Gangabai and Others vs The State of Tamil Nadu

Ramaswami, J.—One Gangaram Singh was carrying on business in sweets and other eatables in Madurai during the assessment year 1969-

He died on 28th July, 1971. The business was continued by the widow as proprietrix. The original return for the assessment year 1969-70

was filed by the deceased and even the assessment order was made on 25th November, 1970, during his lifetime. On 29th July, 1974, there was

an inspection of the place of business and also the premises No. 9/1, Subramaniapuram, Madurai, where the deceased lived, and certain anamath

accounts pertaining to the business were recovered. After issuing notice u/s 16 of the Tamil Nadu General Sales Tax Act, 1959, a revised

assessment under that provision was made with reference to the materials available in the anamath accounts in respect of three assessment years

1969-70, 1970-71 and 1971-72. In this case we are concerned only with the assessment year 1969-70. The assessing officer held that the

anamath accounts revealed that there were purchase omissions to the extent of 331 tins of ghee valued at Rs. 51,395.60 and on that basis

estimated the sales omission of Rs. 5,04,517.60. The revised order was dated 15th March, 1975.

It appears that since the widow continued the business as proprietrix the assessing authority issued a notice of reassessment u/s 16 to her alone.

But on the ground that the deceased had left behind him his widow, four daughters and a son of whom three were minors as legal representatives,

it was contened before the appellate authority in the appeal filed against the reassessment order that the reassessment order is liable to be set aside

as not having given a reasonable opportunity or violation of the principles of natural justice in that the notice has not been given to all the legal

representatives. This contention was accepted by the Appellate Assistant Commissioner and the reassessment order was set aside and remanded

to the assessing officer for fresh disposal on merits, after notice to all the legal representatives. After issuing fresh notices, the assessing officer

made a revised reassessment order on 24th February, 1976. There was an appeal against this revised reassessment order also to the Appellate

Assistant Commissioner and in that appeal the sales suppression was estimated at Rs. 2,86,507.40. The petitioners filed a further appeal to the

Tribunal. Two points were raised before the Tribunal. The first related to the question of limitation and the other related to the jurisdiction of the

officer to levy penalty on the legal representatives. The argument of the assessee was that u/s 16(1) the reassessment order should have been made

within a period of five years from the expiry of the year to which the tax relates and the revised reassessment order made on 24th February, 1976,

was beyond the period of five years and, therefore, without jurisdiction. Relying on the decision of this Court in Deputy Commissioner of

Commercial Taxes v. Abdul Shukoor & Company [1977] 39 S.T.C. 137. the Tribunal held that the period of five years will have to be calculated

from the expiry of the year to which the tax relates and since notice of reassessment was issued within a period of five years the assessment order

was not barred by limitation. On the second question, the Tribunal held that in view of section 15 the legal representatives shall be deemed to be

dealers and the reassessment order and the imposition of penalty were in order. However, on merits, taking a lenient view, the Tribunal estimated

the turnover at Rs. 77,093 and the penalty was reduced to Rs. 2,313 equivalent to tax due on the sales suppressed. It is against this order the

present revision petition has been filed.

In this revision petition, the learned counsel for the assessee contended that as the original notice u/s 16 was issued only to the widow of the

deceased and not to all the legal representatives, that notice cannot be considered to be a valid notice issued u/s 16 and only when the notice was

subsequently issued to all the legal representatives after the order of remand by the Appellate Assistant Commissioner there was a strict

compliance with section 16 and that notice having been issued after five years from the expiry of the assessment year 1969-70, the revised

assessment order was illegal as made beyond the period of limitation. In support of this contention the learned counsel for the petitioner relied on

Jai Prakash Singh (Legal Representative of Estate of Late B. N. Singh) Vs. Commissioner of Income Tax, Assam, . That was a case under the

Income Tax Act. The assessee died on 16th April, 1967, before submitting returns for the assessment years 1965-66, 1966-67 and 1967-68. The

assessee left behind him three widows, three sons and four daughters as his legal representatives and the fact of death and the names of his

successors and legal representatives were intimated to the Income Tax Officer. However, the returns were filed by one of the sons in respect of all

the assessment years. An assessment order was made after issuing notice to that son who submitted the return u/s 143(2) of the Income Tax Act,

1961. The question for consideration was whether the non-service of notice u/s 143(2) against 9 out of 10 legal representatives of the deceased

invalidated the assessment order of the Income Tax Officer. After noting the provisions relating to the assessment on legal representatives, the

learned Judges of the Gauhati High Court held that if the estate of the deceased is to be assessed to Income Tax, the estate must be fully

represented by impleading all the legal representatives and serving notices u/s 143(2) on all of them who represent the entire estate and the non-

issue of the notice invalidated the assessment orders. It may be seen that not only the decision rested on the peculiar provisions in the Income Tax

Act but also on the fact that even before the returns were filed and the assessments were completed the Income Tax Officer was informed about

the death as also about the names and addresses of the legal representatives of the deceased and, in those circumstances, it was held that notices

should have been issued to all the legal representatives before the assessment order was made. Even otherwise, we consider that this cannot be

taken as laying the correct proposition of law because if one legal representative is issued a notice and unless there are other grounds to state that

he could not have represented the estate of the deceased, he is normally to be treated as representing the body of legal representatives and also the

estate of the deceased. If in a particular case any other legal representative is aggrieved by allowing that one individual to represent the estate, he

can be permitted to redress his grievance but that cannot be considered to invalidate the assessment itself. In fact, the Supreme Court in Daya Ram

and Others Vs. Shyam Sundari, , which was a case arising under the Civil Procedure Code, where the question for consideration was whether the

decree made against the legal representatives as representing the estate of a deceased, without impleading all the other legal representatives, was

invalid, observed :

When this provision speaks of ''legal representatives'' is it the intention of the legislature that unless each and every one of the legal representatives

of the deceased defendants, where these are several, is brought on record there is no proper constitution of the suit or appeal, with the result that

the suit or appeal would abate ? The almost universal consensus of opinion of all the High Courts is that where the plaintiff or an appellant after

diligent and bona fide enquiry ascertains who the legal representatives of a deceased defendant or respondent are and brings them on record within

the time limited by law, there is no abatement of the suit or appeal, that the impleaded legal representatives sufficiently represent the estate of the

deceased and that a decision obtained with them on record will bind not merely those impleaded but the entire estate including those not brought

on record.

In a later case reported in First Additional Income Tax Officer, Kozhikode Vs. Susheela Sadanandan and Another, , this principle was held not

restricted to suits or appeals but it is one of general application and was applied to a case arising under the Income Tax Act. The learned Judges,

quoting this passage, further observed :

We do not see why the said principle cannot be invoked in the case of assessment of income from the estate of a deceased person in the hands of

his legal representatives.

We are of the view that the same principle will apply also to the cases arising under the Sales Tax Act as the principle laid down by the Supreme

Court is one of general application. In this case, as already stated, the widow continued to carry on the business after the death of the dealer as a

sole proprietrix. There is no evidence also to show that at the time when the notice of reassessment was issued by the assessing authority he was

aware that the deceased had left any legal representative other than the widow and anybody else had any right in the business. In those

circumstances, merely because the notice was issued originally to the widow alone, it cannot be stated that the reassessment proceedings were not

validly initiated. Since there is no dispute that that notice was within a period of five years, no question of limitation arises.

The other submission that the period of five years will have to be counted with reference to the revised reassessment order made on 24th

February, 1976, is not also acceptable. This Court had considered a similar question in Deputy Commissioner of Commercial Taxes v. Abdul

Shukoor & Co. [1977] 39 S.T.C. 137 and held that the period of limitation will have to be counted with reference to the notice issued u/s 16 and

not with reference to the revised reassessment order made subsequently after remand by the appellate authority. This ground of limitation raised by

the learned counsel for the petitioner is therefore not sustainable.

It was then contended by the learned counsel that section 15 which authorised the assessment on the legal representatives does not confer any

power on the assessing authority to levy penalty on the legal representatives. This point is directly covered by a decision of this Court in State of

Madras v. M. Rangarajan [1968] 21 S.T.C. 186., where this Court held that by virtue of section 15 the legal representative of a deceased dealer

should be taken as a dealer for the purposes of the Act and it provides both for assessment and also for levy of penalty on the legal

representatives.

The learned counsel for the petitioner drew our attention to section 45 relating to offences and penalties and contended that if the fiction created

by section 15 deeming the legal representative as dealer is to be extended for levy of penalty, it may also attract section 45 relating to prosecution.

But section 15 makes it clear that the liability of the legal representative is only to the extent of the assets of the deceased in his hands. There is no

personal liability on the legal representatives as such for either payment of the tax or penalty or any other liability of the deceased dealer. Therefore

section 45 may not be applicable to the legal representatives and that provision in no way affects or restricts the scope of section 15 or any penalty

levied u/s 16(2).

For the foregoing reasons, we are of the view that the order of the Tribunal does not call for any interference and the revision petition is

accordingly dismissed. The respondent will be entitled to his costs. Counsel''s fee Rs. 250.

Petition dismissed.