Receiver income recovery from beneficiaries upheld where substitution in certificate proceedings and statutory liability supported the demand.

Income receivable by a receiver was treated as assessable in the receiver's hands and recoverable in the same manner as from the person on whose behalf it was received, while the statutory scheme also preserved direct assessment or recovery from the beneficiaries. Because the demand notices were issued after the receivers had been discharged, the beneficiaries had agreed to separate shares, and the certificate records were amended by substitution of their names, the recovery certificate against the petitioner remained valid. The court also noted that liability was not confined to the person originally named as assessee and that the petitioner had not pursued the available appellate remedies under the Public Demands Recovery Act. The challenge therefore failed.

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Issues: Whether tax assessed in the hands of receivers could be recovered from the beneficiaries by substitution in the certificate proceedings, and whether the petitioner could avoid liability on the ground that he was not the assessee.

Analysis: Under section 41(1) of the Income-tax Act, 1922, income receivable by a receiver is assessable in the receiver's hands and recoverable in the same manner as from the person on whose behalf the income is received. Section 41(2) expressly preserves direct assessment or recovery from the beneficiaries. The demand notices were issued after the receivers were discharged, the beneficiaries had agreed to separate shares, and the certificate records were amended by substitution of the beneficiaries' names. The definition of assessee and the demand provisions in the Income-tax Act also show that liability is not confined to the person in whose name the assessment originally stood. The petitioner also had not pursued the appellate remedies available under the Public Demands Recovery Act.

Conclusion: The recovery certificate against the petitioner was valid and the challenge failed. The petitioner was liable for the tax demand and the application was dismissed.

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