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TMI Blog1964 (11) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1959, prior thereto executing her last will dated April 8, 1959. The petitioners are the joint executors appointed under that will. The deceased left a large estate amounting to about ₹ 9 lakhs and odd. For the financial year expiring on 31st October, 1959, i.e., the assessment year 1960-61, the petitioners as executors were assessed to pay wealth-tax in respect of the estate left by the deceased and there is no dispute between the parties as regards that assessment. For the next financial year expiring on 31st October, 1960, i.e., the assessment year 1961-62, the Wealth-tax Officer served on the executors a notice dated August 8, 1961, under the provisions of section 14(2) of the Act requiring that a return should be filed within 35 days in connection with the wealth-tax payable by the estate of the deceased. The notice is addressed as follows: To Late Smt. Sohadradevi N. Daga, Through legal representatives and heirs * * * * The petitioners filed a return in response to the notice, and by the (impugned) assessment order dated March 25, 1963, the net value of the wealth of the deceased was declared to be ₹ 9,46,609. In the assessment order, the nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative of a deceased individual. Section 21 relates to assessment when assets are held by courts of wards, administrators-general, trustees, etc. Before referring to the provisions in diverse sections, it is relevant to point out the definitions of the words assessee , assets and net wealth as contained in section 2. Assessee has been defined in clause (c) of section 2 to mean a person by whom wealth-tax or any other sum of money is payable under the Act, and includes every person in respect of whom any proceedings under the Act have been taken for the assessment of the value of his assets. Clause (e) defines assets to mean property of every description, movable or immovable...Clause (m) defines net wealth to mean the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets...belonging to the assessee on the valuation date including assets required to be included in his net wealth as on that date under this Act... Under section 4, in computing the net wealth of an individual, it is directed to include the wealth of such parties as the assessee's wife, minor child, etc. We are not concerned with those provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g furnished a return which the Wealth- tax Officer has reason to believe to be incorrect or incomplete, the Wealth- tax Officer may make an assessment of the net wealth of such person and determine the wealth-tax payable by the person on the basis of such assessment, and for this purpose, may, by the issue of the appropriate notice which would have had to be served upon the deceased person if he had survived, require from the executor, administrator or other legal representative of the deceased person any accounts, documents or other evidence which might under the provisions of section 16 have been required from the deceased person. It appears to us that on a true construction of the provisions of section 3 read with the definitions of the various phrases which we have referred to above and also read with the provisions in sections 4 and 5 relating to ascertainment and computation of net wealth for the purposes of wealth- tax, it is clear that the assessee who is an individual is taxed in respect of wealth of his ownership. There is no direct provision in these sections for taxing a deceased individual with wealth-tax. There is no direct provision in respect of assessing wealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue in accordance with the provisions in sections 3, 4 and 5 and other relevant provisions of the Act. Section 19, to repeat, does not create any new liability. Sub-section (1) of that section is meant only to provide for the liability of the executor, administrator or other legal representative of a deceased person to pay the tax and/or amounts assessed as payable by such person. In connection with this question, it is necessary to remember that having regard to the provisions in the Indian Succession Act and otherwise also it is well-settled that upon the death of an individual he ceases to own properties of any kind. The ownership of the estate left by a deceased person in law becomes vested, when such person dies intestate, in his heirs and legal representatives, and in other cases when he dies testate, in the executors. The result is that a deceased person does not from and after the moment he dies own properties of any kind. It is true that having regard to the provisions of the Indian Succession Act, the estate left by such person must be so administered that preferential and other creditors of such person must be paid out of the estate the debts due to them in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he financial years during which such liability continued. That construction is, prima facie, not justified having regard to the language in the section. The provisions in sub-section (2) when read with sub-section (1) clearly indicate that the provisions in this section were to enable the revenue to recover wealth-tax in respect of the net wealth of the deceased person for the financial year in which the person died. Though such deceased person ceased to be the owner of all his properties at a moment which was not the end of the financial year, by legal fiction the tax was intended to be levied on the footing that he continued to own the estate left by him during the complete duration of the relevant financial year. The executors, administrators and other legal representatives were made liable to pay such wealth-tax for that relevant financial year from out of the estate left by the deceased person. In this connection, it is relevant to point out that the provisions in section 24B of the Income-tax Act, 1922, are similar to the provisions in section 19 of the Wealth-tax Act. There is no substantial difference between the provisions in sub-section (1) of both these sections. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e previous or the account year cannot be called income received by the person deceased. The provisions of section 24B do not extend to tax liability of the estate of a deceased person beyond the previous or the account year in which that person dies. Reference is then made to certain decisions which need not be referred to here. Their Lordships further observed at page 66(1): The correct position is that apart from section 24B no assessment can be made in respect of the income of a person after his death. After making the above observation, the court quoted a portion of the judgment in the case of Ellis C. Reid v. Commissioner of Income-tax [1963] 48 I.T.R. 59, 66 and the further observations run as follows [1930] 5 I.T.C. 100: The individual assessee has ordinarily to be a living person and there can be no assessment on a dead person and the assessment is a charge in respect of the income of the previous year and not a charge in respect of the income of the year of assessment as measured by the income of the previous year....By section 24B the legal representatives have, by fiction of law, become assessees as provided in that section but that fiction canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the net wealth of a deceased individual beyond the financial year in which such person dies. His executors, administrators and legal representatives are by legal fiction made liable to pay wealth-tax for that particular financial year in the next assessment year. There is no further liability to pay wealth-tax attached to the estate left by a deceased individual and continuing in the hands of the executors, administrators or other legal representatives. It may be pointed out that section 21 of the Act refers to trustees appointed under a trust declared by a duly executed instrument in writing, whether testamentary or otherwise. The section provides for the method and manner in which wealth-tax in respect of estates held by individual trustees may be assessed. Sub-section (2) of that section provides that the provisions in sub-section (1) of section 21 will not prevent direct assessment of the persons on whose behalf the assets are held by a trustee or other persons mentioned in sub-section (1) of section 21. We are however not concerned with the provisions of this section in this petition. It is abundantly clear that the above assessment order has not been made under the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the respondents it was contended that the order passed by the Commissioner was an administrative order and could not be corrected by the court in the writ petition that was before the court. There are observations of the court in that case that the court had no jurisdiction to issue a writ of certiorari for quashing the order passed by the Commissioner. The court also observed that the tax that had been levied did not fall within the mischief of article 265 because the assessment order had been passed by the Income-tax Officer and the collection would proceed on the authority of that order. Unless the order passed by the Income-tax Officer and confirmed by the Commissioner in his order, which was impugned in the case, was quashed, there was no scope for the grant of a writ of mandamus against the authorities who would proceed to recover the amount of income-tax from the petitioner. The court also observed that the order of the Commissioner was an administrative order and could not be set aside. In this very connection, we have been referred to the decision of the Supreme Court in Calcutta Discount Co. v. Income-tax Officer [1961] 41 I.T.R. 191 ; [1961] 2 S.C.R. 241; A.I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under article 226 of the Constitution clear and complete jurisdiction to quash and set aside even an administrative and/or executive action in cases where it is apparent on the face of the record that the action is completely without jurisdiction at all. This court has repeatedly asserted that in matters where there is apparently no jurisdiction, the court would under article 226 of the Constitution intervene, so as to protect a citizen. It appears to us that in the case of Dhunjishaw Pestonji Ratanji Cassad v. Commissioner of Income-tax [1962] 46 I.T.R. 1023, the question did not relate to absence of jurisdiction at all, but the substance of the contention of the petitioner was that he was entitled to exemption from inclusion of the income derived by the Byramji Mining Combine Limited in his own private income having regard to the provisions in the notifications quoted in that decision. It was not his contention that the Income-tax Officer had no jurisdiction at all to proceed to tax the assessee. The question that has arisen in this case relates to total absence of jurisdiction to assess wealth-tax in respect of the estate left by the deceased, Smt. Sodradevi, in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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