1. One S. Ramaswamy Gounder died on December 12, 1965. He had executed a registered will on May 1, 1965, under which the petitioner herein and one C. Krishnan are the legatees. For the assessment years 1965-66 and 1966-67, the Income-tax Officer, Circle 1(1), Erode, completed the assessment on the estate of the said S. Ramaswami Gounder. For the assessment year 1965-66, the total income was determined at Rs. 57,190 and after deducting the annuity deposit payable at Rs. 5,720 the net taxable income was computed at Rs. 51,470. For the assessment year 1966-67, the Income-tax Officer determined the total income at Rs. 49,360 and after deducting the annuity deposit payable by him at Rs. 4,910 the net taxable income was computed at Rs. 44,450. After the completion of the said assessments the Income-tax Officer called upon the petitioner as legal representative to the estate of S. Ramaswami Gounder to pay the arrears of annuity deposit amounts.
2. Thereafter, the petitioner moved the Commissioner of Income-tax with a prayer that he should be relieved of the obligation of the payment of annuity deposit contending that a legal representative cannot be held liable to pay the annuity deposit when the depositor under chapter 22-A of the Income-tax Act was dead, and that, in any event, Section 280T which contemplated initiation of recovery proceedings in relation to annuity deposits having been omitted with effect from April 1, 1967, no recovery proceedings could be validly initiated as regards annuity deposits. The Commissioner, however, was not inclined to interfere in the matter. Thereafter, the peti-tioner moved the Central Board of Direct Taxes for granting exemption from payment of annuity deposit. That petition also did not succeed.
3. Then, the Tax Recovery Officer, the respondent herein, issued a notice dated May 25, 1971, acting under Rule 2, Schedule II, of the Income-tax Act, 1961, based on a certificate of recovery issued by the Income-tax Officer for a sum of Rs. 5,230 being the arrears of annuity deposit amounts for the years 1965-66 and 1966-67. The petitioner has challenged the validity of the said demand dated May 25, 1971, in this writ petition, raising the following contentions : (1) Section 280T which contemplated initiation of recovery proceedings in relation to annuity deposit amounts having been deleted with effect from April 1, 1967, by Section 32 of the Finance Act of 1966, no annuity deposit could be recovered on or after April 1, 1967, and by the omission of Section 280T the entire machinery for enforcement and collection of annuity deposit stood abolished, and (2) even assuming that Section 280T is available to the department for enforcing the payment of annuity deposits, the said provision cannot apply to the legal representative and, therefore, the recovery proceedings initiated against the petitioner as a legal representative of the estate of the deceased, Ramaswami Gounder, are invalid.
4. The first of the above two contentions has already been considered by this court in J.K.K. Angappan v. Income-tax Officer : 94ITR397(Mad) .and it has been held that the liability to pay annuity deposit being a present liability which existed on 1st April, 1967, the date on which the provisions relating to annuity deposits were omitted from the Income-tax Act of 1961 by the Finance Act of 1966, could be enforced even after the said date notwithstanding the said omission, taking advantage of Section 6 of the General Clauses Act, 1897. In view of the said decision, the first contention has to be rejected and it is rejected accordingly.
5. As regards the second contention that a legal representative of a deceased who was liable to pay annuity deposit cannot be proceeded against for recovery of the same, it is submitted by Mr. K. Srinivasan, learned counsel for the petitioner, that Chapter 22A of the Income-tax Act dealing with annuity deposits being a self contained code by itself for recovering the annuity deposits, it is only the provisions contained in that Chapter that have to be invoked, that the petitioner, though a legal representative, is not a defaulter in relation to the annuity deposits as contemplated by the provisions of that Chapter and that, therefore, the provisions relating to recovery of income-tax cannot be invoked for recovery of the annuity deposits. What in effect the learned counsel contends is that unless there is a specific provision in Chapter 22A of the Income-tax Act enabling recovery of the annuity deposits payable by a deceased from his legal representative, the liability comes to an end on the death of the deceased, and it could not be revived and enforced against the legal representative. The learned counsel points out that there should have been specific provisions like Section 2(2) and Section 24B of the Indian Income-tax Act of 1922 roping in the legal representative within the definition of ' depositor ' in Chapter 22-A of the Income-tax Act, 1961, and enabling recovery of annuity deposits from him, and that, in the absence of such a provision, no recovery could at all be made of annuity deposits as against the legal representative. We are not inclined to accept the above contention of the petitioner as tenable. It is true, the annuity deposit has normally to be made only by the depositor. But, in this case, the depositor died long before the assessment could be made and the assessment was in fact made on the petitioner as the legal representative of the deceased. Admittedly, in the computation of the income-tax payable by the deceased credit has been given to the annuity deposit payable by him. It is not the case of the petitioner that he represented to the Income-tax Officer at the stage of the assessment that he is not liable to pay the annuity deposit and that, therefore, there could not be any direction for payment of the annuity deposit in the assessment. After having had the benefit of deduction of the annuity deposit from the assessed tax the petitioner now turns round and says that as a legal representative he is not liable to pay the annuity deposit amounts. That the deceased was liable to pay the annuity deposit is not in dispute and it cannot be disputed in view of the decision in J.K.K. Angappan v. Income-tax Officer. Therefore, the only question that has to be considered here is whether the petitioner as legal representative of the depositor who is liable to pay the annuity deposit can be proceeded against as representing the estate of the deceased. In this case the repondent has proceeded to invoke Rule 2 of the Second Schedule to the Income-tax Act, 1961, on the basis of a tax recovery certificate issued under Section 222. Though the learned counsel for the petitioner generally submits that Chapter 22-A of the Income-tax Act dealing with annuity deposits is a self contained Chapter that should be invoked for recovery of the annuity deposits, he concedes that in the case of the depositor himself the other provisions contained in Chapter 17-D could be validly resorted to. Thus he modifies his submission that though the provisions contained in Chapter 17-D could be invoked for recovery of annuity deposits from the depositor it could not be invoked as against legal representatives. In this connection it must be noted that Section 280T, before it was omitted by Act 13 of 1966, was as follows:
' For the removal of doubts, it is hereby declared that any arrear of annuity deposit and any penalty imposed under this Chapter shall berecoverable in the manner provided in Chapter XVII-D for the recovery of arrears of tax.'
6. As per the said section arrears of annuity deposit or penalties imposed under Chapter 22-A are recoverable in the manner provided in Chapter 17-D of the Income-tax Act for the recovery of arrears of tax. Section 156 of the Income-tax Act of 1961, as it then stood, was as follows:
' 156. Notice of demand.--When any tax, interest, penalty, fine or any other sum (including annuity deposit referred to in Chapter XXII-A) is payable in consequence of any order passed under this Act, the Income-tax Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable.'
7. Thus, a combined reading of Sections 280T and 156 as they stood before April I, 1967, shows that annuity deposit amounts are recoverable by resort to the provisions contained in Chapter 17-D. The contention of the learned counsel for the petitioner that Chapter 22-A is a self contained code and the recovery has to be made only under the provisions of that Chapter without resort to the other provisions in the Income-tax Act is not, therefore, tenable. It is true, Section 280T has been omitted from Chapter 22-A and Section 156 has also been amended by omitting the words ' including annuity deposits referred to in Chapter 22-A'. But, as already pointed out in J.K.K. Angappan v. Income-tax Officer, the omission of Section 280T as also the deletion of the words ' including annuity deposits referred to in Chapter 22-A' from Section 156 cannot affect the liability for the annuity deposits already accrued or the right to recover the same. The petitioner's counsel is, therefore, not right in his submission that the provisions contained in Chapter 17-D cannot be resorted to for recovery of annuity deposits. Section 159 specifically states that where a person dies his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. It should be noted that the said Section 159 deals with any sum payable by the deceased under the Income-tax Act which may include annuity deposits as well. It is not, therefore, open to the petitioner to say that he, as a legal representative, is not liable to pay the annuity deposit under Section 159 once his plea that Chapter 22-A is a self-contained code has not been accepted. Thus, the second contention also fails.
8. The result is that the writ petition is dismissed and the rule nisi is discharged. The respondent will be entitled to his costs. Counsel's fee, Rs. 250.