Executor and trust estate liability under wealth tax fails after substantial administration and formal assent alone

Wealth-tax notices issued to a surviving executor, and later to the legal heirs as representatives of the trustees, were unsustainable because the estate had already been substantially administered and no assessable trust property remained in the executor's hands. The will used the terms "executors" and "trustees" loosely, but once executorial duties were completed and the family arrangement had allotted the house properties to the legatees, the later assent by the surviving executor only perfected title and did not show control of estate assets. Notice to a person in that capacity was therefore invalid, and the resulting assessments could not stand.

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Issues: Whether the wealth-tax notices issued to the surviving executor and thereafter to the legal heirs as legal representatives of the trustees were valid, and whether any assessable estate or trust property remained in the hands of the trustees for the relevant assessment years.

Analysis: The estate had been substantially administered long before the impugned assessments. The will used the expressions "executors" and "trustees" loosely, and until the estate was fully administered the persons named were acting as executors, not trustees. The family arrangement of 1947 allotted the house properties to the legatees and left only formal acts to be completed. The later document of 6-8-1976 was merely an assent by the surviving executor to perfect the legatees' title under section 332 of the Indian Succession Act, 1925, and did not show that the executor was managing any estate property. Since there was no estate in the hands of the trustee/executor when notice was issued, the proceedings based on such notice could not be sustained. The legal heirs of the legatee in possession might be answerable in their own right, but not as legal representatives of the trustees of the estate.

Conclusion: The notices and consequent assessments were invalid, and the cancellation of the assessments was .

Ratio Decidendi: Once executorial duties are completed and the estate has been substantially distributed, a later formal assent by the executor does not create a subsisting trust estate in his hands for tax assessment; notice issued to him or to his legal representatives in that capacity is invalid.

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