First Additional Income-Tax Officer,... vs Susheela Sadanandan And Anr.

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 29 October, 1964

Coram: J.C. Shah, K. Subba Rao, S.M. Sikri

In this appeal filed by special leave, the Court noted that it was directed against the judgment and order of the Kerala High Court which had issued writs under article 226 of the Constitution against the appellant, who was the First Additional Income‑Tax Officer, and the second respondent. The factual background began with the death of S. P. Sadanandan, a resident of Kozhikode, who died on 10 July 1948 leaving a registered will dated 23 June 1948. The will appointed his widow, who is the first respondent in this case, his eldest son Earnest Devadas Sadanandan, and a chartered accountant named Paramasivan of Kozhikode as executors. The family of the deceased comprised his widow, two sons, three daughters and a grandson through a daughter who had previously died, and the will made various bequests to these members. The tax authorities had assessed the income of S. P. Sadanandan for the years 1945‑46 through 1949‑50. After his death, the Income‑Tax Officer discovered that the deceased had evaded a substantial amount of tax. Consequently, on 20 March 1954, notices were issued under section 34 of the Income‑Tax Act, 1922, addressed to “late S. P. Sadanandan by his legal heirs E. D. Sadanandan and others, Kozhikode.” In response to those notices a return was filed in which the assessee was described as “late S. P. Sadanandan by the legal heirs E. D. Sadanandan and others.” The return bore the signature of E. D. Sadanandan, who was identified as an individual legal heir. Subsequently, on 17 August 1954, the Income‑Tax Officer of Coimbatore made an order of reassessment for the same assessment years and described the assessee in that order as “Late S. P. Sadanandan represented by legal heirs and legal representatives Sri E. D. Sadanandan and J. G. Sadanandan and others, Kozhikode.” The first paragraph of the assessment order expressly stated: “The assessee in this case is Shri S. P. Sadanandan, who died on July 10 1948. After his death he is represented by his sons, namely, E. D. Sadanandan and J. G. Sadanandan, and the assessee’s wife, Mrs. S. P. Sadanandan.” The Court observed that these facts were taken from the High Court’s judgment, as the original documents on which the High Court relied were not placed before the Court. E. D. Sadanandan appealed against the reassessment order to the Appellate Assistant Commissioner, Coimbatore, and those appeals were finally dismissed on 20 June 1957. Meanwhile, on 15 September 1956, the second respondent issued two notices to the first respondent: one notice of attachment under section 27 of the Madras Revenue Recovery Act II of 1864, attaching certain properties for the recovery of a tax amount, and another notice of sale of land issued under section 36 of the same Act, declaring that most of the attached properties would be sold on 8 December 1956. Although the notices directed the sale of the properties, for reasons not detailed in the record the properties were not sold. Later, on 15 November 1957, fresh notices under sections 27 and 36 of the Act were issued, demanding payment of the tax amount by 9 February 1958 and threatening sale of the attached properties on 10 February 1958 if the amount remained unpaid. Following these proceedings, the first respondent filed Original Petition 70 of 1958 under article 226 of the Constitution in the High Court of Kerala at Ernakulam, seeking to quash the attachment notices and to restrain the second respondent from taking any further steps with respect to the attached properties.

On September 15, 1956 the second respondent served the first respondent with two separate notices under the Madras Revenue Recovery Act II of 1864. The first notice, issued under section 27, demanded payment of the sum of Rs 13,09,352‑3‑0 and warned that, if the amount remained unpaid on or before December 7, 1956, the properties that had been attached would be sold. The second notice, issued under section 36, announced that most of the attached properties would be sold on December 8, 1956. For reasons that are not specified in the record, the sale of the properties did not take place pursuant to those notices. Subsequently, on November 15, 1957 the second respondent issued fresh notices, again invoking sections 27 and 36 of the same Act, and required the amount to be paid on or before February 9, 1958. The fresh notices further stipulated that, should the amount remain unpaid, the attached properties would be sold on February 10, 1958. In response to these actions, the first respondent filed Original Petition No. 70 of 1958 under article 226 of the Constitution in the High Court of Kerala at Ernakulam, seeking to quash the attachment notices and to restrain the second respondent from taking any steps to recover the claimed tax. A Division Bench of that High Court allowed the petition on the ground that the notices issued under section 34 of the Act had not been served on all executors named in the will; consequently, the deceased was not properly represented in the assessment proceedings and the assessment order was held to be void. The present appeal arose out of that judgment.

The revenue side was represented by counsel who raised four specific points before the Supreme Court. First, counsel argued that the High Court should have dismissed the writ petition in exercise of its discretion because the matters raised involved complicated questions of fact and law that could not be adequately resolved in a summary proceeding under article 226. Second, counsel maintained that, based on the facts stated and omitted in the affidavit, the petitioner had disclosed no right to relief, and therefore the petition should have been dismissed at the threshold stage. Third, counsel contended that, irrespective of whether a will existed or the estate was intestate, the notices served on E. D. Sadanandan on behalf of all legal representatives of the late S. P. Sadanandan were sufficient to sustain the assessment against the estate. Fourth, counsel submitted that, in any event, the assessment order would be enforceable against E. D. Sadanandan, and that the High Court’s order, which was framed in very broad language, required clarification so that it would be confined solely to the claim of the first respondent. The Court noted that the first of these points had not been raised before the High Court and found no merit in the contention. The Court also observed that the first respondent’s grievance was that, under the color of an assessment order to which she was not a party, her property was being attached and slated for sale through a coercive process.

In this case, the State was alleged to have threatened to violate the petitioner’s fundamental right guaranteed by article 19(1)(f) of the Constitution, and consequently the petitioner sought the assistance of the High Court to issue a writ protecting that right. The Court has repeatedly held that the presence of an alternative remedy does not preclude the issuance of an appropriate writ under article 226 of the Constitution when a fundamental right is at stake. Accordingly, the High Court was correct in disposing of the petition on its merits.

The next issue before the Court was whether the reassessment orders issued pursuant to the notices issued under section 34 of the Act were void because they failed to comply with the requirements of sub‑section (1) and sub‑section (2) of section 24B of the Act. Sub‑section (1) of section 24B provides that the executor, administrator, or any other legal representative of a deceased person is liable to pay, out of the estate of the deceased, any tax that would have been payable by the deceased if he had not died. This liability, however, is limited to the extent that the estate is capable of meeting the charge. Sub‑section (2) states that if a person dies before the publication of the notice referred to in sub‑section (1) of section 22 or before being served with a notice under sub‑section (2) of section 22 or section 34, the Income‑tax Officer may serve the notice on the administrator, executor, or other legal representative of the deceased and may assess the total income of the deceased as if that legal representative were the assessee; in other words, for assessment purposes the legal representative stands in the place of the deceased.

Section 13(2) of the General Clauses Act (Central Act X of 1897) declares that words in the singular include their plural also. Consequently, the expression “legal representative” in section 24B is to be understood as encompassing a plurality of legal representatives. As observed by Mahajan J., then, in Tirtha Lal v. Bhusan Moyee Dasi, where two or more legal representatives exist, all must be impleaded to make the representation of the estate complete. This principle has been applied to co‑executors in decisions such as Muniyammal v. Third Additional Income‑tax Officer, Salem and Vedakannu Nadar v. Nanguneri Taluk Singikulam Annadana Chatram. The result of this line of authority is that when a deceased person executes a will appointing more than one executor, or when a deceased person dies intestate leaving more than one heir, the Income‑tax Officer must assess the total income of the deceased against all the executors or legal representatives, as the case may be.

Therefore, the question that arose was whether the Income‑tax Officer had indeed proceeded to reassess the total income of the deceased against all his legal representatives. Unfortunately, the affidavits filed by the parties before the High Court and the material placed before it do not disclose the essential facts required to give a definitive answer to that question.

The material filed by the parties before the High Court and the documents placed before it do not disclose the essential facts required to give a definite answer to the question. It is not contested that S. P. Sadanandan died leaving a will. That will appointed three executors: his widow, Mrs. Suseela Sadanandan, who is the first respondent; his eldest son, E. D. Sadanandan; and a registered accountant and auditor of Kozhikode named Paramasivan. The will further indicates that the deceased had another minor son, two minor daughters and a minor grandson through a predeceased daughter. According to the will, the property of the deceased vested in the three executors, who were directed to administer the estate in accordance with the terms of the will. It is admitted that the will was not probated. Section 211 of the Indian Succession Act provides that the executor of a deceased person is his legal representative for all purposes and that all the property of the deceased vests in the executor as such. Section 13 of the General Clauses Act further provides that where there is more than one executor, all of them are legal representatives of the deceased. Consequently, for the purpose of section 24B(2) of the Income‑Tax Act, all of the executors may represent the estate of the deceased. However, because no probate was obtained, section 213(1) of the Indian Succession Act bars the establishment of any rights as executor in any court of justice, as indicated in the decisions of Ganshamdass Narayandass v. Gulab Bi Bai and Hem Nolini v. Isolyne Sarojbashini. The impact of a non‑probated will on the status of an executor has been the subject of many decisions in this country, but a detailed discussion of those decisions is unnecessary in the present context. In Williams on Executors and Administrators, Vol. I, 14th Edition, page 58, it is observed: “Where an executor is appointed by a will, he derives title from the will, and the property of the deceased vests in him from the moment of the testator’s death, so that probate is said to have relation to the time of the testator’s death. Thus, though he cannot rely on his title in any court without production of probate, probate is merely operative as the authenticated evidence of the executor’s title.” The same author further explains on page 64: “But a creditor of a deceased debtor cannot sue a person named as executor in the will unless he has either administered, that is, intermeddled with the estate, or proved the will, and consequently, the seizure and sale of part of the testator’s assets, under an execution founded upon a judgment in an action so constituted, was ineffectual to bind the testator’s estate.” The definition of a legal representative under section 2(11) of the Code of Civil Procedure aligns with this principle, describing a legal representative as a person who in law represents the estate of a deceased person and includes anyone who intermeddles with that estate.

It was explained that the term “legal representative” as used in section 2(11) of the Code of Civil Procedure means a person who represents the estate of a deceased individual, and that the definition expressly embraces any person who intermeddles with that estate. The Court noted that jurisprudence holds that a person who intermeddles with a deceased person’s estate, even if the intermeddling concerns only a portion of the estate, qualifies as a legal representative within the meaning of the statutory provision and is liable only to the extent of the property that he has taken possession of. By the same reasoning, the Court observed that where all the executors or only some of the executors have administered the deceased’s estate without having obtained probate, each of those executors who has actually administered the estate may be treated as a legal representative of the deceased and may be held liable for the portion of the property that he has taken into his possession. The Court further stated that, had it been proven that E. D. Sadanandan alone had managed the entire estate, a conclusion could have been drawn that he alone was the legal representative of the deceased and therefore he alone represented the estate in the assessment proceedings. However, the Court pointed out that the parties failed to make a serious attempt before the High Court to place before it the necessary material showing that all or some of the executors, although they had not obtained probate of the will, had intermeddled with the estate either wholly or in part. The Court then referred to a large body of authority which holds that when a plaintiff bona‑fide impleads one of the legal representatives as the representative of a deceased party’s estate, and that representative actually represents the estate, any decree obtained in that suit binds the other legal representatives of the deceased as well. The Court indicated that a full survey of the many decisions on this point was unnecessary because a recent decision of this Court, Daya Ram v. Shyam Sundari, had already summarised the law. In that decision, Justice Rajagopala Ayyangar, speaking for the Court, explained that the legislative intent behind the reference to “legal representatives” was not to require that every single legal representative of the deceased be formally brought on record for a suit or appeal to be properly constituted. He observed that the prevailing view of the High Courts is that if a plaintiff or appellant, after a diligent and bona‑fide enquiry, identifies the legal representatives of a deceased defendant or respondent and brings them on record within the statutory time limit, the suit or appeal does not abate; the impleaded legal representatives sufficiently represent the estate, and a decision rendered with them on record binds not only those impleaded but the entire estate, including those representatives who were not formally brought before the court. The Court concluded that, although this principle was originally articulated in the context of suits and appeals, it is of general application. Consequently, the same principle could be applied to the present proceedings.

The judgment observed that the principle earlier explained could not be applied to the assessment of income that arose from the estate of a deceased person when the estate was held by his legal representatives. It was noted that no documentary material had been placed before the High Court for consideration. The Income‑tax Officer, who had filed the affidavits, was found to have had no personal knowledge of the circumstances that prevailed at the time the assessment was made. The judgment pointed out that more substantive material could have been produced so that the court could determine whether the Income‑tax Officer had acted in good faith when he served the notices solely on E. D. Sadanandan, on the ground that this individual was the executor who interfered with the estate and was actually managing it. Further, the notices issued under section 34 of the Act were addressed to “Late S. P. Sadanandan by his heirs E. D. Sadanandan and others, Kozhikode.” The record before the court did not reveal how the proceedings had been conducted, who had represented the estate, or whether the other executors and legatees had expressly consented to or acquiesced in that representation. Although the notices had been served only on one executor, the proceedings might nevertheless demonstrate that the estate was properly represented by E. D. Sadanandan with the express or implied consent of the other executors and heirs; the judgment stated that this issue was a factual question that required decision on the basis of relevant evidence. The judgment further noted that even if the will had been disregarded, the question remained whether the Income‑tax Officer had acted in good faith and whether the estate had been properly and effectively represented by one or more of the deceased’s legal representatives. Moreover, the judgment raised the question of what effect the non‑service of notice on some legal representatives would have on the enforceability of the assessment order against the portion of the estate that was in the possession and management of E. D. Sadanandan. It was observed that counsel for both sides had advanced arguments on hypothetical and alternative bases, but that, except for the extremely vague affidavit filed by the Income‑tax Officer and the equally unhelpful affidavit filed by the respondent, no material had been placed before the court. The records of the income‑tax proceedings that the High Court judges had relied upon were also unavailable. Because of the scanty material, the court found it impossible to reach any definite conclusion on any of the points raised. Consequently, with some reluctance, the order of the High Court was set aside and the matter was remanded for fresh disposal. The parties were directed to be given an opportunity to file fresh affidavits and to place all relevant material before the High Court so that it may reach a definitive conclusion on the issues, including whether E. D. Sadanandan was in possession and management of the entire estate of his father and, if so, whether he qualified as a legal representative within the meaning of section 24B of the Income‑tax Act.

In the matter, the Court set out a series of specific questions that the High Court was to consider. First, it asked whether D. Sadanandan had been in possession of and had managed the entire estate of his father, and if that were true, whether he qualified as a legal representative of his father within the meaning of section 24B of the Income‑tax Act. Second, the Court inquired whether, even if he had dealt only with a portion of the estate, the Income‑tax Officer had honestly regarded him as the estate’s representative and consequently assessed the estate’s income as though it were in his hands. Third, the Court sought to determine whether E. D. Sadanandan, in fact, had acted as the estate’s representative and whether the other executors and representatives had expressly or impliedly accepted his role as such. Fourth, the Court questioned whether the first respondent, who had not been a party to the assessment proceedings, could challenge the enforceability of the final assessment order that had been made against E. D. Sadanandan. The Court then clarified that it had not reached a final opinion on any legal or factual question presented in the case and that any observations it had offered were intended only as guidance for the High Court, which retained full freedom to examine all the parties’ contentions without being constrained by those observations. Finally, noting that the appellant had, to a considerable degree, been negligent in raising the matter, the Court directed the appellant to bear the costs of the first respondent in this Court, while the costs incurred by the High Court would be borne by the party who ultimately succeeded there.