1960 (3) TMI 4 - SC - Income Tax

Whether the effect of section 24B(1) of the Income-tax Act is that the liability of the executors administrators or other legal representatives in regard to the tax payable is the same as was the liability of the deceased person and that the tax is one and therefore the liability of the heirs of the deceased was one and joint? Held that - Both Kamini Kumar Dutta and the appellant were brought on the record as legal representatives of the deceased. They both admitted the liability of Rs. 58, 24, 023. The several assessment orders income-tax assessment orders excess profits tax assessment and business profits assessment orders show that the total amount to be realised as tax was Rs. 52, 34, 663 divided into 8 equal parts. The liability of Kamini Kumar Dutta and his branch of the family alone as a result of composition came to an end but that does not mean that the balance of the tax which was exigible must also be taken to have been satisfied. It only means that to the extent that the amount is realized from Kamini Kumar Dutta and his branch of the family the liability to tax will be taken to have been satisfied and the appellant will be liable for the payment of only the balance and to the extent that he has in his possession any of the assets of the deceased or comes into possession of the assets in future. Appeal dismissed.

Summary

Issues:
1. Appeal against the report of the Income-tax Investigation Commission and orders passed by the Central Government.
2. Liability of legal representatives for concealed income of deceased.
3. Application for composition under section 8A of the Act.
4. Rejection of application for reference to High Court.
5. Interpretation of liability under section 24B(1) of the Income-tax Act.
6. Application of settled tax liability to legal representatives.

Analysis:

The judgment pertains to an appeal challenging the report of the Income-tax Investigation Commission and subsequent orders by the Central Government. The case involves the concealed income of a deceased individual, Captain N. N. Dutta, which was discovered posthumously. The legal representatives, Kamini Kumar Dutta and the appellant Debendra Nath Dutta, were brought on record. The investigation revealed that a significant portion of the concealed profits was invested in the names of the deceased's relatives. Kamini Kumar Dutta cooperated and accepted the liability, leading to a composition application under section 8A of the Act, which was recommended for approval by the Commission. However, the settlement only applied to Kamini Kumar Dutta and his branch, not including the appellant.

The appellant contested the liability, arguing that any composition with one legal representative discharged the liability of all heirs. Citing legal precedents, the appellant claimed joint liability for the tax payable on the concealed income. The court rejected this argument, emphasizing that the liability of legal representatives must be determined as per the provisions of the Act. The court clarified that the settlement under section 8A(1) applied only to the person offering it, in this case, Kamini Kumar Dutta, and did not absolve the appellant of his separate liability.

The court highlighted that both legal representatives admitted the concealed income liability, and subsequent assessment orders allocated the tax liability among them. While the liability of Kamini Kumar Dutta and his branch ended due to the composition, the appellant remained liable for the outstanding balance. The judgment emphasized that the appellant would be responsible for payment to the extent of any assets he possessed or might acquire in the future from the deceased.

Ultimately, the court found the appeal devoid of merit and dismissed it, ordering the appellant to bear the costs of the respondents. The judgment underscores the distinct liabilities of legal representatives under the Act and the application of tax settlements to individual parties based on their involvement and agreements, thereby upholding the decision of the lower courts and authorities.