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TMI Blog1983 (4) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings had been instituted against Neelakanta Iyer. On the date of his death, Neelakanta Iyer was due in a sum of Rs. 85,074.00 as arrears of taxes and penalties to the State. 3.. On 6th October, 1977, the Commercial Tax Officer, XIV Circle, Bangalore, respondent (hereinafter referred to as the CTO), issued notice No. T. 21/77-78 dated 6th October, 1977 (exhibit A), invoking section 16 of the Act to the first petitioner calling upon her to pay a sum of Rs. 85,074.00 as arrears of tax and penalty due within 7 days thereof. On 2nd January, 1978, the CTO by 6 separate but identical notices called upon M/s. (1) South India Wire Products, (2) Intact Manufacturing Company, (3) Control Equipments, (4) Control Oxygen Agency, (5) Lectromeotic Private Limited, and (6) Mohamed Laboratories, (exhibits C to H), under section 14 of the Act to pay the amounts that they held or payable to the deceased assessee and forwarded copies of the same to the power of attorney holder of the petitioners. On 2nd March, 1978, the petitioners have filed this writ petition under article 226 of the Constitution challenging the notices dated 6th October, 1977, and 2nd January, 1978, (exhibits A, C to H) on dive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid in such manner and in such instalments, if any, and within such time, as may be prescribed. (2) If default is made in making payment in accordance with sub-section (1), (i) the whole of the amount outstanding on the date of default shall become immediately due and shall be a charge on the properties of the person or persons liable to pay the tax under this Act; and (ii) the person or persons liable to pay the tax under this Act shall pay a penalty equal to- (a) one per cent of the amount of tax remaining unpaid for each month for the first three months, after the expiry of the time prescribed under subsection (1) and (b) two and one half per cent of such amount for each month subsequent to the first three months as aforesaid. Explanation.-For purposes of clause (ii) the penalty payable for a part of a month shall be proportionately determined." The rest of the provisions of the section dealing with the modes of recovery is not material and is, therefore, not noticed. Section 13(1) of the Act provides that the taxes under the Act shall be paid in such manner and in such instalments and within such time as is provided by the Rules. Rule 17A provides for the detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal representative and his failure to pay the amounts within the stipulated time, a default in payment cannot and will not arise so far as he is concerned. If a legal representative has to be treated as a defaulter he has necessarily to be issued with a notice of demand. From this it follows that on the death of the assessee, law, reason and justice require the authority to issue a notice of demand to the legal representative of the deceased, preferably stating that that is the legal position brought about by section 16 of the Act. 18.. Section 16 of the Act, the scope of which I have earlier noticed, does not dispense with the requirement of issuing a notice of demand to the legal representative. Section 16 itself creates an obligation on a legal representative. An order under section 16, though desirable, is not a condition precedent to fasten liability against the legal representative. Hence, the order made by the CTO on 6th October, 1977 (exhibit A), that too against petitioner No. 1 only and not against the other petitioners cannot be construed as a notice of demand. Even otherwise, a mere demand in that notice or order cannot be construed as a notice of demand issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a Full Bench consisting of Somnath Iyer, J. (as he then was), Kalagate, j., and Sadanandaswamy, J. (as he then was), to state its view on the following question of law: "Whether, on the facts and circumstances of this case, the petitioner can be said to be an 'assessee in default' within the meaning of that expression found in section 34(3) of the Hyderabad Agricultural Income-tax Act, 1950 (Act 13 of 1950)?" On an examination of that question, the Full Bench expressed its concurrence with the view expressed by Hegde, J., and the earlier ruling of this Court in Govindaswamy's [1960] 38 ITR 197 and Abdul Rahaman's I.T.R.C. No. 4 of 1959 decided on 13th June, 1961 (Mysore High Court) cases and ruled that in the absence of a notice of demand issued against him, the petitioner was not an assessee in default. In answering the question, the Full Bench expressed thus: "That certificate so prepared exhausted itself when the father died, and so, the power for recovery of the arrears, flowing from it also perished. In that situation, the recovery of the tax from the petitioner under section 34(3) in enforcement of the liability springing from section 22(1), was not possible until he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act also. From the above discussion, two conclusions emerge and they are (1) that on the death of Neelakanta Iyer, the CTO was under a legal obligation to issue notices of demands to the petitioners (2) that without issuing notices of demands to the petitioners, the CTO cannot treat them as "assessees in default" and initiate further recovery proceedings against them. 23.. Section 16 of the Act fixes the liability on the legal representatives of the deceased assessee to the extent of the assets in their hands. The liability on the legal representatives is created by law. The notice dated 6th October, 1977, issued by the CTO to petitioner No. 1 (annexure A) does no more than inform the legal liability created by law. On the earlier conclusion, the demand therein requires to be ignored without being quashed. Hence, the notice dated 6th October, 1977, does not call for this Court's interference. 24.. In the notices dated 2nd January, 1978 (exhibits C to H), the CTO has called upon the other persons under section 14 of the Act who are alleged to be due or become payable to the deceased assessee. Section 14 of the Act is analogous to section 226 of the Indian Income-tax Act of 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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