IMPORTANT POINT
Obligation of the son to pay off the debts contracted by his father is limited to the properties inherited by the son from his father and a decree obtained by the creditors could not be executed against the Government securities invested by the Court of Wards out of the savings of the estate of the father.

JUDGMENT

Sen, J.-The assessee Raja Vishwanath Pratap Singh is the son of late Captain Raja Bahadur Ram Gopal Singh, who was the owner of extensive zamindari and other properties. Ram Gopal Singh ran into debts. He applied under Section 4 of the U.P. Encumbered Estates Act, 1934 for the liquidation of his debts. While his application under Section 4 was pending, Ram Gopal Singh passed away and his estate was taken over by the Court of Wards on September 16, 1941. The estate was released on February 16, 1953. All the proceedings pursuant to the application before the Special Judge after the death of Ram Gopal Singh went on in the name of the assessee.

2. Out of the saving of the estates, the Court of Wards invested an amount of Rs. 6,11,324/- in Government securities. The investment fetched an income of Rs.76,000 per annum by way of interest. The amount of interest used to be collected by the assessee.

3. In the proceedings under the U.P. Encumbered Estates Act, the Special Judge passed a simple money decree for Rs. 30,000,00/- and odd. Since the assessee had been substituted in the place of his father, the decree was passed against the assessee. When some of the decree-holders wanted to proceed against the amount of Rs. 6,87,000 held in Government securities, the assessee opposed the claim of the decree-holders. The Special Judge held that the decree-holders could not proceed against this amount which did not form part of the estate of the deceased Ram Gopal Singh. The decree-holders went on appeal to the High Court which upheld the order of the Special Judge by an order passed on March 25, 1961.

4. While all these proceedings were going on under the U.P. Encumbered Estates Act, Wealth Tax Assessment of the assessee was completed for the assessment years 1957-58, 1958-59 1959-60. However, the proceedings for the assessment years 1960-61 and 1961-62 were pending. In the Wealth Tax Assessment proceeding upto the assessment year 1959-60, the decretal amount of Rs. 30.000,00/- an odd had been treated as debt owed by the assessee. Taking this debt into consideration, it was held that the assessee was not liable to tax under the Wealth Tax Act. But, when the judgment of the High Court dated March 25, 1961 came to the knowledge of the Department that the decree-holders could not proceed against the amount of Rs. 6,87,000/- and odd held by the assessee in his own name for recovery of the decretal debt, the Wealth Tax Officer initiated proceedings under Section 17 of the Wealth Tax Act against the assessee for the assessment years 1957-58, 1958-59 and 1959-60.

5. After giving a hearing to the assessee, the assessments were completed by the Wealth Tax Officer for the aforesaid years of assessment holding that since the decretal amount of Rs.30,000,00/- could not be recovered from the assessee personally, it was not a debt owed by the assessee. The sum of Rs.6,78,000/- constituted the net wealth of the assessee against which the decretal amount could not be set off. Similar orders were passed for the assessment years 1960-61 and 1961-62.

6. The assessee appealed to the Assistant Appellate Commissioner who examined the facts of the case in depth and dimissed the appeals by a consolidated order disposing of all the five cases.

7. One of the points taken before the Appellate Assistant Commissioner was that the assessee had a pious obligation to discharge the debts contracted by his father and, therefore, the decretal dues of Rs.30,000,00/- should be treated as debt owed by the assessee. The Appellate Assistant Commissioner, however, held that under the Hindu Law the creditors could not proceed against the assets of the assessee for fulfilling his pious obligation to pay the decretal dues of his father.

8. There was a further appeal to the Tribunal. Before the Tribunal the point of pious obligation of the son to pay the debts contracted by the father under Hindu Law was given up. It was contended that the aggregate value of the debts of the asses