Case: Kapurchand Shrimal Vs. Tax Recovery Officer, Hyderabad &amp; Ors

and detention.It is true that if properties of the family, movable and immovable, are to be attached proceedings may be started against the Hindu undivided family and the manager represents the family in proceedings before the Tax Recovery Officer. But by the clearest implication of the statute the assessee alone may be deemed to be in default for non-payment of tax, and liability to arrest and detention on failure to pay the tax due is also incurred by the assessee alone.The manager by virtue of his status is competent to represent the Hindu undivided family, but on that account he cannot for the purpose of Section 222 of the Act of 1961 be deemed to be the assessee when the assessment is made against the Hindu undivided family and certificate for recovery is issued against the family.6. Counsel for the Revenue invited our attention to Section 140 (b) and Section 282 (2) of the Income-tax Act, 1961 in support of his contention that when tax is assessed against the Hindu undivided family there is no distinction between the representative status of the manager of the family and his personal status. Section 140 (b) authorises the manager in the case of a Hindu undivided family to sign and verify the return of income, and Section 282 (2) provides for the mode of service of notice or requisition issued under the Act, amongst others, against a Hindu undivided family.But because the manager of a Hindu undivided family is authorised to sign and verify the return of income and a notice under the Act could be served upon him when it is addressed to a Hindu undivided family and such service is treated as service upon the Hindu undivided family for the purpose of the Act, the manager cannot be deemed to be the assessee where the income assessed is of the Hindu undivided family.The expression assessee under Section 2 (7) means a person by whom any tax or any other sum of money is payable under the Act, and includes - (a) every person in respect of whom any proceeding under the Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person; (b) every person who is deemed to be an assessee under any provisions of the Act; (c) every, person who is deemed to be an assessee in default under any provisions of the Act. For purposes of Clause (a) the person against whom any proceeding under the Act has been taken is deemed an assessee: but that necessarily postulates that the proceeding should be lawfully taken against the person before he could be deemed to be an assessee for the purpose of Section 222 or Rule 2 and Rule 73.There is no provision in the Act which deems the manager to be the assessee for the purpose of assessment and recovery of tax, when the income of the Hindu undivided family of which he is the manager is assessed to tax. Nor is there any provision enabling the Income-tax Officer or the Tax Recovery Officer to treat the manager of the Hindu undivided family as an assessee in default under the provisions of the Act.Section 160 provides for treating a person as a representative assessee, and Section 161 prescribes the liability of a representative assessee. Section 179 makes a special provision for rendering the Directors of private company in liquidation to be jointly and severally liable for the payment of tax which cannot be recovered from the assets of the private company in liquidation. The Legislature has made no such provision for recovery of tax by report to the personal property of the manager of the Hindu undivided family, or by his arrest and detention for default by the family in paying the tax due.7. Sections 276, 276A, 277 and 278 on which reliance was placed by counsel for the Revenue in support of his argument also do not assist him. These sections occur in a chapter relating to penalties, and they seek to penalise failure to carry out specific provisions mentioned therein.We are unable to hold that the expression "person" in Sections 276, 276A and 277 is used in the sense in which it is defined in Section 2 (31) of the Act. For each specific act which is deemed to be an offence under those provisions, an individual who without reasonable cause or excuse fails to do the acts prescribed by statuteor acts in a manner contrary to the statute or makes a declaration on oath which he believes to be false or does not believe to be true, is made liable to be punished. Section 278 penalises the abetment or inducing any person to make and deliver an account, statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe to be true.In the context in which the expression "person" occurs in Sections 276, 276A, 277 and 278, there can be no doubt that it seeks to penalise only those individuals who fail to carry out the duty cast by the specific provisions of the statute, or are otherwise responsible for the acts done. For the default of the Hindu undivided family, therefore, in payment of tax, the Karta cannot be arrested and detained in prison.8. The High Court, we think took a somewhat technical view in declining to allow the contention raised by the appellant in the first writ petition presented before be High Court that be was not liable to be arrested and imprisoned for non-payment of the tax arrears, since he was not an assessee, and then in treating the judgment of the High Court in the first writ petition operating constructively as res judicata in the second petition.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]7. Sections 276, 276A, 277 and 278 on which reliance was placed by counsel for the Revenue in support of his argument also do not assist him. These sections occur in a chapter relating to penalties, and they seek to penalise failure to carry out specific provisions mentioned therein.We are unable to hold that the expression "person" in Sections 276, 276A and 277 is used in the sense in which it is defined in Section 2 (31) of the Act. For each specific act which is deemed to be an offence under those provisions, an individual who without reasonable cause or excuse fails to do the acts prescribed by statuteor acts in a manner contrary to the statute or makes a declaration on oath which he believes to be false or does not believe to be true, is made liable to be punished. Section 278 penalises the abetment or inducing any person to make and deliver an account, statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe to be true.In the context in which the expression "person" occurs in Sections 276, 276A, 277 and 278, there can be no doubt that it seeks to penalise only those individuals who fail to carry out the duty cast by the specific provisions of the statute, or are otherwise responsible for the acts done. For the default of the Hindu undivided family, therefore, in payment of tax, the Karta cannot be arrested and detained in prison.8. The High Court, we think took a somewhat technical view in declining to allow the contention raised by the appellant in the first writ petition presented before be High Court that be was not liable to be arrested and imprisoned for non-payment of the tax arrears, since he was not an assessee, and then in treating the judgment of the High Court in the first writ petition operating constructively as res judicata in the second petition.