Case ID: 1343

Judgment:
Civil Appeal No. 282 of 1960. Appeal from the judgment and order dated February 15	 1956	 of the Madras High Court in Writ Petition No. 404 of 1952. K. N. Rajagopala Sastri and P. D. Menon	 for the appellant. R. Gopalakrishnan	 for the respondent. October 20. The Judgment of the Court was delivered by HIDAYATULLAH	 J. Whether the legal representative of a deceased person	 who is assessed in respect of the total income of the latter person	 as if he were the assessee	 can be ordered to pay a penalty under section 46(1) of the India Income tax Act	 is the short question that arises in this appeal. One Ebenezer died intestate on November	 22	 1945	 during his year of account which ended on March 31	 1946. He left behind him the respondent	 E. Alfred	 his son	 and eight daughters. For the assessment year	 1946 47	 the respondent was assessed under section 24B(2) of the Income tax Act	 after a notice was issued to him under s.22(2)	 ibid. The assessment was completed on March 26	 1951	 and a notice of demand was issued under section 29 of the Act. The respondent appealed against the order of assessment to the Appellate Assistant Commissioner	 but during the pendency of the appeal	 a penalty of Rs. 250/ was imposed upon 145 him under s 46(1) of the Act by the Income tax officer	 as he had defaulted in payment of tax on the due date. After the appeal was disposed of with very minor modifications	 a notice of demand was again issued to him to pay the tax on or before December 15	 1951. On his default	 a second penalty of Rs. 10	000/ was imposed upon him on March 8	 1952. The respondent then filed a petition under article 226 of the Constitution in the High Court of Madras challenging the imposition and levy of penalty imposed upon him. The High Court held in his favour	 and quashed the	 two orders imposing penalty but granted a certificate of fitness to appeal to this Court. This appeal was then filed. In reaching the conclusion that section 46(1) of the Act did not apply to a legal representative	 the learned Judges of the High Court held that a legal representative could not be said to be included within the words of that section. "when an assessee is in default in making a payment of Income tax" because of the scheme of the Act	 particularly B. 29	 where a distinction is made between "an assessee" and "other person". According to the learned Judges	 a legal representative is assessed as an assessee under a fiction in section 24B(2)	 and that fiction comes to an end when the computation of the tax Or	 in other words	 the assessment is made. The learned Judges drew distinction between the three subsections of 8. 24B	 and pointed out that sub section (1) only created a liability on the legal representative for collection of tax but did not refer to him for that purpose as an assessee and sub s.(3) which did not concern itself with collection	 did not refer to the legal representative as an assessee	 and held that the fiction in sub section (2) was created for the limited purpose of assessment	 and since that subsection also did not concern itself with collection	 the fiction could not be carried beyond assessment resulting in the determination of the tax. 146 Thereafter	 according to the High Court	 the legal representative is not an assessee within the meaning of section 29	 but can only be brought under tho words "other person"	 and inasmuch as sections 45 and 46 refer to "an assessee in default"	 the legal 3. representative cannot be treated as such and no penalty can either be imposed upon him or recovered. We are concerned with the definition of "assessee" before its amendment in 1953. That definition read as follows: "assessee" means a person by whom income tax is payable" The generality of this definition is sufficient to include even a legal representative who is to pay the tax	 though out of the assets of the deceased person. Section 24B	 which makes it legal representative liable	 is as follows: 24B. (1) Where a person dies	 his executor	 administrator	 or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to which the estate is capable of meeting the charge the tax assessed as payable by such person	 or any tax which would have been payable by him under this Act if he had not died. (2) where a person dies before the publication of the notice referred to in subsection (1) of section 22 or before he is served with a notice under sub section (2) of section 22 or section 34	 as the case may be	 his executor	 administrator or other legal representative shall	 on the serving of the notice under subsection (2) of section 22 or under section 34	 as the case may be comply therewith	 and the Income tax officer may proceed to assess the total income of the deceased person as if such executor	 administrator or other legal representative were the assessee. 147 (3) where a person dies	 without having furnished a return which he has been required to furnish under the provisions of section 22	 or having furnished a return which the income tax officer has reason to believe to be incorrect	 or incomplete	 the Income tax officer may make an assessment of the total income of such person and determine the tax payable by him 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 had he survived	 require from the executor	 administrator or other legal representative of the deceased person any accounts	 documents or other evidence which he might under the provisions of sections 22 and 23 have required from the deceased person". The scheme of the section	 which was inserted by the Second Amendment Act of 1933 and modified further by the Amendment Act of 1939 is as follows: Subsection (1) of a 24B makes	 inter alia the legal representative liable to pay out of the estate of deceased person to the extent to which the estate is capable of meeting the charge	 the tax assessed as payable by such person or any tax which would have been payable by him under the Act	 if he had not died. By this sub section	 a legal representative is made liable to pay the tax which might have been assessed but not paid by the deceased person or which might be assessed after his death. It covers all situations and contingencies and makes the liability absolute	 limited	 however	 to the extent to which the estate of the deceased is capable of meeting the charge. The subsection does not provide for issue of notices	 assessment collection or anything connected with the imposition	 levy and collection of the tax	 Subsection (2) and (3) next provide for different contingencies. Subsection (2) provides that where a person dies 148 before the publication of a general notice or before he is served with a special notice under s.22 or s.34 his legal representative shall	 on the service of the special notices comply with these notices	 and the Income tax officer may proceed to assess the total income of the deceased person as if the legal representative were the assessee. Sub section (3) provides that where a person dies after he has been required to furnish a return but without having furnished such return	 or where he has furnished the return but the Income tax officer has reason to believe it to be incorrect	 the Income tax officer may make the assessment of the total income of such deceased person	 and determine	 the tax after serving such notices	 as may be required under s.22 or 23	 upon the legal representative of the deceased person to produce the accounts	 documents or other evidence. In the present case	 the matter fell to be governed by the second sub section	 because Ebenezer died before the end of his year of account. The service of the notice upon the respondent and his assessment	 as if he were the assessee	 were made under the second sub section. By reason of this assessment	 the respondent became liable under the first sub section to pay out of the estate of Ebenezer the tax assessed	 to the extent to which Ebenezer 's estate was capable of meeting the charge but he himself was deemed to be the assessee. No doubt	 the fiction made the respondent an assessee for the purpose of assessing the total income of Ebenezer. But the question is whether the fiction came to an end after the assessment	 so that he remained a mere debtor thereafter to the Department. The answer to this question would determine the further application of the other sections of the Act. When a thing is deemed to be something else it is to be treated as if it is that thing	 though	 in fact	 it is not. The original assessee being dead before the notice	 either general or 149 special	 to him	 he could not be treated as all assessee	 and the process of the Act is	 by the fiction made available against a different person like a legal representative	 who is fictionally deemed to be an assessee for purposes of assessment. The word "assessment" bears different meanings	 and in one sense	 it comprehends the entire process of computation and levy of the tax. It is in this sense that the legal representative becomes an assessee by the fiction	 and it is this fiction which has to be fully worked out	 without allowing the mind "to boggle" as was said in Commissioner of Income Tax vs Teja Singh(1) applying the dictum of Lord Asquith in East End Dwellings Co.	 Ltd. vs Finsbury Borough Council(2). If we turn to the definition of "assessee"	 it says that an assessee means a person by whom income tax is payable. A legal representative who by fiction	 is decreed to be an assessee therefore	 comes within this definition	 because he is a person by whom income tax is payable	 though out of the assets left by a deceased person. The assessment of the legal representative is then made under section 23 of the Act	 and he has the right to appeal under B. 30	 which he would not have	 if he ceased to be an assessee after the determination of the tax. We are not concerned in this case with the position of the legal representative under the third sub section of s.24 B	 and are not required to consider what his position would be	 if he made a default in the payment of the tax. The fiction is enacted at least for the purpose of sub section (2)	 and it is to that subsection that we are confined in this case. Nor can the fiction in that sub section be limited by provisions of law for a totally different situation. Under s.45	 if a notice of demand is issued under s.29 on an assessee and has not been complied with the assessee is deemed to be in default	 and under section 46 (1)	 if the assessee is in default	 a penalty	 can be imposed. All these stages the respondent (1) (1959) Supp. 1 S.C.R. 394. (2) 	 132. 150 went through in this case. He was himself an assessee qua the assets and liability to tax	 of Ebenezer he was	 therefore	 an assessee in default and liable to the imposition of penalty for this default. The question is whether s.29	 which makes a distinction between an assessee and "other person"	 makes any difference. The High Court as well as the learned counsel for the respondent (who pressed upon us the reasons of the High Court) referred to the words of s.29 where in addition to an "assessee" liable to pay the tax occur the words "other person" liable to pay such tax	 and observed that the respondent would fall to be governed by the words "other person" liable to pay such tax and not by the words "the assessee" liable to pay such tax. The High Court reasoned	 therefore	 that the words "an assessee" in sections 45 and 46 in their application are limited to an assessee	 who is assessed on his own behalf and not "other person"	 who is not an assessee. This distinction	 it observed	 must be borne in mind in interpreting the word "assessee" used in sections 45 and 46	 and so construing	 limited the word "assessee" in those two sections to an assessee proper. The words "other Person" cannot apply to a legal representative	 if he is an assessee by fiction	 and the section has to be worked out to its logical conclusion. If he falls within the word "assessee '	 as has been shown above	 he does not fall within the words "other person" and it is not necessary to find in this case what persons are there meant to be included. In our opinion	 the penalty could be imposed on respondent as an assessee. The appeal thus succeeds	 and is allowed with costs here and in the High Court. Appeal allowed.

Summary:
One died intestate during his year of account Leaving g behind him his son A the respondent and eight daughters. After notice under section 22 (2) of the Income Tax Act was issued	 A was assessed under section 24 (2) of the Act and notice of demand was issued under section 29. The respondent appealed to the Appellate Assistant Commissioner	 but during the pendency of the appeal a penalty was imposed upon him under section 46 (1) of the Act by the Income tax officer as the respondent had defaulted in payment of tax on the due date. After the appeal was disposed of a notice of demand was again issued to the respondent to pay the tax. On respondent 's default	 a second penalty was imposed upon him. Respondent challenged this order by writ. The High Court quashed the order inter alia holding that section 46 (1) did not apply to a legal representative as he was assessed as an assessee under a fiction in section 24B (2) and that fiction came to an end when the assessment was made	 for the fiction was created for the limited purpose of assessment	 and since that subsection was not concerned with collection	 the fiction could not be carried	 beyond assessment resulting in the determination of tax. The question was whether the fiction came to an end after the assessment	 so that the Legal representative remained a mere debtor to the department or could he be ordered to pay penalty under section 46 (1) of the Act. ^ Held	 that the fiction made the respondent an assessee for the purpose of assessing the total income of E. That fiction did not come to an end after the assessment. When a thing is deemed to be something else	 it is to be treated as if it is that thing	 though	 in fact it is not E being dead before the notice	 either general or special	 to his	 could not be treated as an assessee	 and the process of the Act	 was	 by fiction	 made available against the legal representative who was the assessee for purpose of assessment which meant the entire process of computation and law of the tax and the fiction had to be worked out to its logical conclusion. The definition of 144 the word assessee being defined in the Act as a person by whom income tax is payable	 the legal representative came within the definition and his assessment being made under section 23	 he had also a right of appeal under section 30 since he did not cease to be an assessee after the determination of the tax at least for the purpose of sub section (2) of section 24 B	 and section 29 applied to the legal representative in his position as the assessee. Commissioner of Income tax vs Teja Singh	 [1959] Supp. 1 S.C.R. 394 and East End Dwellings Co. Ltd. vs Finsbury Borough Council	[1952] A.C. 109	 referred to.