Legality of proceedings against secretary personally for recovery of tax.

SRINIVASAN J.

The assessment in the present case giving rise to the questions that stand referred to us is under the Wealth-tax Act. The assessee and a brother of his, Raghunatha Rao, constituted a Hindu undivided family. Raghunatha Rao died on December 16, 1956. The assessee became the sole surviving coparcener of the undivided family and in that capacity became entitled to all the properties of the family. Following upon the death of Raghunatha Rao, the assessee made a return for purposes of estate duty and such duty was assessed at Rs. 62, 196 by the order of the Estate Duty Officer dated November 30, 1957 In respect of the wealth-tax assessment for the assessment year 1957-58, the assessee made a return on February 3, 1958. In this return, he claimed his status to be that of a Hindu undivided family. He claimed also to be entitled to deduct the sum of Rs. 62, 196 being the estate duty assessed on the death of Raghunatha Rao. The Wealth-tax Officer found that the assessee, the sole surviving member of the joint Hindu family, is an issueless widower and that there were no other persons entitled to any claims upon the estate. There were no widows or other female members of the family with rights to maintenance. He accordingly held the status of the assessee to be that of an individual. In so far as the claim to deduct the estate duty payable was concerned, the Wealth-tax Officer came to the conclusion that it became a liability only on the date of its determination, viz., November 30, 1957. As the wealth of the assessee had to be computed with reference to the valuation date, that is the last day of the previous year, March 31, 1957, he decided that the liability to pay the estate duty would not be a proper deduction in respect of the valuation of the estate which had to be made as on March 31, 1957Against this assessment, an appeal was taken to the Appellate Assistant Commissioner. The view of the Wealth-tax Officer that the assessee was liable to be assessed as an individual was upheld. The claim of the assessee made in the appeal that at least to the extent of Rs. 27, 031 being the quantum of estate duty which had been admitted by the assessee in his estate duty return, should be allowed, was also rejected. The further appeal to the Tribunal failed on the first of the above contentions. But the Tribunal was apparently inclined to accept the claim of the assessee that as on the valuation date, the assessee having accepted the liability of Rs. 27, 031.37 as the amount payable as and for estate duty, that amount was allowable as a deduction

On the application of the assessee under section 27(1) of the Wealth-tax Act, the following questions stand referred to us

"1. Whether the assessee is a Hindu undivided family for wealth-tax assessment ?

2. Whether Rs. 35, 165 being the excess of the estate duty assessed over the duty payable on the return on the death of Raghunatha Rao aforesaid is a liability deductible from the net wealth for the assessment year 1957-58 ?" *

The principal and indeed, the sole argument of Mr. Ramamani, learned counsel for the assessee, that notwithstanding that the assessee is the sole surviving coparcener the property continues to be joint family property, and if that is so, the assessment should be made in the status of an undivided Hindu family and not in the status of an individual. The claim, therefore, is that the nature of the property determines the status of the person liable to be assessed. It is argued on this line of reasoning that though the assessee is the sole surviving coparcener, the coparcenary must be deemed to continue till such last coparcener dies and that, therefore, an individual can in certain circumstances assume the character of a Hindu undivided family. The short question is whether this interpretation of the legal position is correctSection 3 of the Wealth-tax Act contemplates three classes of assessable entities : (1) an individual, (2) a Hindu undivided family and (