1957 (4) TMI 65 - HC - Income Tax

Complete Representation: failure to notify all known legal representatives vitiates assessment, but appeal remedy bars writ relief.

Where multiple legal representatives of a deceased taxpayer are known, the assessing officer must make enquiries and issue notice to all representatives ... Assessment of deceased - assessment under section 34 completed through legal representative - liability of legal representatives - service of notice on all legal representatives - good faith of assessing officer - principle of complete representation of estateAssessment under section 34 completed through legal representative - service of notice on all legal representatives - principle of complete representation of estate - good faith of assessing officer - Validity of the reassessment for the year 1944-45 completed by serving notice and assessing only one of several known legal representatives of the deceased assessee. - HELD THAT: - The Court examined whether an assessing officer may validly complete an assessment of a deceased assessee by issuing notice to and assessing a single legal representative when multiple legal representatives are known to exist. Applying the principle that the representation of a deceased person's estate must be complete, the Court held that where plurality of legal representatives exists and that fact is known to the Income-tax Officer, the officer must take steps to bring all legal representatives on record or otherwise ensure full representation of the estate before completing the assessment. The assessing officer's plea of acting in good faith was rejected because he had sufficient knowledge of other legal representatives and of pending administration proceedings (O.S. No. 121 of 1948), yet failed to make adequate enquiries (for example, of the court records) or to issue notices to the other legal representatives. The Court explained that mere disclaimers by some heirs of possession do not obviate the duty to verify exclusive possession or to implead all representatives; absent bona fide verification and in the absence of the assessed representative actually representing the estate, the assessment is vitiated for want of complete representation. The Court relied on established authorities and the principle that 'legal representative' in the plural must be read so as to secure complete representation of the deceased's interest, and concluded that the assessment for 1944-45 was invalidated by the failure to issue notice to and bring on record the other legal representatives who were known to the officer.Assessment for 1944-45 completed without notice to the other known legal representatives is vitiated for want of complete representation and inadequate enquiry by the Income-tax Officer.Alternative remedy - Whether the petitioner should be granted relief under Article 226 despite having an alternative remedy by appeal. - HELD THAT: - Although the reassessment for 1944-45 was held to be vitiated for procedural defect, the Court declined to grant relief in the writ proceedings because the petitioner had availed himself of an alternative statutory remedy by preferring an appeal against the assessment. The Court observed that if the appellate authority sets aside the assessment, other departmental remedies may follow, and therefore it discharged the rule and dismissed the petition without costs.No writ relief granted; rule discharged and petition dismissed because an alternative remedy by appeal exists.Final Conclusion: The reassessment for the year 1944-45 was held to be vitiated because the Income-tax Officer failed to secure complete representation of the deceased's estate by issuing notice to all known legal representatives and did not make adequate enquiries; nevertheless, the writ petition was dismissed and the rule discharged because the petitioner has an alternative remedy by way of appeal. Issues: (i) Whether the assessment completed under section 34 of the Income tax Act for the year of account ending 31st March, 1944 (assessment year 1944 45) was vitiated by failure to issue notice to all legal representatives of the deceased assessee; (ii) Whether writ relief under Article 226 should be granted despite the existence of an alternative remedy by way of appeal.Issue (i): Whether the assessment under section 34 was invalid for failure to issue notice to all legal representatives of the deceased and for proceeding when the Income tax Officer knew of multiple legal representatives and pending administration proceedings.Analysis: Section 24B(2) imposes liability on the legal representative(s) of a deceased assessee and notices must reach the legal representatives on whom liability is to attach. Where plurality of legal representatives is known, the principle of complete representation requires that all legal representatives who should be brought on record be given notice unless a bona fide and verifiable basis exists to treat a single representative as representing the entire estate. Knowledge of multiple legal representatives and of pending administration proceedings, presence of a court appointed receiver and of separate guardians for minors, and the assessee's refusal to represent others collectively impose a duty to make further enquiries before treating one co heir as sole representative. Mere disclaimers by other heirs do not suffice to dispense with such enquiry; good faith requires enquiry into possession and representation. Where these enquiries are not made and the officer proceeds to assess only one co heir known not to represent all, the assessment is vitiated.Conclusion: The assessment under section 34 for the assessment year 1944 45 was vitiated by failure to issue notice to and bring on record the other legal representatives of the deceased; the officer could not properly treat the petitioner as sole legal representative in the circumstances.Issue (ii): Whether extraordinary writ relief should be granted notwithstanding availability of an alternative remedy by appeal.Analysis: The availability of an effective alternative statutory remedy by way of appeal precludes grant of relief under Article 226 in the exercise of discretionary jurisdiction. Even where the assessment is found to be vitiated on the facts, if the petitioner has invoked the appellate remedy and that appeal remains pending, the writ petition is not the appropriate forum for granting substantive relief.Conclusion: No writ relief is granted because the petitioner has an alternative remedy by way of appeal which is pending; the writ petition is therefore dismissed though the assessment was found vitiated on the stated ground.Final Conclusion: The assessment for the assessment year 1944 45 was held to be invalid for want of notice to all legal representatives, but the petition under Article 226 is dismissed on the ground that an alternative remedy by appeal exists and has been availed of; rule discharged and petition dismissed.Ratio Decidendi: Where multiple legal representatives of a deceased are known to the assessing authority, the assessment procedure under section 24B(2)/section 34 must ensure complete representation by issuing notice to and bringing on record the relevant legal representatives; failure to do so without adequate enquiry vitiates the assessment.