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HIGH COURT OF CALCUTTA
K. L. RAY
GOBINDLAL BANGUR - Appellant
Versus
INCOME-TAX OFFICER, CENTRAL - Respondent
Matter 391 Of 1968
Decided On : NOVEMBER 27, 1969
INCOME TAX - Assessment - Executor - Administration of estate not complete - Assessment under Section 160 of the Income-tax Act, 1961 - Legality - Whether the Income-tax Officer can be prohibited from making the assessment in a particular way.
Fact of the Case:
The petitioner, an executor of the estate of a deceased person, challenged the Income-tax Officer's decision to make the assessment under Section 160 of the Income-tax Act, 1961, instead of Section 168, arguing that the administration of the estate was not yet complete and he was in possession of the estate as an executor, not as a trustee.
Finding of the Court:
The court held that the Income-tax Officer's decision to make the assessment under Section 160 was not based on legal principles, as the administration of the estate was not yet complete and the executor continued to be in charge of the estate. However, the court declined to prohibit the Income-tax Officer from making the assessments in a particular way at this stage, as he had the jurisdiction to make the assessment and determine the status of the assessee.
Issues: 1. Whether the Income-tax Officer's decision to make the assessment under Section 160 was legally sound, given that the administration of the estate was not yet complete? 2. Whether the court could prohibit the Income-tax Officer from making the assessments in a particular way at this stage.
Ratio Decidendi: 1. The court held that the Income-tax Officer's decision to make the assessment under Section 160 was not based on legal principles, as the administration of the estate was not yet complete and the executor continued to be in charge of the estate. The court relied on the provisions of Sections 159, 160, and 168 of the Income-tax Act, 1961, and the decision in Suhashini Karuri v. Wealth-tax Officer, Calcutta, [1962] 46 I. T. R. 953 (Cal.). 2. The court declined to prohibit the Income-tax Officer from making the assessments in a particular way at this stage, as he had the jurisdiction to make the assessment and determine the status of the assessee. The court distinguished the case from East India Commercial Co. Ltd. v. Collector of Customs, where the Supreme Court held that the court could prohibit an officer from proceeding with an action if it was clear that the proposed action was not permissible under the relevant provisions of the law.
Final Decision: The court discharged the rule and vacated all interim orders, directing the Income-tax Officer to act according to law in making the proposed assessments for the assessment years 1964-65 and 1965-66.
( 1 ) ONE Ramkumar Bangur died some time in the year 1961 having made and published his will dated the 26th day of June, 1941. Under the said will he appointed his nephew, Gobind Lal Bangur, as the executor and the trustee and declared that as he was childless he had taken his another nephew, Gokul Chand Bangur, to be his adopted son. The testator directed his executor and trustee to pay all his debts outstanding at the time of his death and to pay his funeral and testamentary expenses including the amount necessary for his sradh. The movable properties already made over to the testator's wife were declared to be her personal property. The will further directed the executor and trustee to set apart and hold a sum of Rs. 4 lakhs out of certain amounts lying in the account of Ramnarayan Ramkumar and to enable the testator's wife to utilize the said sum for charity, for religious expenses, for making pilgrimages and for making gifts or otherwise to relations with certain limitations. The testator bequeathed the residue of his estate, both movable and immovable, to his adopted son, Gokul Chand Bangur, absolutely. Up to the assessment year 1963-64, for which the corresponding accounting year was the period 8th November, 1961, to 27th October, 1962, the assessment in respect of the estate of the deceased was made on Gobind Lal Bangur as the executor of the estate of Sri Ram Kumar Bangur, deceased. The said assessment was made on the 30th September, 1967. It is alleged in the petition and not denied in the affidavit-in-opposition that the petitioner, Gobind Lal Bangur, has not yet made over the said sum of Rs. 4 lakhs to the widow of the testator nor has he been able to obtain the probate of the will as the estate duty payable in respect of the estate of the deceased has not yet been paid though such duty had been paid on a provisional assessment on the basis of the return filed. On the 3rd May, 1968, the respondent-Income-tax Officer addressed a letter to the petitioner to be furnished with certain particulars and information's. The letter further states that from the will of the deceased the respondent finds that the executor had been entrusted with making the following payments, viz. , (a) the meeting of funeral and testamentary expenses ; (b) payment of all debts outstanding at the time of death ; (c) payment of Rs. 4 lakhs to the widow of the testator; and (d) handing over of the estate to Gokul Chand Bangur for his absolute benefit. The respondent went on to say that item No. (a) had already been paid and there were no debts or liabilities outstanding as mentioned in item No. (b ). According to the respondent, estate duty was not a debt outstanding at the time of the death of the deceased and in any event it was payable by the persons liable to pay the same under the Act. In any event as the provisional duty as per the return had been paid and the estate had adequate assets there was no reason why the amount of Rs. 4 lakhs due to the widow had not yet been paid. The respondent further stated that, in the circumstances, he considered that the execution of the will was already complete and that Gobind Lal Bangur was holding the assets not as an executor but as a trustee for the benefit of the widow to the extent of Rs. 4 lakhs and to the extent of the remaining estate for the benefit of Gokul Chand Bangur. The respondent, therefore, proposed to complete the assessment for the years 1964-65 and 1965-66 under section 160 and not under section 168 and further informed 1he petitioner that the income would be subjected to tax at the same rate and it would have suffered tax in the hands of the beneficiaries if directly assessed. By his letter dated the 13th May, 1968, the petitioner objected to the course intended to be taken by the respondent and pointed out that as the estate duty payable had not yet been assessed it was not possible to make a provision for the amount of such duty. Unless the duty was paid probate of t
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