Residuary estate taxation: a legatee cannot be assessed before administration is complete, and jurisdictional defects justify writ relief.

The Calcutta HC stated that a residuary legatee cannot be assessed to wealth tax on an undivided share in an estate until administration is complete and the residue has crystallised. Section 19A of the Wealth-tax Act requires the executor to be charged on the deceased person's net wealth while the estate remains unadministered, and direct assessment on the beneficiaries was therefore without jurisdiction on these facts. The court also held that the existence of an alternative remedy did not bar writ relief where the impugned assessment was jurisdictionally defective. The wealth-tax assessments and proceedings based on them were set aside.

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Issues: (i) Whether the wealth-tax authorities could assess the petitioners on the deceased beneficiary's one-third residuary share in the estate of the testator before completion of administration of the estate; (ii) Whether the writ petition was barred on the ground that an alternative remedy was available.

Issue (i): Whether the wealth-tax authorities could assess the petitioners on the deceased beneficiary's one-third residuary share in the estate of the testator before completion of administration of the estate.

Analysis: Section 19A of the Wealth-tax Act, 1957 applies where the net wealth of a deceased person is chargeable in the hands of the executor or executors until the estate is fully administered. On the facts, the estate had not been fully administered and the residuary share had not yet crystallised. A residuary legatee acquires no enforceable property in specific assets or income until administration is complete and the residue is ascertained. In the absence of evidence that the executors had assented to the legacy or that the estate was finally administered, the petitioners could not be assessed directly on that share in their hands.

Conclusion: The assessment of the residuary share in the hands of the petitioners was invalid and was quashed.

Issue (ii): Whether the writ petition was barred on the ground that an alternative remedy was available.

Analysis: The assessment was without jurisdiction because the statutory scheme required assessment of the undivided estate in the hands of the executor until administration was complete. Where the impugned action is jurisdictionally defective, the existence of an alternative remedy does not preclude writ relief. The proceedings had already been entertained and heard on merits, and no ground was made out to refuse interference.

Conclusion: The plea of alternative remedy was rejected.

Final Conclusion: The impugned wealth-tax assessments for the relevant years and all proceedings based on them were set aside for want of jurisdiction.

Ratio Decidendi: A residuary estate cannot be assessed in the hands of the residuary legatee or his legal representatives until the estate has been fully administered and the residue ascertained; until then, the executor remains the proper person chargeable to tax under the statutory scheme.

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