Commissioner of Income Tax vs Mrunalinidevi Puar of Dhar

D.A. Mehta, J.—The Tribunal, Ahmedabad Bench ''B'' has referred the following three questions u/s 256(1) of the Income Tax Act, 1961 (the Act) at the instance of the Commissioner of Income Tax (CIT), Bhopal (MP).

(1) Whether, on the facts and in the circumstances of the case, the assessee being the wife and sole surviving successor and legal heir has to be assessed in respect of the income arising to her from the properties of her late husband Shri Anandrao Puar as per the provisions of Section 159 or as per the provisions of Section 168 of the Act.

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified, in relying on the judgment of the Supreme Court in the case of Navnit Lal Sakarlal Vs. Commissioner of Income Tax, , in directing deletion, from assessee''s income, of the sum of Rs. 12,72,790 for assessment year 1981-82 and Rs. 99,000 for assessment year 1982-83 which represented income arising from the properties of the assessee''s late husband ?

(3) Whether, on the facts and in the circumstances of the case, the income from the properties of late Shri Anandrao Puar for each of the assessment years 1981-82 and 1982-83 was rightly deleted by the Tribunal from the personal/individual assessment of the assessee (wife of the deceased) for the reason that the said income has been assessed by the Income Tax Officer, Indore on the assessee as an executor of the estate of the deceased person in accordance with the provisions of Section 168 of the Income Tax Act, 1961 ?

The assessment years involved are 1982-83 and 1981-82. The relevant accounting period being years ended on 31-3-1982 and 31-2-1981 respectively. Before adverting to further facts it is necessary to record that initially the assessing officer falling within the Commisionerate, Baroda was having jurisdiction over the assessee but between the point of time the Tribunal decided the appeals and the revenue preferred reference applications, the jurisdiction of CIT, Baroda had been divested and CIT, Bhopal was vested with the jurisdiction. This fact would assume importance in light of the view that the court is inclined to adopt.

The dispute between the parties for the years under reference is as to whether income arising from properties left behind by late husband of the assessee is to be assessed in hands of the assessee in her individual capacity, as claimed by the revenue; or in hands of the assessee as an executor of the estate of the deceased, as claimed by the assessee. Deceased Anandrao Puar expired on 25-4-1980 without executing a will. He was survived by the assessee, widow of the deceased, as his only legal heir.

The stand of revenue was that the income arising from the estate of the deceased had to be taxed in hands of the assessee as an individual considering that deceased had died intestate and the assessee was the only legal heir. The assessment made by the assessing officer was confirmed by Commissioner (Appeals) but has since been reversed by the Tribunal. The reasons which have weighed with the Tribunal are that the assessee, in the capacity as an executor of the estate, has been assessed on substantive basis as an executor of the estate of her late husband both under the wealth-tax and Income Tax by the assessing officer, Indore for assessment years 1981-82 to 1987-88. That the administration of the estate was not complete during the assessment years under appeal before the Tribunal. Placing reliance on the Apex Court decision in case of Navnit Lal Sakarlal Vs. Commissioner of Income Tax, as well as two other High Court decisions, the Tribunal has come to the conclusion that the assessee individual is not required to be assessed in respect of the income arising from the estate of late Anandrao Puar.

Mr. B.B. Naik, learned standing counsel for the applicant revenue has made various submissions based on different decisions of High Courts to contend that there is a distinction between intestate and testate succession and that the provisions of Section 168 of the Act and Section 19A of the Wealth Tax Act, 1957 are applicable only in case of a person who has expired after executing a will and cannot be applied in case of intestate succession. Though various authorities have been cited in support of the submissions made it is not necessary to enter into any discussion as regards the same for the reasons that follow hereinafter.

Admittedly, between the same parties, viz. CIT, Bhopal and the assessee the matter had been carried before the High Court of Madhya Pradesh, Indore Bench and the said High Court has after relying on the Apex Court decision in case of Navnitlal Sakarlal (supra) came to the conclusion that the assessee as an individual can be charged to wealth-tax only after the estate has been fully administered and the residue becomes available to the individual. (Decision is reported as Asstt. CWT v. Smt. Mrinalini Devi Puar (2006) 202 CTR (MP) 69 Ed.). Mr. Naik vehemently contended that the said decision rendered by High Court of Madhya Pradesh requires to be distinguished as the said judgment is either sub silentio or is contrary to law and hence cannot have any binding effect so far as this Court is concerned. In support of this submission reliance has been placed on the following decisions:

(1) Reg. Director, ESI Corporation v. Kirloskar Bros. (1987) 2 Comp. LJ 66 (MP);

(2) British Indian Corporation Ltd. Vs. Commissioner of Income Tax,

(3) M.M. Ipoh and Others Vs. Commissioner of Income Tax, Madras,

(4) ARVIND BOARDS and PAPER PRODUCTS LTD Vs. COMMISSIONER OF Income Tax, GUJARAT-IV.,

(5) N.R. Paper and Board Limited and Others Vs. Deputy Commissioner of Income Tax,

It was submitted that if an earlier High Court decision is not in accordance with law a different view is permissible; principles of res judicata do not apply to tax proceedings; judgment which is sub silentio is not binding and where no reasons are discernible in the earlier judgment the court is not bound to follow such a judgment. That the judgment rendered in assessee''s own case by High Court of Madhya Pradesh, according to Mr. Naik, does not contain any reasons and hence is not binding.

Mr. S.N. Soparkar, learned advocate appearing on behalf of the respondent assessee after pointing out relevant facts submitted that the same applicant viz. CIT, Bhopal cannot be permitted to urge contrary to the decision of the High Court of Madhya Pradesh. Referring to the decisions cited on behalf of Mr. Naik it was submitted that to the contrary the said decisions in fact supported the case of the assessee; that in the present facts a different view should not be taken.

There is no dispute with general propositions laid down in the decisions cited on behalf of the applicant revenue but the crux of the matter is that this is a case where between the same parties, for the very same assessment year, one High Court has held that the properties, of which the estate of the deceased is comprised of, do not form part of taxable wealth of the assessee individual. In the circumstances, there can be no question of holding that income from such properties are taxable in hands of the assessee individual. Admittedly the decision rendered by High Court of Madhya Pradesh has been accepted by the revenue and this fact was admitted by Mr. Naik. The applicant herein, CIT, Bhopal is bound by the judgment rendered by the jurisdictional High Court viz. High Court of Madhya Pradesh and cannot be permitted to contend otherwise. In the circumstances, no interference is warranted in the view adopted by the Tribunal in the facts and circumstances of the case.

Considering the aforesaid fact situation reference is returned unanswered and stands disposed of accordingly.