TaxTMI 
TaxTMI 
1980 (3) TMI 78
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....1970. He took the plea that the total wealth for the aforesaid year was below the taxable limit. He did not commit any deliberate default in delaying the filing of returns. While the proceedings were pending, Rameshwar Prasad died on 22nd February, 1973. His son and legal representative, Inder Bhushan, appears to have been brought on record and the proceedings were continued. Inder Bhushan filed an objection submitting that the penalty proceedings which were initiated against his deceased father could not validly be continued against him. This submission was repelled. Ultimately, penalties were imposed for each of the aforesaid nine years for varying amounts. Inder Bhushan went up in appeal, which failed. He then approached the Tribunal in further appeal. The Tribunal upheld the levy of penalty. At the instance of the legal representative, the Tribunal has submitted a statement of the case and has sought our opinion on the question of law mentioned at the beginning of this judgment. Under s. 3 of the W.T. Act, wealth-tax is a tax which is charged in respect of the net wealth on the corresponding valuation date of every individual, HUF and company at the rates specified in t....
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....representative and he be made liable to pay penalty? Chapter V of the W.T. Act deals with liability to assessment in special cases. Section 19 relates to tax of a deceased person payable by the legal representative. Other special cases mentioned in this Chapter are : (1) assessment in case of executors (s. 19A); (2) assessment after partition of a HUF (s. 20); (3) assessment when assets are held by courts of wards, administrators- general, etc., (s. 21); and (4) assessment in cases of diversion of property, or of income from property, held under trust for public, charitable or religions purposes (s. 21A) and assessment of persons residing outside India (s. 22). It is evident that liability of a legal representative is dealt with by s. 19 of the Act alone. Section 19 provides : " 19. (1) Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person, to the extent to which the estate is capable of meeting the charge, the wealth-tax assessed as payable by such person, or any sum, which would have been payable by him under this Act if he had not died. (2) Where a person dies without havin....
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....tatutory provisions of Chap. V. If in a given situation there is no statutory provision for initiation or continuance of proceedings against a legal representative, they cannot either be initiated or continued. Learned counsel for the revenue invited our attention to the phrase " or any sum which would have been payable by him under this Act if he had not died " occurring in sub-s. (1) of s. 19. Sub-s. (1) of s. 19 makes a legal representative liable to pay wealth-tax or any sum provided it was payable if the person had been alive. Section 30 of the W.T. Act deals with notice of demand. It provides : " 30. When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Wealth-tax Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable. " Section 31 specifies as to when an assessee is deemed to be in default. He is an assessee in default if the amount specified in the notice of demand under s. 30 is not paid within the period mentioned in it. These provisions make it clear that liability to pay tax, interest, fine or any other sum accrues or arises in consequence ....
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....see. Till an order is passed under this Act, there is only liability to assessment. When an order has been passed, liability to pay arises or accrues. If in a given situation a legal representative is not liable to be assessed under the Act, he cannot be assessed by passing an order, and, consequently, no liability to pay will arise against him. If, for example, penalty proceedings had been initiated by the issuance of a show-cause notice to the original assessee and during the pendency of such proceedings the original assessee dies, such proceedings will come to an end. They cannot be continued against the legal representative, because the legal representative is not liable to be assessed; and since no order determining liability can be passed after the death of the person who was liable to be assessed, it is obvious that no valid order can be passed after his death against the legal representatives. We are hence clear that penalty proceedings could not validly be continued against the legal representative. The view we have taken finds support from the decision of the Andhra Pradesh High Court in Smt. Yawarunnisa Begum v. WTO [1975] 100 ITR 645. In that case, the notice itsel....