1974 (2) TMI 14 - HC - Income Tax

Summary

Issues: Recovery proceedings against legal representatives without notice of demand under section 156 of the Income-tax Act, 1961.

Analysis:
The judgment by the High Court of Karnataka, delivered by Judge E. S. Venkataramaiah, dealt with the legality of recovery proceedings against the sons and legal representatives of a deceased assessee without serving a notice of demand under section 156 of the Income-tax Act, 1961. The petitioners challenged the recovery proceedings as illegal and unauthorized due to the absence of such notice. The primary contention raised was the extent of liability of legal representatives under section 159 of the Act. Section 159(1) imposes liability on legal representatives to pay any sum the deceased would have been liable to pay. Sub-sections (3) and (6) further define the legal representatives' liability, limiting it to the extent the deceased could meet the liability. The court emphasized that the Act and the Rules provide a comprehensive code regarding the rights, liabilities, and remedies of legal representatives of a deceased defaulter. Rule 85 of Schedule II allows proceedings against legal representatives as if they were the defaulters themselves.

The judgment highlighted the procedural requirements under the Act and the Rules for recovering tax from legal representatives of a deceased defaulter. Rule 60 mandates serving a notice to legal representatives under rule 85 before taking coercive steps for recovery. Rule 3 specifies a waiting period of fifteen days after notice service before execution steps can be initiated. Additionally, Rule 11 allows for adjudication of any claim or objection regarding property attachment, with an appeal provision under rule 86. The court emphasized that the Act and the Rules simplify the procedure for recovery from legal representatives, aligning it with civil procedure principles regarding liability.

The judgment addressed the petitioner's reliance on previous decisions from the Allahabad High Court and the Supreme Court, emphasizing the evolution of tax recovery procedures under the current Act and Rules. The court rejected the contention that a fresh notice of demand under section 156 was necessary for recovery from legal representatives, deeming it untenable. It noted that such a requirement would contradict the logic of rule 85 and the Act's scheme, leading to an illogical outcome. The judgment concluded that all necessary steps under the Act and Rules had been taken in the present case, dismissing the petitions and ruling in favor of the revenue without costs.