit P-l, may be taken to be a notice under Rule 22 of Order 2J of the Civil Procedure Code entitling the petitioner to raise all objections which a legal representative could have raised when a decree is sought to be executed against the legal representative including the contention that he is not a legal representative and is therefore not liable to pay any amount as mentioned in exhibit P-l and that the matter may be allowed to be proceeded with on that basis. I am inclined to agree. After all, the requirement of Rule 22 of Order 21, though mandatory, is to enable the legal representative sought to be proceeded against to raise all valid contentions regarding that he is not liable for the debt. As long as this requirement which is the substance of the rule is satisfied, I think, there will be no violation of any statutory provision, or the principles of natural justice, nor can any injustice result from adopting such a course.

10. In the light of the above, I direct that the notice, exhibit P-l, will be considered as a notice under Rule 22 of Order 21 of the Civil Procedure Code and the petitioner will have a month's time from today to raise all her objections to the proposal to recover the amount from her. She will send her objections to reach the second respondent by registered post acknowledgment due on or before the 9th of March. If such an objection is taken, it will be duly considered during which process a reasonable opportunity will be given to the petitioner, and an order passed by the second respondent determining the question of liability, if any, of the petitioner for the amount mentioned in exhibit P-l. Only after such an order is passed, coercive steps under the Revenue Recovery Act will be taken for recovery of the amount from the petitioner, in case it is found that she is liable. Such proceedings, if it is to be taken, will be commenced by a fresh notice under the Revenue Recovery Act.

11. This original petition is ordered as above. I direct the parties to bear their respective costs.


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