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T. M. K. Abdul Kassim Vs. First Additional Income-tax Officer, Karaikudi, and Another. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberWrit Petition No. 896 of 1956
Reported in[1958]33ITR466(Mad)
AppellantT. M. K. Abdul Kassim
RespondentFirst Additional Income-tax Officer, Karaikudi, and Another.
Cases ReferredRajah Manyam Meenakshamma v. Commissioner of Income
Excerpt:
- .....year 1948-49. khadir mohideen died on august 11, 1948. the petitioner, kassim, is one of the legal representatives of the deceased khadir mohideen. notices under section 22(2) of the income-tax act were served on the petitioner and his brother, syed mohammed, after the death of the assessee, khadir mohideen. the assessment was completed in 1953. notices of demand under section 29 of the act to pay the balance of the tax payable were served on the petitioner on march 31, 1953, and on his brother on april 2, 1953. as the amount remained unpaid, the income-tax officer (first respondent) issued a certificate under section 46(2) of the act to the collector of ramanathapuram on october 26, 1953. on july 17, 1956, the special deputy tahsildar, (second respondent) a revenue subordinate of.....
Judgment:

The judgment of court was delivered by

RAJAGOPALAN, Offg. C.J. - This application under article 226 of the Constitution for the issue of a writ of prohibition arose out of proceedings to assess the income-tax payable by T.M. Khadir Mohideen on his income during the year of account ending with March 31, 1948, in the assessment year 1948-49. Khadir Mohideen died on August 11, 1948. The petitioner, Kassim, is one of the legal representatives of the deceased Khadir Mohideen. Notices under section 22(2) of the Income-tax Act were served on the petitioner and his brother, Syed Mohammed, after the death of the assessee, Khadir Mohideen. The assessment was completed in 1953. Notices of demand under section 29 of the Act to pay the balance of the tax payable were served on the petitioner on March 31, 1953, and on his brother on April 2, 1953. As the amount remained unpaid, the income-tax Officer (first respondent) issued a certificate under section 46(2) of the Act to the Collector of Ramanathapuram on October 26, 1953. On July 17, 1956, the Special Deputy Tahsildar, (second respondent) a revenue subordinate of the Collector, issued notices to the petitioner and his brother, informing them that if the amount was not paid proceedings would be taken under the Revenue Recovery Act. The petitioner pleaded that no proceedings could be taken against him under section 46(2) of the Income-tax Act, which provided for the recovery of the tax as if it were an arrear of land revenue by recourse to the Revenue Recovery Act, and has applied for a writ of prohibition to restrain the authorities from applying the provisions of the Revenue Recovery Act to him.

It should be recorded that the validity of the assessment to income-tax was not challenged in these proceedings. The amount ultimately demanded of the petitioner, the payment of which was required by the notice dated July 17, 1956, included a sum of Rs. 1,000, levied apparently under section 46(1) of the Act as penalty for the nonpayment of the tax due. The validity of the order imposing that penalty was not challenged either in these proceedings. The limited attack was on the certificate issued under section 46(2) of the Act and the further recourse to the provisions of the Revenue Recovery Act on the basis of that certificate.

Section 46(2) of the Income-tax Act runs :

'The 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.'

We shall omit the proviso as it is not relevant for our present purposes.

The question to be determined is, whether the sum demanded of the petitioner on the basis of the certificate issued under section 46(2) constituted 'arrears due from the assessee,' and whether the petitioner was such an assessee within the meaning of section 46(2). If that question is answered in the negative we have to hold that the Income-tax Office had no jurisdiction to issue the certificate and that the certificate was invalid. On the basis of such an invalid certificate the Collector would have no jurisdiction to recover the amount shown in the certificate as if it were an arrear of land revenue under the provisions of the Revenue Recovery Act.

The logical extension of what we laid down in Alfred v. Additional Income-tax Officer compels us to answer the question in the negative.

It was the validity of recourse to section 46(1) of the Act that arose for consideration in Alfreds case. The assessment in that case was under section 24B(2) of the Act after the death of the assessee, Ebenezer. The notice under section 29 of the Act was served on Alfred, son of the deceased assessee. When the tax was not paid a penalty was imposed on Alfred under section 46(1) treating him as the assessee in default. After examining the scope of the definition of 'assessee' in section 2(2) of the Act as well as the scope of section 29 and each of the three sub-sections of section 24B of the Act, we stated at page 713 :

'If through all the three sub-sections (of section 24B) the same principle runs, that the extent of the liability of the executor, administrator or other legal representative of the deceased person in limited by the possession of the assets of the deceased person, there should be little difficulty in placing the executor, administrator or other legal representative of the deceased person, who comes within the scope of either section 24B(2) or section 24B(3) of the Act, in the category of persons referred to in section 29 of the Act as other person liable to pay such tax as distinct from the assessee. For the purpose of section 29, therefore, it is the deceased that would be the assessee, and the executor, administrator or other legal representative, in whose presence the income of the deceased is assessed either under section 24B(2) or under section 24B(3), would be not the assessee but merely a person liable to pay the assessed tax.'

In construing the term 'assessee in default' in section 46(1) of the Act we pointed out at page 710 :

'To establish default in the payment of the assessed tax, within the meaning of section 45, two conditions at least have to be specified : (1) failure to pay the amount specified in the notice of demand issued under section 29, and (2) that failure must be that of an assessee..... Obviously, when section 46(1) refers to an assessee in default it is the assessee who is in default within the meaning of section 45 that is meant. A penalty can be imposed under section 46(1) only on such an assessee in default.'

The limits of the legal fiction enacted by section 24B(2) was thus explained by us at page 714 :

'In our opinion, the legal fiction enacted by section 24B(2) is only for the purposes of assessment. For the purpose of initiating and completing the assessment on the income of the deceased, his legal representative is deemed by that legal fiction to be the assessee. With the completion of the assessment, the necessity for that legal fiction ends. The liability to pay the assessed tax has to be enforced under section 29 of the Act. For the purposes of section 29 of the Act, the legal representative would not himself be an assessee, but he would, none the less, be a person liable to pay the tax. When there is such a specific statutory provision to enforce the liability of the legal representative in section 29 of the Act, there is no need to continue the fiction enacted by section 24B(2) further, to provide also for the collection of the assessed tax.'

In Alfreds case, we specifically left open the scope of section 46(2) of the Act (see page 716). It is that question we have to decide now in these proceedings.

The assessment with which we are now concerned was also under the enabling provisions of section 24B(2). The income of the deceased, Khadir Mohideen, in the year of account ending with March 31, 1948, was assessed to tax as if his legal representatives including the petitioner were the assessees within the meaning of section 24B(2). As we pointed out in Alfreds case, section 24B(2) itself did not provide for the collection of the assessed tax. Section 29 provided the machinery for collection. As we have already pointed out in Alfreds case the legal fiction enacted by section 24B(2) extended only to the assessment to tax and did not extend to the collection thereof. Section 46(2) of the Act provided only for collection. The fiction of section 24B(2) under which the petitioner was the assessee for purposes of assessment, cannot therefore be extended when we have to examine the scope of the expression 'assessee' in section 46(2) of the Act.

In our opinion, the apparent difference in language between section 46(1), which refers to an assessee in default and section 46(2), where the reference is to the arrears due from an assessee, makes no real difference in seeking the principle to apply. As we pointed out in Alfreds case, to establish that an assessee is in default within the meaning of sections 45 and 46(1) what has to be established is (1) failure to pay the amounts specified in the notice of demand issued under section 29, and (2) that failure must be that of an assessee. It is the same set of conditions that has to be satisfied to establish that arrears are due from an assessee within the meaning of section 46(2). 'Arrears' is not a term of art, as explained in Burrows Words and Phrases, Volume 1, page 231. There must be a legal obligation to pay the amount which has been ascertained or is easily ascertainable, for example, ex facie the document that evidences that obligation. If that amount is not paid on or before the date on which the payment fell due, that amount is in arrears as that expression is normally understood. In other words, there must be a legal obligation and a default in the performance of that obligation before any arrears can emerge. Analogous to section 46(1), section 46(2) requires two conditions to be satisfied, (1) the amount must be in arrear, and (2) those arrears must be due from an assessee. In the case of the petitioner there should be no difficulty in establishing the first of these conditions. The amount lawfully demanded of him under the notice issued under section 29 of the Act was not paid within the time specified in the notice. That amount was in arrears. The real question is, whether they were arrears due from an assessee within the meaning of section 46(2) of the Act.

If, in the case of an assessment completed under section 24B(2), the legal representative of the deceased assessee could not be viewed as himself an assessee within the scope of section 46(1), it is a little difficult to hold that he would be an assessee within the scope of section 46(2) of the Act. As we explained in Alfreds case, the petitioner would not be 'an assessee' but only 'the other person liable to pay' the assessed tax, for the collection of which tax section 29 provided. The petitioners obligation to pay the amount assessed under section 24B(2) arose on the service of the notice under section 29 of the Act. The context of section 29, which marks off the stage of assessment from that of collection, restricted the scope of the interpretation to be placed on the expression 'assessee from whom arrears are due' as it occurs in section 46(2), which is part of the statutory machinery for the collection of the assessed tax, despite the fairly wide definition of 'assessee' in section 2(2) of the Act. We explained in Alfreds case, that the liability of a legal representative of a deceased assessee whose income was assessed to tax under section 24B(2) is limited by the possession of the assets of the deceased. In such cases the word 'assessee' has to be given the same meaning both for purposes of section 46(1) and 46(2). No more than section 46(1) does section 46(2) limit the liability of the assessee who is in default or in arrears. If the legal representative of the deceased assessee is himself an assessee not only for the purpose of assessment to tax under section 24B(2) but also for purposes of collection under section 46(2), the liability of the legal representative could not, under the terms of section 46(2), be limited to the possession of the assets of the deceased. If the basic principle is that, where an assessment is completed under section 24B(2) the liability of the legal representative is limited by the extent of the assets of the deceased in the possession of that legal representative, for the imposition of any additional burden on that legal representative there must be statutory provision, either in express terms or by necessary intendment. We are unable to discover any such provision in section 46(2) any more than in section 46(1). To include a legal representative in such cases within the scope of the statutory expression 'assessee' in section 46(2) would neccessarily involve an imposition of vicarious liability for which we can find no statutory sanction. As we said, section 46(2) itself does not in any way limit the liability of the assessee from whom the arrears are due. If the expression 'assessee' in section 46(2) were to include the legal representative of a deceased assessee whose income was assessed under section 24B(2), on a certificate issued under section 46(2) all the assets of that legal representative, his own as well as those of his deceased predecessor in interest, could well be proceeded against. We emphasise this feature only to show that the Legislature could not have intended to impose and did not impose such an unlimited liability, inclusive of what would be a vicarious liability, on a legal representative of an assessee when the assessment was completed under section 24B(2) of the Act.

The learned counsel for the Department referred to Rajah Manyam Meenakshamma v. Commissioner of Income-tax. In that case, after referring to the provisions of sections 28, 31 and 33 as well as those of section 24B of the Act, Subba Rao, C.J., observed at pages 289-90 :

'A combined reading of these provisions indicates that a legal representative, who is liable to pay tax from and out of the estate of a deceased person, would be an assessee as defined in the Act.'

That decision may have no real bearing on the question at issue before us, whether the petitioner was an assessee within the meaning of section 46(2) of the Act. We have to point out that an appeal either under section 30 or under section 33 of the Act is still at the stage of assessment to tax. In Alfreds case we pointed out that the legal fiction enacted by section 24B(2) is applicable at the stage of assessment but not at the stage of collection. We are concerned not with the question, whether the legal representative of a deceased assessee is not himself an assessee for any purpose whatsover under the Act, but with the limited question, whether such a legal representative is an assessee within the meaning of section 46(2) of the Act. That question did not arise for consideration in Rajah Manyam Meenakshamma v. Commissioner of Income-tax.

In our opinion the petitioner was not an 'assessee' within the meaning of section 46(2) of the Act. The Income-tax Officer had no jurisdiction to treat him as an assessee for the issue of a certificate under section 46(2). Since the jurisdiction of the Collector depended on a valid certificate issued under section 46(2), the notice issued by the Deputy Tahsildar on July 17, 1956, was also without jurisdiction.

Though it was a writ of prohibition that the petitioner asked for, we consider that the appropriate remedy would be to grant a writ of certiorari to set aside the certificate issued under section 46(2) of the Income-tax Act by the first respondent and to set aside the notice dated July 17, 1956, issued by the second respondent. Such a writ of certiorari will issue.

There will be no order as to costs.

Petition allowed.


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