1. This reference under Section 66(1) of the Indian Income-tax Act, 1922, is at the instance of the Commissioner of Income-tax, West Bengal IT, Calcutta. The facts relating thereto which have been found and/or are not in dispute are briefly as follows :
The assessee is Shantilal C. Mehta, the administrator to the estate of Late Madan Shum Slier Jung Bahadur Rana of Nepal. The assessment years involved are 1952-53 and 1953-54. The corresponding previous years are the financial years ending respectively on the 31st March, 1952, and on the 31st March, 1953.
2. Madan Shum Sher Jung Bahadur Rana of Nepal, hereinafter referred to as ' the Rana ', was during his lifetime assessed to income-tax in the non-resident refund circle, Bombay, in respect of dividends and interest on securities. He died intestate on or about 20th June, 1953. Letters of administration were issued by this court on the 6th January, 1954, in favour of the assessee.
3. The Income-tax Officer, ' A ' Ward, District 1(1), Calcutta, started proceedings under Section 34 of the Indian Income-tax Act, 1922, with notices under the said section issued on the 18th March, 1961, in respect of both the assessment years as follows :
Sri Shantilal C. Mehta,
Administrator to the Estate of
Late Madan Shum Sher Jung Bahadur
Rana of Nepal
23, Sri Hariram Goenka St.,
Whereas I have reason to believe that your income assessable to income-tax for the assessment year 1953-54 has-
(a.) escaped assessment,
(b) been under-assessed..........
I therefore propose to...... reassess...... the said income...... that has--...
(a) escaped assessment,
(b) been under-assessed.......
I hereby require you to deliver to me within 35 days of the receipt of this notice, a return in the attached form of your total income and total world income assessable for the said year.'
4. The said notices were duly served and returns were filed by the assessee. Being aggrieved by the orders of reassessment passed thereon the assessee preferred appeals to the Appellate Assistant Commissioner contending, inter alia, that the Rana having died intestate the said notices should not have been served in the name of the administrator. The Appellate Assistant Commissioner allowed the appeal and cancelled the assessments holding that the proceedings were not initiated by valid notices. The revenue preferred further appeals to the Tribunal in which the order of the Appellate Assistant Commissioner was sustained. The Tribunal held that as the liability to pay tax arose by virtue of the charging Sections 3 and 4 of the Indian Income-tax Act, 1922, ex hypothesi such liability accrued to the Rana and was his personal liability. Furthermore, the Rana was the person in actual receipt and enjoyment of the income during the said years. The liability of the administrator to be assessed to pay tax in respect of the income of the estate arose or accrued only subsequent to the death of the deceased under the general provisions of law and, therefore, the liability to pay tax in respect of the assessment years in question having arisen in respect of or accrued upon the Rana, the notices should not have been served upon the administrator in the manner in which they were done.
5. The following question has been referred in this case as arising out of the order of the Tribunal :
' Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the proceedings under Section 34 of the Indian Income-tax Act, 1922, had not been initiated by valid notice and in cancelling, the assessments on that ground '
6. The assessee did not appear at the hearing. Mr. Suhas Sen, learned counsel for the revenue, has contended that the question stands determined by Section 24B of the Indian Income-tax Act, 1922, which reads, inter alia, as follows ;
' 24B. Tax of deceased person payable by representative.--(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 tax assessed as payable by such person, or any tax which would have been payable by him under this Act if he had not died.
(2) Where a person dies before the publication of the notice referred to in Sub-section (1) of Section 22 or before he is served with a notice underSub-section (2) of Section 22 or Section 34, 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 22 or under Section 34, as the case may be, comply therewith, and the Income-tax Officer may proceed to assess the total income of the deceased person as if such executor, administrator or other legal representative were the assessee.....'
7. Mr. Sen cited Additional Income-tax Officer v. E. Alfred : 44ITR442(SC) , where the Supreme Court has analysed the said Section 24B in the following manner :
' The scheme of this section, which was inserted by the Second Amendment Act of 1933 and modified further by the Amendment Act of 1939, is as follows : Sub-section (1) of Section 243? makes, inter alia, the legal representative 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 tax assessed as payable by such person or any tax which would have been payable by him under the Act, if he had not died. By this sub-section, a legal representative is made liable to pay the tax which might have been assessed but not paid by the deceased person or which might be assessed after his death. It covers all situations and contingencies, and makes the liability absolute limited, however, to the extent to which the estate of the deceased is capable of meeting the charge. The sub-section does not provide for issue of notices, assessment, collection or anything connected with the imposition, levy and collection of the tax. Sub-sections (2) and (3) next provide for different contingencies. Sub-section (2) provides that where a person dies before the publication of a general notice or before he is served with a special notice under Section 22 or Section 34 his legal representative shall, on the service of the special notices, comply with those notices, and the Income-tax Officer may proceed to assess the total income of the deceased person as if the legal representative were the assessee......When a thing isdeemed to be something else, it is to be treated as if it is that thing, though, in fact, it is not. The original assessce being dead before the notice, either general or special, to him, he could not be treated as an asscssee, and the process of the Act is, by the fiction, made available against a different person like a legal representative, who is fictionally deemed to be an assesses, for purposes of assessment.'
8. Mr. Sen next cited the case of Shaikh Abdul Kadar v. Income-tax Officer : 34ITR451(MP) , where the Madhya Pradesh High Court hold that a notice if issued in the name of a person who is known to be dead is purposeless and defective and no valid assessment can be made under Section 34 on the strength of such a notice.
9. Mr. Sen also cited First Additional Income-tax Officer v. Mrs. Susheela Sadanandan : 57ITR168(SC) , where the Supreme Court reiterated thaton the death of a person the Income-tax Officer has to proceed against the executor and/or the legal representative of the deceased.
10. Lastly, Mr. Sen cited a decision of the Gujarat High Court in Chooharmal Wadhuram v. Commissioner of Income-tax : 69ITR88(Guj) , for the proposition that where there was a clear mistake in a notice under Section 34 and the status of the assessed had been wrongly described, the same would not have the effect of invalidating the assessment proceeding's and such mistake can always be corrected by the Income-tax Officer.
11. Mr. Sen distinguished the case of James Andersen v. Commissioner of Income-tax : 47ITR229(Bom) , which had been mainly relied on by the Tribunal. The facts in that case were that the deceased was possessed of certain shares in an Indian company and steps were taken by the administrator to sell the same. The names of the transferees were not brought on record and they continued to stand in the name of tho deceased. In this background, proceedings under Section 23A of the Indian Income-tax Act, 1922, were initiated and an order was passed whereby some income was deemed to have been distributed to the shareholders in an earlier year during the lifetime of the deceased. As such income was considered to have escaped assessment in the hands of the administrator, notice was issued under Section 34 to the administrator. It was held by the Bombay High Court that the deemed dividend could not be deemed to have been received by the assessee in an earlier year. If such dividend was deemed to have been received by the deceased, the notice should have been for the assessment of the escaped income of the deceased and not for the reassessment of the escaped income of the administrator. It was held that this deemed income cannot be said to have been received by the administrator from the estate.
12. On the facts before us, it appears that the question is concluded by Section 24B of the Act. On the death of an assessee, the estate remains liable for payment of taxes accruing both before and after the death. After the death of the original assessee, the assessment proceedings can only continue in the name of the legal representatives. There is no restriction in Section 34 for assessment of an estate of a deceased person nor does that section nor Section 24B provide for any special form of notice of reassessment in such cases. In any event, there is no challenge as to the form of the notice. The, only contention has been that the assessee as an administrator should not have been served with a notice under Section 34 in respect of income accruing during the lifetime of the owner of the estate.
13. The decision in James Anderson's case : 47ITR229(Bom) supports the case of the revenue inasmuch as it was accepted by the Bombay High Court that the deemed dividend which was stated to have escapedassessment could have been made the subject-matter of proceedings under Section 34 with the aid of Section 24B, the estate being in the hands of the administrator.
14. We find that the notice is valid and lawful and not in any way ' defective in form. We make it clear that there is no question of any personal liability of the administrator beyond the estate which has devolved.
15. We answer the question referred in the negative and in favour of the revenue.
16. There being no contest by the assessee, we make no order as to costs.
C.K. Banerji, J.
17. I agree.