2017 (9) TMI 386 - HC - Income Tax

Scope of the term legal representative - Tax Recovery proceedings - legal representative of the deceased - Held that - Section 2(29) of the Act of 1961 stipulates that the meaning of legal representative assigned to it in Clause (11) of Section 2 of the Code of Civil Procedure 1908 would apply to the Income Tax Act, 1961. Section 2 (11) of the Code of Civil Procedure 1908 stipulates that a legal representative means a person who in law represents the estate of a deceased person and includes any person who intermeddles with the estate of the deceased. It also includes a party who sues or is sued in a representative character on whom the estate devolves on the death of the party so suing or sued. Nolini Bai (1989 (4) TMI 327 - SUPREME COURT OF INDIA) is of the view that, the definition of legal representative given in the Code of Civil Procedure, 1908 is inclusive in character and its scope is wide. It is not confined to legal heirs only. It may be a person who may or may not be the heir, competent to inherit the property of the deceased. However, such person is representing the estate of the deceased. It includes heirs as well as persons who represent the estate even without title either as executors or administrators in possession of the estate of the deceased. Such persons are covered by the expression legal representative. Viewed from such perspective, the petitioner is one his heirs and legal representatives of the deceased. W.P. dismissed.

Summary

Issues:
1. Interpretation of legal representative under Section 2(29) of the Income Tax Act, 1961.
2. Whether the petitioner qualifies as a legal representative of the deceased under Section 2(11) of the Code of Civil Procedure, 1908.
3. Validity of the orders passed by the Tax Recovery Officer and the Appellate Authority.

Issue 1: Interpretation of legal representative under Section 2(29) of the Income Tax Act, 1961:

The petitioner argued that he should not be considered a legal representative of the deceased under Section 2(29) of the Income Tax Act, 1961, as he had severed all relationships with the deceased in 1999 and had purchased shares from the deceased for valuable consideration during the deceased's lifetime. The petitioner contended that the definition of legal representative under Section 2(11) of the Code of Civil Procedure, 1908, should be imported into the Income Tax Act, 1961. However, the Additional Solicitor General for the Revenue asserted that the definition of legal representative is inclusive, encompassing anyone who meddles in the estate of the deceased. The Appellate Authority and the Tax Recovery Officer found that the petitioner had indeed succeeded to the shares of the deceased, indicating his involvement in the deceased's estate post-death.

Issue 2: Whether the petitioner qualifies as a legal representative of the deceased under Section 2(11) of the Code of Civil Procedure, 1908:

The judgment referred to the case of Custodian of Branches of BANCO National Ultramarino vs. Nalini Bai Naique to highlight that the definition of legal representative is broad and not limited to legal heirs only. It includes individuals who represent the estate of the deceased, even without title, such as executors or administrators in possession of the estate. The court concluded that the petitioner, being one of the heirs and legal representatives of the deceased, falls within the scope of the definition provided in the Code of Civil Procedure, 1908.

Issue 3: Validity of the orders passed by the Tax Recovery Officer and the Appellate Authority:

The Tax Recovery Officer initiated proceedings under Section 159 of the Income Tax Act, 1961 against the petitioner regarding the deceased defaulter assesse, the father of the petitioner. The Tax Recovery Officer and the Appellate Authority both determined that the petitioner and his brother are heirs and legal representatives of their deceased father. The court emphasized that a Writ Court is not a second Appellate Authority and can only interfere if the impugned order lacks jurisdiction, violates natural justice, is non-speaking, or is tainted by fraud or mala fides. As none of these grounds were substantiated in this case, the court declined to interfere with the writ petition, ultimately dismissing it without costs.

This detailed analysis of the judgment from the Calcutta High Court addresses the interpretation of legal representative under the Income Tax Act, the petitioner's qualification as a legal representative under the Code of Civil Procedure, and the validity of the orders issued by the Tax Recovery Officer and the Appellate Authority.