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HIGH COURT OF CALCUTTA
G. K. Mitter, S. A. Masud
COMMISSIONER OF INCOME-TAX - Appellant
Versus
SUDHIR KUMAR LAHA - Respondent
I. T. Ref. 14 Of 1961
Decided On : JANUARY 21, 1965
INCOME TAX - Assessment - Notice - Validity - Notice describing assessee as executor trustee - Not bad - Income Tax Act (11 of 1922), Secs. 3, 22, 34 (1) (a), 41.
Fact of the Case:
The assessee, Anath Krishna Laha, was the executor and trustee of the estate of Joggeswar Laha. The Income Tax Officer issued a notice under Section 34 (1) (a) of the Income Tax Act, 1922, describing the assessee as an executor trustee. The assessee filed a return showing an income of Rs. 1610/- and claimed that the income from the estate should be taxed individually in the hands of the deities only. The assessment was made under Section 23 (3) read with Section 34 (1) (a) and Section 41 of the Act on Anath Krishna Lalta as trustee. The assessee's appeal to the Appellate Assistant Commissioner was not successful. The Tribunal set aside the assessment on the ground that the notice was invalid as it did not specify the particular character which the assessee held at the relevant time.
Finding of the Court:
The High Court held that the notice was not bad merely because it described the assessee as an executor trustee. The Court observed that it was for the assessee to assert whether he was functioning as executor or as trustee. If the Income Tax Officer had any doubt on this score, he was within his right to serve a notice on the assessee in his dual capacity. Such a notice is neither illegal nor improper. It does not in any way prejudice the assessee from stating the true character in which he held the property.
Issues: Whether the notice issued under Section 34 (1) (a) of the Income Tax Act, 1922, describing the assessee as an executor trustee was valid.
Ratio Decidendi: The Court held that the notice was valid as it was not for the Income Tax Officer to make up his mind in what status the notice was to issue. In many cases that might in effect be prejudging the issue without hearing the assessee.
Final Decision: The Court answered the question posed in the negative and against the assessee.
( 1 ) THIS is a reference under Section 66 (1) of the Act the question referred being-"whether on the facts and circumstances of the case the assessment under Section 34 (1) (a) was correctly set aside ?"
( 2 ) THE facts are as follows : One Joggeswar Laha by his will dated December 22, 1920 appointed his wife Nrityakali Dassi, his nephew Anath Krishna Laha and one Radha Kanto Paul as executrix, executors and trustees of his will. He bequeathed his business solely to his said nephew and devised and dedicated rights in his properties both movable and immovable and all the rest and residue of his estate including the outstandings of his business to various religious and charitable trusts. He further directed thereby that his executrix, executors and trustees should stand possessed of all his properties both movable and immovable upon trust to collect all his assets and spend Rs. 5,000/- for the purpose of his Adyashradha ceremony and the sum of Rs. 2500/-for the similar ceremony of his wife and erect three temples on premises Nos. 11/2 and 11/3, Baburam Ghose Lane at a cost of not less than Rs. 25,000/ -. The said executrix, executors and trustees were to consecrate and establish according to Hindu rights and ceremonies Sree Kali Thakurani and two Siva Lingas in the said three temples at a cost of Rs. 5,000/- out of the trust fund in their hands. He also appointed his wife and his nephew Anath Krishna Laha and the survior of them to be the Shebaits for the purposes of all religious ceremonies and charitable acts mentioned in his will. The executrix, executors and trustees were to realise all rents and profits of his properties and to pay repair charges of the same out of the trust funds and perform or cause to be performed the daily periodical worship of the three thakurs to be established and consecrated. The will contains a list of ceremonies and charitable acts to be performed by the trustees, as also the expenses to be incurred in connection therewith. He further directed that after the death of the two Shebaits already mentioned Sudhir Kumar Laha and Manindra Kumar Laha, sons of his nephew Beney Krishto Laha and the survivor of them were to be the shebaits and after their death the nearest male members of his family should be the Shebaits. The executrix, executors and trustees were to be at liberty to sell a certain property in the district of 24 Parganas and after meeting all the payments mentioned the were to invest the sale proceeds either in the purchase of profitable immovable properties or in Government or other approved securities. There was a further direction that the executrix, executors and trustees should invest the surplus income in any manner that might appear to them gate and proper and devote the income thereof for the purpose of other religious and charitable acts as they would think fit.
( 3 ) PROBATE of the will was taken out on March 19, 1921. The Tribunal found that the administration of the estate was complete at or about the time relevant to the assessment year 1947-48. In response to a notice under Section 34 (1) (a) Anath Krishna Laha filed a return as executor for the assessment year 1949-50 showing an income of Rs. 1610/ -. He claimed that the income from the estate should be taxed individually in the hands of the deities only and should not be treated as income taxable in the hands of the trustees. The assessment was made under Section 23 (3) read with Section 34 (1) (a) and Section 41 of the Income-tax Act on Anath Krishna Lalta as trustee. The assessee's appeal to the Appellate Assistant Commissioner was not successful. After going into the question elaborately the Appellate Assistant Commissioner held that directions under the will having been carried out the assessee was holding the properties as trustee. In his appeal to the Tribunal the assessee contended that notice under Section 34 (1) (a) having been issued to the executrix, executors and trustees was not in proper form as t
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