1991 (10) TMI 6 - HC - Wealth-tax

Summary

Issues Involved:

1. Whether the petitioners could be assessed as "Mahamaya Mukherjee and others".
2. Whether the assessment of the one-third share in the estate of Sir R. N. Mukherjee (deceased) in the hands of the petitioners was contrary to section 19A of the Wealth-tax Act, 1957.

Issue-wise Detailed Analysis:

1. Assessment as "Mahamaya Mukherjee and others":

The petitioners contended that they could not all be assessed as "Mahamaya Mukherjee and others". The appellate authority had previously directed that respondent No. 1 should have enquired about the number of legal representatives of Rabindra Nath Mukherjee and whether Smt. Mahamaya Mukherjee was competent to represent all such legal representatives. Respondent No. 1 issued notices of hearing under section 16(2) of the Act to all legal representatives after confirming through an Income-tax Inspector that Rabindra Nath Mukherjee left behind his four children as his legal heirs and representatives. The petitioners were represented through one advocate who filed a vakalatnama for Smt. Mahamaya Mukherjee and all four petitioners. Despite this, the court found that the assessments could not be sustained because the administration of the estate was not complete, and thus, the petitioners could not be assessed collectively as "Mahamaya Mukherjee and others".

2. Assessment under Section 19A of the Wealth-tax Act, 1957:

The petitioners argued that the assessment of the one-third share in the estate of Sir R. N. Mukherjee (deceased) in their hands was contrary to section 19A of the Act. Section 19A(1) provides that the net wealth of the estate of a deceased person shall be chargeable to tax in the hands of the executor or executors. The court noted that the assets of the estate of Sir R. N. Mukherjee were still in the hands of the executors, as confirmed by letters dated September 26, 1979, and March 1, 1988, which stated that the administration of the estate was not yet complete. The court highlighted that under section 332 of the Indian Succession Act, 1925, an executor continues as such unless he assents to the legacy in favor of the beneficiary, and there was no evidence of such assent.

Additionally, the court referred to CIT v. Mrs. A. Ghosh [1986] 159 ITR 124, which held that if estate duty in respect of the estate remained unpaid, the estate had not been fully administered, and the extent of the residuary legatee could not be ascertained. The court also cited V. M. Raghavalu Naidu and Sons v. CIT [1950] 18 ITR 787, which distinguished between a specific legacy and a residuary bequest, noting that a residuary bequest only comes into existence when the administration is completed.

The court concluded that the assessment of the residuary estate of Sir R. N. Mukherjee (deceased) in the hands of Mahamaya and the petitioners before the completion of the administration of the estate was without jurisdiction. Therefore, respondent No. 1 could not have assessed the share of Rabindra Nath Mukherjee in the estate of Sir R. N. Mukherjee (deceased) in the hands of Mahamaya or the petitioners.

Conclusion:

The court quashed the impugned assessment orders for the assessment years 1968-69 to 1975-76 and all proceedings thereunder, making the rule nisi absolute. The court also noted that it would not be justified in rejecting the petition on the ground of alternative remedy, as the court had already entertained the petition, issued a rule nisi, and heard the matter at length.