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SUPREME COURT OF INDIA
K. Subba Rao, J.C. Shah, S.M. Sikri, JJ.
First Additional Income Tax Officer, Kozhikode (Kerala) - Appellant
Versus
Mrs. Suseela Sadanandan And Another - Respondents
Civil Appeal No. 52 of 1964
Decided On : 29-10-1964
INCOME TAX - Assessment - Deceased assessee - Representation of estate - Service of notice under Section 34 of the Income Tax Act, 1922 - Whether all legal representatives must be served - Whether assessment order valid against legal representative served - Interpretation of Section 24-B(2) of the Act.
Fact of the Case:
The assessee, S.P. Sadanandan, died on July 10, 1948, leaving a will appointing his widow, eldest son, and a Chartered Accountant as executors. The Income Tax Officer issued notices under Section 34 of the Income Tax Act, 1922, to "Late S.P. Sadanandan by his legal heirs E.D. Sadanandan and others." E.D. Sadanandan filed appeals against the assessment order, which were dismissed. The assessee's widow filed a writ petition challenging the assessment order on the ground that all the executors were not served with notices under Section 34.
Finding of the Court:
The High Court allowed the writ petition and quashed the assessment order. The Supreme Court set aside the High Court's order and remanded the matter for fresh disposal.
Issues: 1. Whether all the legal representatives of a deceased assessee must be served with notices under Section 34 of the Income Tax Act, 1922, for a valid assessment order. 2. Whether an assessment order made against one legal representative is enforceable against the entire estate or only against the part of the estate in the possession and management of that legal representative.
Ratio Decidendi: 1. Section 24-B(2) of the Income Tax Act, 1922, provides that if a person dies before the publication of the notice under Section 22 or before he is served with a notice under Section 22 or Section 34, the Income Tax Officer may serve the said notices on the administrator, executor, or other legal representative of the deceased and proceed to assess the total income of the deceased as if the said legal representative was the assessee. 2. The expression "legal representative" in Section 24-B of the Act takes in plurality of legal representatives. If there are two or more legal representatives of the deceased person, all must be impleaded to make the representation of the estate complete. 3. If a person dies executing a will appointing more than one executor or dies intestate leaving behind him more than one heir, the Income Tax Officer shall proceed to assess the total income of the deceased against all the executors or the legal representatives, as the case may be. 4. If all the executors or some of them administered the estate of a deceased without obtaining the probate, all of them or some of them who have administered the estate may be held to be the legal representatives of the deceased and liable to the extent of the property taken possession of by them. 5. If a party bona fide impleaded one of the legal representatives as representing the estate of a deceased party and the said representative represented the estate, the decree obtained therein is binding on the other legal representatives of the deceased.
Final Decision: The Supreme Court set aside the High Court's order and remanded the matter for fresh disposal, directing the parties to file fresh affidavits and place relevant material before the High Court to enable it to come to a definite conclusion on the following points: 1. Whether E.D. Sadanandan was in possession and management of the entire estate of his father and, if so, whether he would be the legal representative of his father within the meaning of Section 24-B of the Income Tax Act. 2. Even if he inter-meddled only with a part of the estate, whether the Income Tax Officer bona fide treated him as representative of the estate and proceeded to assess the income of the estate in his hands. 3. Whether E.D. Sadanandan, in fact, represented the estate and whether the other executors and representatives expressly or impliedly accepted his representation. 4. Whether the assessee's widow, who was not a party to the assessment proceedings, could question the enforceability of the final assessment order made against E.D. Sadanandan.
JUDGMENT :
Subba Rao, J.
This appeal by special leave is directed against the judgment and order of the Kerala High Court issuing appropriate writs under Article 226 of the Constitution against the appellant and the second respondent.
2. One S.P. Sadanandan, a resident of Kozhikode, died on July 10, 1948, leaving a registered will dated June 23, 1948. Respondent 1 is his widow. Under the said will the testator appointed his widow the 1st respondent herein, his eldest son Earnest Devadas Sadanandan and one Paramasivan, a Chartered Accountant of Kozhikode, as his executors. The family of the testator consisted of his widow, 2 sons, 3 daughters and a grandson through a deceased daughter. Under the will various bequests were made.
3. S.P. Sadanandan was assessed to income tax for the years 1945-46 to 1949-50. The Income Tax Officer, after assessee's death, discovered that there was a large-scale evasion of tax by the assessee and on that ground on March 20, 1954, issued notices under Section 34 of the Income Tax Act, 1922, hereinafter called the Act, and they were addressed to "Late S.P. Sadanandan by his legal heirs E.D. Sadanandan and others, Kozhikode". Pursuant to the notices a return was submitted in due course and the name of the assessee in the return was shown as "Late S.P. Sadanandan by the legal heirs E.D. Sadanandan and others". The return was signed by E.D. Sadanandan as the legal heir and his status was given as "individual". On August 17, 1954, the Income Tax Officer, Coimbatore, made an order of reassessment for the said years and in the said order the assessee was described as "Late S.P. Sadanandan represented by legal heirs and legal representatives Shri E.D. Sadanandan and J.G. Sadanandan and others, Kozhikode". In the first paragraph of the assessment order the Income Tax Officer noted:
"The assessee in this case is Shri S.P. Sadanandan, who died on July 10, 1948. After his death he is represented by his sons, namely, E.D. Sadanandan and J.G. Sadanandan and the assessee's wife, Mrs S.P. Sadanandan."
We have taken the aforesaid facts from the judgment of the High Court, as no documents from which the said facts were gathered by the High Court are placed before us. E.D. Sadanandan filed appeals against the said order of assessment to the Appellate Assistant Commissioner, Coimbatore, and the said appeals were ultimately dismissed on June 20, 1957. On September 15, 1956, the 2nd respondent issued two notices to the 1st respondent; one was a notice of attachment under Section 27 of the Madras Revenue Recovery Act 2 of 1864 attaching the properties mentioned therein for recovery of a tax of Rs 13,09,352-3-0 and stating that if the said amount was not paid on or before December 7, 1956, the attached properties would be sold, and the other was a notice of sale of land issued under Section 36 of the said Act proclaiming that most of the attached properties would be sold on December 8, 1956. For one reason or other - the details need not be given here - the properties were not sold pursuant to the said notices. On November 15, 1957, the 2nd respondent issued fresh notices under Sections 27 and 36 of the said Act demanding that the said amount should be paid on or before February 9, 1958, and stating that if the said amount was not paid on or before the said date the said attached properties would be sold on February 10, 1958. Thereafter, the 1st respondent filed OP 70 of 1958 under Article 226 of the Constitution in the High Court of Kerala at Ernakulam for quashing the notices of attachment and for restraining the 2nd respondent from taking any steps to recover the said amount alleged to be due from her. A Division Bench of the High Court allowed the petition on the ground that as the notices under Section 34 of the Act were not served on all the executors named in the will there was no proper representation of the deceased in the assessment proceedings and therefore, the said assessment order was void. Hence the present appea
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