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PATNA HIGH COURT
B.P.Jamuar and Sinha JJ.
Hiraluxmi Pandit
Versus
Income Tax Officer
Appeal from Original Decree No. 399 of 1951 ;
Decided On : FEBRUARY 21, 1955
GIFT - BENAMI TRANSACTION - BURDEN OF PROOF - PUBLIC DEMANDS RECOVERY ACT, 1914 - CERTIFICATE PROCEEDING - VOID AND ILLEGAL - NOTICE UNDER SECTION 80, CIVIL PROCEDURE CODE - MAINTAINABILITY OF SUIT.
Fact of the Case:
Plaintiff, the widow of Vijoy Shankar Juthabhai Pandit, filed a suit for a declaration that the property in suit was her property and could not be sold in a certificate case for recovery of income tax assessed on her late husband. The plaintiff claimed that she had received the property as a gift from her husband in 1945 and had been in possession of it since then. The defendant, the Income-tax Officer, contested the suit, alleging that the gift was a sham and benami transaction and that the property was liable to attachment and sale for the recovery of income tax dues from the deceased.
Finding of the Court:
The court held that the plaintiff had failed to prove that the gift was a sham and benami transaction and that she had been in possession of the property as the donee under the gift. The court also held that the certificate proceeding was void and illegal as it was initiated after the death of the assessee. However, the court found it unnecessary to decide whether the certificate proceeding was void or illegal as it had already held that the property was not liable to attachment and sale for the recovery of income tax dues from the deceased.
Issues: 1. Whether the gift of the property from the deceased to the plaintiff was a sham and benami transaction? 2. Whether the plaintiff was in possession of the property as the donee under the gift? 3. Whether the certificate proceeding was void and illegal? 4. Whether the suit was maintainable without a notice under Section 80, Civil Procedure Code?
Ratio Decidendi: 1. The burden of proving that a gift is a sham and benami transaction lies on the person who challenges the apparent tenor of the document. 2. In a suit under the Public Demands Recovery Act, the onus lies on the plaintiff to prove that the property sought to be seized belongs to him and not to the judgment-debtor. 3. A certificate proceeding initiated after the death of the assessee is void and illegal. 4. A suit under the Public Demands Recovery Act is a continuation of the previous proceeding under the Act and does not require a fresh notice under Section 80, Civil Procedure Code.
Final Decision: The appeal was allowed, the judgment and decree of the court below were set aside, and the suit was decreed in favor of the plaintiff.
Sinha, J.
1. This is an appeal on behalf of the plaintiff against the judgment of the Court below dismissing her suit for a declaration that the property in suit is her property and as such cannot be sold in Certificate Case No. 29 O. D. of 1948-49 or in any other certificate case for recovery of the income-tax assessed on late Vijoy Shankar Tuthabhai Pandit for the year 1947-48, and for a permanent injunction restraining the defendant from selling the property in question.
2. The plaintiff is the widow of late Vijoy Shankar Juthabhai Pandit. The said Vijoy Shankar Juthabhai Pandit has taken settlement of lands mentioned in schedule A to the plaint on 20-11-1933 from the District Board of Manbhum on an annual rental of Rs. 37-13-0. Out of this land, he had settled, by a registered deed of lease, dated 1-12-1941, an area of 8 kathas 8 chataks with the Burmah Shell Oil Storage and Distributing Company of India Limited on a monthly rental of Rs. 25. On 4-9-1945, he made a gift, as per registered deed, of all the properties which he had taken, in lease from the District Board in favour of the plaintiff, his wife.
The plaintiffs case is that she accepted the gift and came in possession of the gifted property, she realised rent from the Burmah Shell Oil Storage and Distributing Company from month to month, got her name mutated in the office of the District Board, paid rent to the said District Board and had also settled a portion of the land with one S. K. Thacker of Dhanbad on a monthly rental of Rs. 100.
3. Vijoy Shankar Juthabhai Pandit had been assessed by the Income-tax department with income tax to the extent of Rs. 51,295-3-0 for the year 1947-48. He had paid a portion of this income-tax and, before he could pay the balance, Rs. 39,572- 13-0, he died on 13-8-1948. Thereafter, the Income-tax Officer sent a certificate, under Sec. 46(2), Income-tax Act, to the Deputy Commissioner, Dhanbad, for realising this amount of Rs. 39,572-13-0 as land revenue, and Certificate Case No. 29 O. D. of 1948-49 was started.
The certificate mentioned the Income-tax Officer as the certificate-bolder. This certificate case was started on 30-3-1949, after Vijoy Shankar Juthabhai Pandit had died. Later on, his son, Shew Kumar Juthabhai Pandit, was substituted in his place on 13-9-1949. On 17-1-1950, however, the plaintiff came to know that the land in suit had been put up for sale in the aforesaid certificate case.
She filed an application, under Sec.21, Bihar and Orissa Public Demands Recovery Act (4 of 1914), claiming the property as her own and alleging that it was not liable to attachment and sale. This application, however, was summarily rejected under the provisions of Sec.21 (1) of the said Act, as the Certificate Officer considered that the claim was designedly and unnecessarily delayed.
The plaintiff, thereafter, filed the suit alleging that the certificate proceeding was illegal, without jurisdiction and void inasmuch as the certificate proceeding was taken after the death of the assesses against the assessee. She further alleged that the property was her exclusive property and was not liable to attachment and sale for realization of the dues from Vijoy Shankar Juthabhai Pandit.
4. The defence was that the suit was not maintainable, that the Union of India was a necessary party, that the suit was barred under the provisions of Sections 42 and 56 (d), Specific Relief Act and also under Sections 44 and 46, Public Demands Recovery Act, and that the suit was not maintainable as no notice Under Section 80, Civil P. C. had been served upon the defendant, Apart from these, the defendant alleged that the deceased Vijoy Shankar Juthabhai Pandit and his sons were members of a joint Hindu family governed by the Mitakshara School of Hindu Law and the deceased died in a state of joint ness with his sons, and that the deed of gift was a fictitious, fraudulent and collusive transaction, which was never given effect to. Some other defences not rel
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