S. 24B of the Income-tax Act does not extend the tax liability of the estate of a deceased person beyond the previous or the account year in which that person dies.

Judgment

KAPUR, J. : These appeals pursuant to a certificate of High Court of Bombay raise the question of interpretation of S. 24B of the Income-tax Act in an Income-tax Reference. The question referred was answered in the negative and against the Commissioner of Income-tax who is the appellant in these appeals, the respondents being the heirs and legal representatives of one Amarchand N. Shroff deceased. The appeal relate to the assessment Years 1950-51,1951-52, 1952-53,1953-54 and 1954-55.

2. Shortly stated the facts of the case are these; Amarchand N. Shroff, Mangaldas and Hiralal were partners in a firm of solicitors. Amarchand died on July 7, 1949. Thereafter the partnership was carried on by Mangaldas and Hiralal upto November 30 1949 and on December 1, 1949 Ramesh son of Amarchand who had by then qualified as a solicitor joined the firm as the third partner. After the death of Amarchand the arrangement between the various partners in regard to the realisations of the old outstanding was that in respect of the work done upto the death of Amarchand the realisations were to be divided amongst Amarchand Mangaklas and Hiralal in respect of the work between July 8, 1949 and November 30, 1949, the realisations were to be divided between Mangaldas and Hiralal and in respect of work done after December 1, 1949 the realisation were to be divided amongst Mangaldas, Hiralal and Ramesh. The firm kept its accounts on cash basis. For the five assessment years 1950-51 to 1954-55 the following amounts were received: Rs. 37,847/- Rs. 43,162/-, Rs. 34,899/-, Rs. 13,409/- and Rs. 32,523/- by the heirs and legal representatives of Amarchand out of the out standings. The Income-tax Officer sought to tax these realisations. For the assessment years 1950-51 and 1951-52 he assessed the amounts in the hands of the heirs and legal representatives of Amarchand as a Hindu undivided family. Against that order an appeal was taken to the Appellate Assistant Commissioner and then to the Appellate Tribunal. The two members of the Tribunal agreed in holding, though for different reasons, that the amounts were not the income of the T-Hindu undivided family but merely represented inheritance or realizations of the assets of Amarchand.

3. The matter was not pursued further by the Revenue but sometime later proceedings were started by the Income-tax Officer under S. 34 in respect of the same income in the hands of "Amarchand N. Shroff by his heirs and legal representatives". The status of that entity was taken to be that of an individual and not Hindu undivided family. The various amounts were assessed to income-tax in the hands of the respondents under S. 34(1) (b) read with S. 24B of the Income-tax Act. The assessments so made were for the assessment years 1950-51, 1951-52, 1952-53, 1953-54 and 1954-55. On appeal the Appellate Assistant Commissioner held that the notice under S. 34 could validly he served only for the assessment years 1950-51 and notices for the subsequent years were invalid. The assessments for 1951-52 to 1954-55 were therefore quashed. The Commissioner of Income-tax took an appeal to the Appellate Tribunal and the Tribunal held that assessment could not be made on Amarchand and that S. 24B had no application to the income received after the death of Amarchand and that it was capital receipt and not revenue receipt. The order of the Appellate Assistant Commissioner was therefore upheld. On the application of the Commissioner of Income-tax the following question of law was referred to the High Court :

"whether on the facts and in the circumstances of the case, the sums of Rs. 37,847/-, Rs. 43,162/-, Rs. 34,899/-, Rs. 13,402 and Rs. 32,523/- were assessable to income-tax in the hands of the assessee Amarchand N. Shroff by his legal heirs and representatives in the five respective years under reference."

The High Court answered the question in the negative. It held that apart from S. 24B of the income-tax Act the amounts were not taxable and t