1990 (8) TMI 63 - HC - Income Tax

Summary

Issues Involved:
1. Recovery of tax from legal representatives of deceased assessee.
2. Application of res judicata.
3. Limitation period for recovery proceedings.
4. Validity and enforceability of tax recovery certificates.

Issue-wise Detailed Analysis:

1. Recovery of Tax from Legal Representatives of Deceased Assessee:
The court examined whether the amount covered by the eleven certificates could be recovered from the legal representatives of the deceased assessee. The relevant provisions considered were sections 159, 220 to 224, and rule 85 of the Second Schedule of the Income-tax Act. The court noted that recovery proceedings against a legal representative can only be initiated if they are declared as an assessee in default under section 222 after failing to pay the tax specified in a notice of demand under section 156. Rule 85 allows proceedings initiated against the deceased to continue against the legal representative without substitution in the certificate. The court concluded that the eleven certificates issued after the death of the assessee could not be enforced against the legal representatives, as they were not declared as assessees in default.

2. Application of Res Judicata:
The court considered whether the judgment in the earlier writ petitions (confirmed by the Division Bench and the Supreme Court) operated as res judicata, thereby preventing the petitioner from raising questions about the exigibility of tax, penalty, and interest. The court referred to the principle that decisions on matters in controversy in writ proceedings can operate as res judicata in subsequent writ proceedings or regular suits. The court held that the earlier decision, which confirmed the validity of the settlements and the recovery proceedings, operated as res judicata. Thus, the petitioner was barred from challenging the correctness of the levy at the time of recovery.

3. Limitation Period for Recovery Proceedings:
The court examined whether the recovery proceedings initiated for the tax dues of the deceased assessee were barred by limitation. Section 231 of the Income-tax Act provides that recovery proceedings must commence within one year from the last day of the financial year in which the demand is made or from the last day of the financial year in which the assessee is deemed to be in default. The court noted that the corrected certificates could not be enforced against the legal representatives, and no recovery proceedings had been initiated against them as required by sections 159 and 220 to 224. Therefore, the question of limitation did not arise for consideration.

4. Validity and Enforceability of Tax Recovery Certificates:
The court addressed whether the eleven certificates issued after the death of the assessee could be corrected and enforced against the legal representatives. It was argued that section 224(2) allowed for the correction of certificates. However, the court found that the certificates could not be enforced against the legal representatives without declaring them as assessees in default. The court also rejected the argument that the corrected certificates could be treated as fresh certificates, as the legal representatives had not been declared as assessees in default. Consequently, the eleven certificates in dispute were declared unenforceable against the legal representatives.

Conclusion:
The court declared that the eleven certificates in dispute were not enforceable against the legal representatives. The original petition was allowed to the extent indicated, with no order as to costs.