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Banu Asan and Another Vs. Income-tax Officer, Quilon, and Others. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberO. P. No. 22 of 1960
Reported in[1963]47ITR99(Ker)
AppellantBanu Asan and Another
Respondentincome-tax Officer, Quilon, and Others.
Excerpt:
.....29 is a complete code by itself. liability of principal-debtor and surety is always joint and co-extensive. [n. narasimhaiah v karnataka state financial corporation, air 2004 kar 46 dissented from]. - and (2) the taxes have been levied on the partnership, of which the sons are members and, therefore, the partners are liable to discharge the obligation from their personal properties as well. it further follows that before the taxing authority attaches the personal properties of such heirs, the authority must be satisfied about improper administration, and the collector has not expressly so found in the case before us. clearly, the income-tax is not on the firm, of which the sons were partners and, therefore, there is no personal liability of the sons to meet the income-tax from..........heirs are liable to account for the properties of the deceased in their hands, failing which their personal properties should be liable to discharge the debt; and(2) the taxes have been levied on the partnership, of which the sons are members and, therefore, the partners are liable to discharge the obligation from their personal properties as well.obviously, the heirs incur no liability to pay the tax of the deceased assessee personally, unless some assets of the deceased be shown to have come into their hands, of which they cannot give satisfactory follows the finding of the assets of the deceased having not been properly administered. it further follows that before the taxing authority attaches the personal properties of such heirs, the authority must be satisfied about improper.....
Judgment:

ANSARI C.J. - This petition seeks to vacate the order by the Collector dated November 18, 1959, and it has been filed in the following circumstances. The Income-tax Officer, Special Circle, Trivandrum, had on September 23, 1953, issued the certificate to recover Rs. 2,62,899-6-0 from the estate of one E. C. Govindan Asan, and the Inspecting Assistant Commissioner of Agricultural Income-tax, Quilon, had sent a certificate dated December 21, 1953 for recovery of Rs. 33,807-5-0 from the legal representative of the same Govindan Asan. There is yet another certificate dated January 13, 1954, from the Sales Tax Officer, II Circle, Quilon, for the recovery of Rs. 1,11,753-6-9 from Messrs. E. C. Govindan Asan and Sons. The heirs of the deceased have raised several objections to their properties being attached and sold in realisation of the aforesaid certificates. His two sons and daughter had objected to certain properties being notified for sale on September 28, 1954, and his two widows had objected before the Collector on September 24, 1954. The sons then brought the matter to the High Court in O. P. No. 127/54, on which an order was passed on December 2, 1954. In the meantime, the Tahsildar, Quilon, attached some amounts due to the sons and daughter from the municipality and the sons brought the matter to the High Court through O. P. Nos. 74 and 94 of 1955, which were decided on August 22, 1955. The Tahsildar of Quilon thereafter heard and rejected the claims, which was followed by O. P. No. 315/55. The High Court allowed the petition on July 9, 1956, and directed the collector to proceed under section 34 of the Revenue Recovery Act, 1951. In the proceeding under the aforesaid section, the order dated November 18, 1959, had been passed, which this writ petition seeks to vacate. That order covers the following four categories :

(1) Properties claimed to have been purchased by the heirs of the assessee with their own money.

(2) Properties included in the settlement deed of 1949.

(3) Properties included in the last will of the taxpayer.

(4) Properties not specifically included in any of the above categories.

The Collector has rejected objections against properties covered by the third and fourth categories from being proceeded against for arrears of the taxes and no serious objections have been taken against the correctness of such properties being liable to discharge the burden. The complaint is against that part of the order, which holds the other two classes liable, and it is that the two grounds on which they have been held liable are incorrect. The aforesaid grounds are :

(1) The heirs are liable to account for the properties of the deceased in their hands, failing which their personal properties should be liable to discharge the debt; and

(2) the taxes have been levied on the partnership, of which the sons are members and, therefore, the partners are liable to discharge the obligation from their personal properties as well.

Obviously, the heirs incur no liability to pay the tax of the deceased assessee personally, unless some assets of the deceased be shown to have come into their hands, of which they cannot give satisfactory follows the finding of the assets of the deceased having not been properly administered. It further follows that before the taxing authority attaches the personal properties of such heirs, the authority must be satisfied about improper administration, and the Collector has not expressly so found in the case before us. In case that be found to be the position, it would make the personal properties of the heirs liable to attachment, which would include what has been settled under the settlement deed in 1949, liable, but there should be a finding supported by materials. The other ground of the partners being personally liable to meet the arrears of the sales tax is also partly correct. Nobody disputes that partners incur the liability to personally pay the tax, but that is correct only where the partnership has been assessed to tax and, therefore, the order must show whether the sons were partners of the firm, which had been assessed to tax. Clearly, the income-tax is not on the firm, of which the sons were partners and, therefore, there is no personal liability of the sons to meet the income-tax from their own properties. As regards the agricultural income-tax the position is the same. The arrears of sales tax may be of the firm, of which the sons were partners; but there should be a finding about their being partners of the firm, which has been assessed to pay the sales tax. It follows that the sons would not be liable to discharge the income-tax and agricultural income-tax from the personal properties unless they be found not to have properly administered the estate of the deceased. It further follows that they would be liable for sales tax only if found to be partners. The daughter has been exempted and it is agreed that her exemption would stand. We, therefore, vacate the order of the Collector and direct his making a fresh order in view of the legal position clarified above, the parties bearing their costs.

Order accordingly.


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