1957 (8) TMI 39 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the penalty proceedings under section 28(1)(c) of the Income-tax Act against a legal representative.
2. Interpretation of sections 24B(2) and 28(1)(c) of the Income-tax Act.
3. Whether the income of the deceased can be treated as the income of the legal representative for assessment purposes.
4. Whether the penalty proceedings were conducted against the legal representative in his representative or personal capacity.

Detailed Analysis:

1. Validity of the Penalty Proceedings under Section 28(1)(c):
The core issue was whether penalty proceedings under section 28(1)(c) of the Income-tax Act could be initiated against Sri Sukumar Mukherjee, who filed a return as the legal representative of his deceased father. The Income-tax Officer found substantial omissions in the initial return and, after a revised return was submitted, imposed a penalty of Rs. 40,000 for deliberate concealment of income.

2. Interpretation of Sections 24B(2) and 28(1)(c):
The legal question raised was whether sections 24B(2) and 28(1)(c) of the Income-tax Act were misapplied. Section 24B(2) states that the Income-tax Officer may proceed to assess the total income of the deceased person as if the legal representative were the assessee. Section 28(1)(c) allows for penalties if a person conceals income or furnishes inaccurate particulars. The court had to determine if these sections allowed for the imposition of a penalty on the legal representative for inaccuracies in the return filed on behalf of the deceased.

3. Income of the Deceased as Income of the Legal Representative:
The court examined whether the income of the deceased could be treated as the income of the legal representative for assessment purposes. It was argued that section 24B(2) converts the income of the deceased into the income of the legal representative for assessment purposes. The court concluded that the legal representative must be treated as the assessee, and the income of the deceased must be treated as the income of the legal representative.

4. Capacity in which Penalty Proceedings were Conducted:
Another contention was whether the penalty proceedings were conducted against Sri Sukumar Mukherjee in his capacity as the legal representative or in his personal capacity. The court found that the proceedings were indeed conducted against him as the legal representative of his deceased father. This was supported by the statements made by Sri Sukumar Mukherjee himself and the basis on which he raised the question referred to the court.

Conclusion:
The court concluded that the legal representative could be assessed and penalized for inaccuracies in the return filed on behalf of the deceased. The income of the deceased, for assessment purposes, is treated as the income of the legal representative. Therefore, the penalty proceedings under section 28(1)(c) were validly initiated against Sri Sukumar Mukherjee in his capacity as the legal representative of his deceased father. The answer to the question referred was in the affirmative.