The Additional Income-Tax Officer, Salem
V. E. Alfred  INSC 306 (20 October 1961)
CITATION: 1962 AIR 663 1962 SCR Supl. (1) 143
CITATOR INFO :
RF 1963 SC1448 (5) D 1965 SC1358 (19)
Income Tax -Tax of deceased person payable by
representative-Legal representative assessee by fiction - Failure to pay
assessed tax -Penalty, if could be imposed Income-tax Act, 1922 (1 of 1922),
ss.22,(2),(23),24B (2), 29, 30, 46(1).
One died intestate during his year of account
Leaving g behind him his son A the respondent and eight daughters. After notice
under s. 22 (2) of the Income Tax Act was issued, A was assessed under s. 24
(2) of the Act and notice of demand was issued under s. 29. The respondent
appealed to the Appellate Assistant Commissioner, but during the pendency of
the appeal a penalty was imposed upon him under s. 46 (1) of the Act by the
Income- tax officer as the respondent had defaulted in payment of tax on the due
date. After the appeal was disposed of a notice of demand was again issued to
the respondent to pay the tax. On respondent's default, a second penalty was
imposed upon him. Respondent challenged this order by writ. The High Court
quashed the order inter alia holding that s. 46 (1) did not apply to a legal
representative as he was assessed as an assessee under a fiction in s. 24B (2)
and that fiction came to an end when the assessment was made, for the fiction
was created for the limited purpose of assessment, and since that subsection
was not concerned with collection, the fiction could not be carried, beyond
assessment resulting in the determination of tax.
The question was whether the fiction came to
an end after the assessment, so that the Legal representative remained a mere
debtor to the department or could he be ordered to pay penalty under s. 46 (1)
of the Act.
^ Held, that the fiction made the respondent
an assessee for the purpose of assessing the total income of E. That fiction
did not come to an end after the assessment. When a thing is deemed to be
something else, it is to be treated as if it is that thing, though, in fact it
is not E being dead before the notice, either general or special, to his, could
not be treated as an assessee, and the process of the Act, was, by fiction,
made available against the legal representative who was the assessee for
purpose of assessment which meant the entire process of computation and law of
the tax and the fiction had to be worked out to its logical conclusion. The
definition of 144 the word assessee being defined in the Act as a person by
whom income-tax is payable, the legal representative came within the definition
and his assessment being made under s. 23, he had also a right of appeal under
s. 30 since he did not cease to be an assessee after the determination of the
tax at least for the purpose of sub-s. (2) of s. 24 B, and s. 29 applied to the
legal representative in his position as the assessee.
Commissioner of Income-tax v. Teja Singh,
 Supp. 1 S.C.R. 394 and East End Dwellings Co. Ltd. v. Finsbury Borough
109, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 282 of 1960.
Appeal from the judgment and order dated February 15, 1956, of the Madras High Court in Writ Petition No. 404 of 1952.
K. N. Rajagopala Sastri and P. D. Menon, for
R. Gopalakrishnan, for the respondent.
1961. October 20. The Judgment of the Court
was delivered by HIDAYATULLAH, J.- Whether the legal representative of a
deceased person, who is assessed in respect of the total income of the latter
person, as if he were the assessee, can be ordered to pay a penalty under s.
46(1) of the India Income-tax Act, is the short question that arises in this
One Ebenezer died intestate on November, 22, 1945, during his year of account which ended on March 31, 1946. He left behind him the respondent, E. Alfred, his son, and eight daughters. For the
assessment year, 1946-47, the respondent was assessed under s. 24B(2) of the
Income-tax Act, after a notice was issued to him under s.22(2), ibid. The
assessment was completed on March 26, 1951, and a notice of demand was issued
29 of the Act. The respondent appealed
against the order of assessment to the Appellate Assistant Commissioner, but
during the pendency of the appeal, a penalty of Rs. 250/- was imposed upon 145
him under s 46(1) of the Act by the Income-tax officer, as he had defaulted in
payment of tax on the due date. After the appeal was disposed of with very
minor modifications, a notice of demand was again issued to him to pay the tax
on or before December 15, 1951. On his default, a second penalty of Rs.
10,000/- was imposed upon him on March 8, 1952. The respondent then filed a
petition under Art. 226 of the Constitution in the High Court of Madras
challenging the imposition and levy of penalty imposed upon him. The High Court
held in his favour, and quashed the, two orders imposing penalty but granted a
certificate of fitness to appeal to this Court. This appeal was then filed.
In reaching the conclusion that s. 46(1) of
the Act did not apply to a legal representative, the learned Judges of the High
Court held that a legal representative could not be said to be included within
the words of that section. "when an assessee is in default in making a
payment of Income tax" because of the scheme of the Act, particularly B.
29, where a distinction is made between "an assessee" and "other
According to the learned Judges, a legal
representative is assessed as an assessee under a fiction in s. 24B(2), and
that fiction comes to an end when the computation of the tax Or, in other
words, the assessment is made. The learned Judges drew distinction between the
three subsections of
8. 24B, and pointed out that sub-s. (1) only
created a liability on the legal representative for collection of tax but did
not refer to him for that purpose as an assessee and sub-s.(3) which did not
concern itself with collection, did not refer to the legal representative as an
assessee, and held that the fiction in sub-s. (2) was created for the limited
purpose of assessment, and since that subsection also did not concern itself
with collection, the fiction could not be carried beyond assessment resulting
in the determination of the tax.
146 Thereafter, according to the High Court,
the legal representative is not an assessee within the meaning of s. 29, but
can only be brought under the words "other person", and inasmuch as
ss. 45 and 46 refer to "an assessee in default", the legal 3.
representative cannot be treated as such and no penalty can either be imposed
upon him or recovered.
We are concerned with the definition of
"assessee" before its amendment in 1953. That definition read as
"assessee" means a person by whom
income-tax is payable" The generality of this definition is sufficient to
include even a legal representative who is to pay the tax, though out of the
assets of the deceased person. Section 24B, which makes it legal representative
liable, is as follows:
24B. (1) Where a person dies, his executor,
administrator, or other legal representative shall be liable to pay out of the
estate of the deceased person to the extent to which the estate is capable of
meeting the charge the tax assessed as payable by such person, or any tax which
would have been payable by him under this Act if he had not died.
(2) where a person dies before the
publication of the notice referred to in subsection (1) of section 22 or before
he is served with a notice under sub-section (2) of section 22 or section 34,
as the case may be, his executor, administrator or other legal representative
shall, on the serving of the notice under subsection (2) of section 22 or under
section 34, as the case may be comply therewith, and the Income-tax officer may
proceed to assess the total income of the deceased person as if such executor,
administrator or other legal representative were the assessee.
147 (3) where a person dies, without having
furnished a return which he has been required to furnish under the provisions
of section 22, or having furnished a return which the income-tax officer has
reason to believe to be incorrect, or incomplete, the Income tax officer may
make an assessment of the total income of such person and determine the tax
payable by him on the basis of such assessment and for this purpose may, by the
issue, of the appropriate notice which would have had to be served upon the
deceased person had he survived, require from the executor, administrator or
other legal representative of the deceased person any accounts, documents or
other evidence which he might under the provisions of sections 22 and 23 have
required from the deceased person".
The scheme of the section, which was inserted
by the Second Amendment Act of 1933 and modified further by the Amendment Act
of 1939 is as follows: Subsection (1) of a 24B makes, inter alia the legal
representative liable to pay out of the estate of deceased person to the extent
to which the estate is capable of meeting the charge, the tax assessed as
payable by such person or any tax which would have been payable by him under
the Act, if he had not died. By this sub-section, a legal representative is
made liable to pay the tax which might have been assessed but not paid by the
deceased person or which might be assessed after his death. It covers all
situations and contingencies and makes the liability absolute, limited,
however, to the extent to which the estate of the deceased is capable of
meeting the charge. The subsection does not provide for issue of notices, assessment
collection or anything connected with the imposition, levy and collection of
the tax, Subsection (2) and (3) next provide for different contingencies.
Subsection (2) provides that where a person dies 148 before the publication of
a general notice or before he is served with a special notice under s.22 or
s.34 his legal representative shall, on the service of the special notices
comply with these notices, and the Income-tax officer may proceed to assess the
total income of the deceased person as if the legal representative were the
assessee. Sub section (3) provides that where a person dies after he has been
required to furnish a return but without having furnished such return, or where
he has furnished the return but the Income-tax officer has reason to believe it
to be incorrect, the Income-tax officer may make the assessment of the total
income of such deceased person, and determine, the tax after serving such
notices, as may be required under s.22 or 23, upon the legal representative of
the deceased person to produce the accounts, documents or other evidence.
In the present case, the matter fell to be
governed by the second sub-section, because Ebenezer died before the end of his
year of account. The service of the notice upon the respondent and his
assessment, as if he were the assessee, were made under the second sub-section.
By reason of this assessment, the respondent
became liable under the first sub-section to pay out of the estate of Ebenezer
the tax assessed, to the extent to which Ebenezer's estate was capable of
meeting the charge but he himself was deemed to be the assessee.
No doubt, the fiction made the respondent an
assessee for the purpose of assessing the total income of Ebenezer. But the
question is whether the fiction came to an end after the assessment, so that he
remained a mere debtor thereafter to the Department. The answer to this
question would determine the further application of the other sections of the
Act. When a thing is deemed to be something else it is to be treated as if it
is that thing, though, in fact, it is not. The original assessee being dead
before the notice, either general or 149 special, to him, he could not be
treated as all assessee, and the process of the Act is, by the fiction made
available against a different person like a legal representative, who is
fictionally deemed to be an assessee for purposes of assessment. The word
"assessment" bears different meanings, and in one sense, it
comprehends the entire process of computation and levy of the tax.
It is in this sense that the legal
representative becomes an assessee by the fiction, and it is this fiction which
has to be fully worked out, without allowing the mind "to boggle" as
was said in Commissioner of Income-Tax v. Teja Singh(1) applying the dictum of
Lord Asquith in East End Dwellings Co., Ltd. v. Finsbury Borough Council(2). If
we turn to the definition of "assessee", it says that an assessee
means a person by whom income-tax is payable. A legal representative who by
fiction, is decreed to be an assessee therefore, comes within this definition,
because he is a person by whom income-tax is payable, though out of the assets
left by a deceased person. The assessment of the legal representative is then
made under s. 23 of the Act, and he has the right to appeal under B. 30, which
he would not have, if he ceased to be an assessee after the determination of
the tax. We are not concerned in this case with the position of the legal
representative under the third sub- section of s.24 B, and are not required to
consider what his position would be, if he made a default in the payment of the
tax. The fiction is enacted at least for the purpose of sub-s. (2), and it is
to that subsection that we are confined in this case. Nor can the fiction in
that sub- section be limited by provisions of law for a totally different
Under s.45, if a notice of demand is issued
under s.29 on an assessee and has not been complied with the assessee is deemed
to be in default, and under s. 46 (1), if the assessee is in default, a
penalty, can be imposed. All these stages the respondent (1) (1959) Supp. 1
S.C.R. 394. (2)  A.C 109, 132.
150 went through in this case. He was himself
an assessee qua the assets and liability to tax, of Ebenezer he was, therefore,
an assessee in default and liable to the imposition of penalty for this
default. The question is whether s.29, which makes a distinction between an
assessee and "other person", makes any difference.
The High Court as well as the learned counsel
for the respondent (who pressed upon us the reasons of the High Court) referred
to the words of s.29 where in addition to an "assessee" liable to pay
the tax occur the words "other person" liable to pay such tax, and
observed that the respondent would fall to be governed by the words "other
person" liable to pay such tax and not by the words "the
assessee" liable to pay such tax.
The High Court reasoned, therefore, that the
words "an assessee" in ss. 45 and 46 in their application are limited
to an assessee, who is assessed on his own behalf and not "other
person", who is not an assessee. This distinction, it observed, must be
borne in mind in interpreting the word "assessee" used in ss. 45 and
46, and so construing, limited the word "assessee" in those two
sections to an assessee proper. The words "other Person" cannot apply
to a legal representative, if he is an assessee by fiction, and the section has
to be worked out to its logical conclusion. If he falls within the word
"assessee', as has been shown above, he does not fall within the words
"other person" and it is not necessary to find in this case what
persons are there meant to be included. In our opinion, the penalty could be
imposed on respondent as an assessee.
The appeal thus succeeds, and is allowed with
costs here and in the High Court.