Case: D.N. Dutta Vs. Income Tax Investigation Commission

the Commission contained in their report of November 16, 1949. We have verified from the records of this Court that the only order made by this Court was refusing to grant special leave and there is no such observation as the appellant has mentioned in his appeal, affidavit and statement of case. The appellant then obtained special leave against the report of the Commission dated November 16, 1949 and the orders made thereon and that is how this appeal has come before us.5. It is unnecessary to decide whether in view of the High Courts refusal to direct a case to be stated on the questions of law raised or in view of the refusal by this Court to grant special leave against the order of the High Court the appeal is competent because in our opinion there is no substance in the appeal. It was argued on behalf of the appellant that the effect of S. 24 B(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. Consequently any composition made with any one of the legal representatives, in this case with Kamini Kumar Dutta and his branch of the family operated as a discharge of liability of all the heirs and there was no further liability left which could be foisted on to the appellant or attach to any assets which might come into his possession hereinafter. Reliance was placed on certain decided cases to support that argument. The first case is Shaikh Sahed v. Krishna Mohan Basak, 24 Cal LJ 371 : (AIR 1917 Cal 829). In that case a co-sharer landlord brought a suit for arrears of rent against the heirs of the original tenant of whom two appeared and the third did not. A money decree was passed against the absent heir for the entire claim but it was held by the High Court that the suit being against the heirs they must be taken to have been recognised as one body of registered tenants holding a single holding and it was not a case of a joint contract which could be enforced against any of the joint contractors and S. 43 of the Contract Act was inapplicable where parties became jointly interested by operation of law in a contract by a single person. The next case relied upon i.e. Kasi Kinkar Sen v. Satyendra Nath Bhadra, 15 Cal WN 191 was a case under S. 43 of the Contract Act where it was held that whether a promise is joint or several is a question of construction depending upon the intention of the parties to the contract and where several persons jointly inherit a tenancy one of the heirs cannot be made separately liable for the entire rent. Reference was also made to Salmonds Jurisprudence, 11th Ed., page 482.6. In our opinion these cases have no application to the facts of the present case, because no question of enforcing any contractual liability, either against any of the contracting parties or their heirs, arises here.The tax payable in respect of the concealed income is indeed one, but the liability of the appellant and the co-heir must be determined in accordance with the provisions of the Act.Under S. 8(2) of the Act, on the report of the Investigation Commission the Central Government had the power to direct proceedings to be taken under the Income-tax Act against the person to whose case the report related. In the present case the person to whose case the report related was no doubt the deceased and therefore the order made under that Section was against his heirs with a view to assess or reassess the aggregate income of Rs. 58,24,023. The application for composition was made only by Kamini Kumar Dutta and his branch of the family and that falls under S. 8A(1) of the Act. It provides that in any case pending before the Commission if any person applies to it at any time to have the case or any part thereof settled in so far as it relates to him the Commission shall, if it is of the opinion that the settlement applied for may be approved, refer the matter to the Government and if the Government accepts the terms, the Commission shall have the terms thereof recorded and the investigation so far as it relates to matters covered by such settlement shall be deemed to be closed.This Section obviously means that the settlement is with and in regard to the person who offers the settlement and the investigation is closed in regard to him alone. It is this provision which is applicable and operates in cases covered by the Act and no other principle arises in such cases.7. 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 realised 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.

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

Explanation:
0[ds]5. It is unnecessary to decide whether in view of the High Courts refusal to direct a case to be stated on the questions of law raised or in view of the refusal by this Court to grant special leave against the order of the High Court the appeal is competent because in our opinion there is no substance in theour opinion these cases have no application to the facts of the present case, because no question of enforcing any contractual liability, either against any of the contracting parties or their heirs, arises here.The tax payable in respect of the concealed income is indeed one, but the liability of the appellant and themust be determined in accordance with the provisions of the Act.Under S. 8(2) of the Act, on the report of the Investigation Commission the Central Government had the power to direct proceedings to be taken under theAct against the person to whose case the report related. In the present case the person to whose case the report related was no doubt the deceased and therefore the order made under that Section was against his heirs with a view to assess or reassess the aggregate income of Rs. 58,24,023. The application for composition was made only by Kamini Kumar Dutta and his branch of the family and that falls under S. 8A(1) of the Act. It provides that in any case pending before the Commission if any person applies to it at any time to have the case or any part thereof settled in so far as it relates to him the Commission shall, if it is of the opinion that the settlement applied for may be approved, refer the matter to the Government and if the Government accepts the terms, the Commission shall have the terms thereof recorded and the investigation so far as it relates to matters covered by such settlement shall be deemed to be closed.This Section obviously means that the settlement is with and in regard to the person who offers the settlement and the investigation is closed in regard to him alone. It is this provision which is applicable and operates in cases covered by the Act and no other principle arises in such cases.7. 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,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 realised 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.