A composition settlement under Section 8A(1) of the Taxation on Income (Investigation Commission) Act, 1947, operates only in regard to the person who offers the settlement and does not discharge the liability of other heirs for tax on concealed income.

Judgment

KAPUR, J. : This is an appeal by special leave against the report of the Income-tax Investigation Commission made in R. C. No. 332 A and the orders passed thereon by the Central Government dated November 19, 1949 and November 21, 1949, the former under S. 8(2) and the latter under S. 8A (1) of the Taxation on Income (Investigation Commission) Act, Act XXX of 1947 (hereinafter to be referred as the Act). The appellant is Debendra Nath Dutta and the respondents are the Income-tax Investigation Commission constituted under S. 3 of the Act (hereinafter referred to as the Commission) and the Union of India. The facts giving rise to the appeal are that Captain N. N. Dutta, a brother of the appellant was the Managing director of a concern called the Bengal Immunity Co. Ltd. During the last war he made large profits which were neither disclosed to nor detected by the Income-tax Department and thus escaped Income-tax on what may be termed concealed income . On March 23, 1949, the commission made a report to the Central Government under S. 5(4) of the act asking for reference to itself of the case of Captain N. N. Dutta, Almost simultaneously the Commission directed a search to be made to four premises belonging to or in the occupation of Captain N. N. Dutta and his relations as a result of which complete sets of books containing receipts and disbursements of secret profits made by Captain N. N. Dutta came into the possession of the Commission and thus the case of Captain N. N. Dutta came to be investigated after reference to the Commission by the Central Government. This case was R. C. No. 332 A. Captain N. N. Dutta at the time of search was away from Calcutta and after his return he offered to make full disclosure and agreed to pay whatever tax the Commission would find due from him but a few days after this offer i.e., on April 6, 1949, he died leaving brothers, nephews and nieces who are shown in the following pedigree table:

Kamini Kumar Dutta was his elder brother and the appellant Debendra Nath Dutta the younger brother. The deceased himself was unmarried. Another elder brother of his had died sometime before leaving a widow Charunalini Dutta. As a result of the investigation it was found that a substantial portion of the concealed profits was invested by the late Captain N., N. Dutta in the names of his nephews, the sons of Kamini Kumar Dutta and their respective wives, his niece Maya and his widowed sister-in-law Charunalini Dutta. These profits were invested in Government securities and bank deposits.

2. On the death of Captain N. N. Dutta his two brothers Kamini Kumar Dutta and the appellant Debendra Nath Dutta were brought on record as legal representatives. Kamini Kumar Dutta wrote to the Commission that he had no connection with the business of his late brother but as his legal representative he accepted his obligation to pay in full anything due to the State and he also advised his sons to disclose the true state of affairs and to pay whatever sum was justly due. As a result of their co-operation and from the books and materials which had been obtained on search of the premises the total amount of concealed income earned and received by Captain N. N. Dutta during the accounting years 1940-41 to 1947-48 was found to be Rs. 58,24,023 and this was accepted to be the concealed income both by Kamini Kumar Dutta and the appellant. The appellant took no part in the enquiry but after the investigation was completed he was summoned to be present at the final hearing. He was informed of the amount which was found to be concealed income and was invited to examine the materials and make such submissions as he thought necessary in regard to that amount. He accepted the amount but he submitted that he had no assets of the deceased in his hands.

3. On July 5, 1949, Kamini Kumar Dutta s branch made an application for composition under S. 8A of the Act. This was recommended by the Commission who in their report stated that the settl