April 15

SUPREME COURT REPORTS

ANTL BEHARI GHOSH

[ 1955]

SMT. LATIKA BALA DASSI AND OTHERS.

[VIVIAN BOSE, JAGANNADHADAS and SINHA, JJ.]

Indian Succession Act, 1925 (Act XXXIX of 1925), s. 263-- Explanation cl. (a)-Expression "defectivt in substance"-Meaning of-Probate proceedings--Omission to issue citation to persons who should hll'De been apprised-Legal effect thereof-Revocation of grant-Whether qn absolute right irrespective of other considerations arising in the case~'Judicial discretion vested in Courts.

The expression "defective in substance" jn Explanation cl. (a) to s. 263 of the Indian Succession Act,-1925 means that the defect was of such a character as to substantial! y affect the regularity and correctness of the previous proceedings.

The omission to issue c.itations to persons who should have been apprised of the probate proceedings may well be in a normal case a ground by itself for revocation of the grant.

But this is not an absolute right irrespective of other considerations arising from 'the proved facts of a case. . The law has yested a judicial discretion in the court to revoke a grant where the court may have prima facie reasons to believe that it was necessary to have the will proved afresh in the presence of interested parties.

The Supreme Court was not satisfied that in all the circumstances of the present case just cause for the annulment of the grant of probate within the meaning of s. 263 of the Act had been made out.

The annulment of the grant of probate is a mal!er of substance and not of mqe form.

The court may refuse to grant. annulment in cases where there is no likelihood of proof being offered that the will admitted to probate was either not genuine or had not been validly executed.

Where, as in the present case, the validity or gem, llneness of the will bas not )>ecn challenged it would serve no useful purpose to revoke the grant and to. make the parties go through the mere formality of proving the will again. . .

Under tfie circumstances of the present case the omission of citation bas had no effect on the regularity of.the proceedings resulting in the grant of 1921.

Mokshadayini Dasi v. Karnadhar Mandal ((19141 19 C.W.N. 1108), Brindaban v. Sureshwar ((1909) 10 C.L.J. 263), Durgavati v.

Sourabini ([1906] l.L.R. 33' Cal. 1001) and .Ramanandi Kuer v.

Krdowati Kuer ([19271 L.R. 55 I.A. 18), referred to.

1955 C1v1L APPELLATE JuRJSDJCTJON: Civil Appeal No. 106 of 1953.

Anil Befluri Gf1osh

Appeal from the Judgment and Order dated the Smr. Latika Bala 4th September 1951 of the High Court of Judicature Dussiaudothers at Calcutta in Appeal from Original Order No. 131 of

1950 arising out of the Order dated the 29th day of August 1950 of the High Court of Calcutta in its Testamentary Intestate Jurisdiction made in Application under Section 263 of the Indian Succession Act.

P. N. Sen, (A. K. Dutt and S. Chose with him) for the appellant.

M. C. Setall"ad, A 11orney-Ge11eral for India (A .N.

Sinha. with him) for respondent No. 1.

D. N. Mukherji, for respondent No. 2

1955. April 15. The Judgment of the Court was delivered by

SINHA J.-This i~ an appeal against the judgment and order dated the 4th September 1951 of the Calcutta High Court in its appellate jurisdictii.)n reversing those dated the 29th August 1950 of a Judge of that Court sitting on the Original Side granting the appellant's prayer for revoking and annulling the probate granted in respect of the last will and testament dated the 29th July 1912 of one Bi nod Lal

Ghoh. deceased, whom we shall call the testator in the cours.e of this judgment.

The testator is said to have executed a will on the 29th July 1912 which was registered on the same date at the Calcutta registry office.

By the said will the testator appointed the following five persons as executtir~ or executrices:-

< O Anil Nath Basu, Attorney-at-Law

(2) Brindaban Chandra Mitter (These two also figure as attesting witnesses to the will).

<.31 His adopted son Charu Chandra Ghose (whon'l

\Ve shall call Charu for the sake of

brevity) a minor on his attaining majority.

}955

(4) His wife Haimabati Dasi, and

ii Beliari Ghosh

(5) His brother's widow Muktakesi Dasi. v.

Smt. Latika Bala

Da.<si and others He also directed that on the death of the said .Anil

Sinha J.

Nath Basu, his son Achintya Nath Basu, and on the death of .Brindaban Chandra Mitter, his son Debi Prosad Mitter will take their places respectively as executors; and on the death of his wife Haimabati Dasi, Charu's wife, Latikabala Dasi, and on the death of Muktakesi Dasi, his nephew's wife Sushamabala pasi, will take her place respectively as executrix. It 1s not necessary to set out in detail the legacies created by the will except to state that he created annuities in favour of a number of persons including his wife, his brother's widow Muktakesi Dasi, his daughter-in-law, his niece-in-law aforesaid and Charu. He also made provision in his will for arinual payments in respect of the expenses of certain deities and festivals, as also for the funeral expenses of himsdf and the annuitants aforesaid.

He directed his er.r.icutors to accumulate Rs. 12,000 a year out of the balance left after meeting the annuities and the other annua I expenses aforesaid to be paid over to Charu upon the death of the said Latikabala Dasi and Sushama Bala Dasi who were to share the residue, if any, after paying the annuities and other outgoings referred to above. It would thus appear that though the testator intended Charu to be the -owner of his entire estate including the accumulations after meeting the annuities and the other annual expenses, he did not trust him to the extent of putting that estate into bis hands immediately on his attaining ma.iority. He trusted Charu's wife and the other ladies i.n his family more than Charu himself, though he specifically stated in the will-.

"Provided always that the said adopted son shall be deemed to have a vested interest in the said estate immediately on my death".

He appointed his wife Haimabati Dasi as the guardian of the person and property of Charu and of his wife Latikabala Dasi aforesaid.

, On the 5th March 1920 the testator is said to have been murdered by Charu who was placed on his trial,

convicted for murder and sentenced to transporta- 1955 tion for life. Charu served his term of imprinsonment A11il Behari Ghosh and wa& released from jail some time in 1933. v.

Smt. Latika Bala On the 30th September 1921 an application for probate of the will aforesaid was made on the Original Side of the Calcutta High Court on beh::tlf of Anil Nath, Muktakesi Dasi and Latikabala Dasi aforesaid.

The application stated that the testator died on the 5th March 1920 at Baranagar, leaving hirn surviving his adopted son Charu and his widow Haimabati D:tsi. The will dated the 29th July 1912 was recited and the five persons named above were said to have been appointed executors and executrices of the will. lt also stated that Brindaban Chandra Mitter, one of the executors named in the will, had died in July 1913 and his son Debi Prosad Mitter was a minor. It also recited the death of Haimabati Dasi on the 22nd

May 1921, thus explaining why out of the five executors and executrices named in the will the application had been ri1ade only on behalf of the surviving three persons. The assets of the testator's estate were stated not to exceed a sum of Rs.

4,75,780/-. The prayer was "that probate of the said wiil may be granted to your petitioners limited within the Province of Bengal reserving power of making the like grant to the said Charu Chandra Ghose a_!!d the said Debi Prosad Mitter (when he comes of age) when they will come and pray for the same''. The grant was made the same day (i.e., 30th September

1921) which fell during the long vacation and the Judge in charge passed the order-"Order as prayed" no citations being issued.

This is material in view of what has been alleged subsequently about this grnnt, as will presently appear.

Nothing was heard about these proceedings until the 24th July 1933 when an application was made by Debi Prosad Mitter aforesaid for the grant of probate to him along with Anil Nath Basu and Latikabala Dasi.

Tn that application. the previous grant of proh~1tc <litcd the 30th September. 1921. the death of Muktakesi Dasi some time in October 1932 and the

Dassi and others

Si11haJ.

1955 facr of his attaining majority some time in January

Allil 0;:,,~-;; Gliosli 1924 are recited.

On the 16th September. 1933 Debi v.

Pwsf!d Milter's application was granted.

Snu. Latika Bala

Dussi m•1 others It appears that Latikabala Da5i and Sushamabala s;"'"' J.

Dasi applied to the Calcutta High Court on the 4th December 1933 for an order for discharging the

eecutors appointed previously and for a direction to hand over the entire estate of the testator t0 the applicants. In answer to the summons Debi Prasad Mitter made an atlida vit on the 7th Deccm ber 1933 in which he recited the previous grants of the probate made in J 921 and 1933: and stated that the testator Binod Lal Ghosh was inurdered on the 5th March 1920 by Cham and that on the death of Haimabati in May 1921, the testator's first cousin Girish Chandra Ghosh became entitled to the residue of the estate of the testator. In that affidavit he set out the genealogic11l table of the family of the testator showing how Girish Chandra Ghosh was related to the deceased.

He also made pointed reference to the fact that the wrviving grantees of the probate. Anil Nath Basu

and Lalikabala Dasi, after the death of Haimabati had not filed any account of the tcst:ltor's estate in their capacity as executor and executrix respectively and that on his obtaining probate of the will those

person' had not complied with his request of furnishing a statement of accounts about their dealings with the testator's estate. He also set out the test of the letter sent by his solicitor to Anil Nath Basu and Lalikabala Dasi. The letter is elated the 4th December 1933.

It does not appear from the record as to what attitude had been taken by the executor and the executrix aforesaid in answer to the call made by Debi Prasad Mitter for submission of accounts of their dealings with the testator's estate after the grant of probate in 1921 .as aforesaid.

Ultimately, on the 16th May, J 1)34 th~ High Court dismissed the appiication for discharging the persons who had been granted the probate.

Girish Chandra Ghosh aforesaid died in Dcccmhcr. 19.40 without having , taken any steps in court clahning his rights, whatever they were, in the

testator's estate.

Anil Nath Basu also died in July, 1955 1948.

He does not appear from the record to have Anil Behari Ghnsh rendered any accounts in respect of his dealings as the s L v:k B . . f h 11 f h d d mt. ati a ma managing executor 0 t e WI 0 t e ecease .

Dn.ui and others

It was not until the 17th September, I 949 that the appellant, who is one of the four sons of the said Girish Chandra Ghosh, made an application to the Calcutta High Court on the Original Side praying that the probates dated the 30th September, 1921, and the 16th September, 1933 in respect of the will dated the 29th Ju!y, 1912 be revoked, annulled and/or set aside and that an administrator pendente lite be appointed. The petition runs into about twenty printed pages setting out the petitioner's relationship with the testator, the will and the grant of the probates as aforesaid, the murder of the testator by Charu, his trial, conviction and sentence for that murder. It was also averred that the testator had "intended to revoke his said will of 29th July, 1912". Then follows a long recital of facts tending to that conclusion. Then follows para.

19 which is in these terms:~

"From the said correspondence and papers it is absoiutely clear that the said testator revoked his will of 2C)th July, 1912. Your petitioner submits that arrangements were being made for handing over the estate of the said Binod Lal Ghosh, deceased, in the hands of the Administrator-General of Bengal for the purpose of charity but the said purpose did not mature and under the circumstances your petitioner submits that the said will of 29th July, 1912 ha" been revoked bv the said testator and no further will was executed in its place or stead".

Para. 23 is a statement of the grounds on which the case for revocation of the grants is founded.

That paragraph is in these terms:-

"Your petitioner submits that the probates herein should be revoked as a just cause for doing so exists inter alia, on the following grounds:

(a) That no notice of either application for probate was served on your petitioner's father, although he was the nearest male relative alive at the time when the said Binod Lal r.hosh was murdered;

Sinha.!.

Anil Beltari G!10sh

Snit. latika Bala

Da.<;.r; f and others

Sinha J.

(b) That the grants were obtained fraudulently; le) That the grants were obtained by means of an untrue allegation of a fact essential to justify the grant;

(d) That the grants were obtained by making a false declaration that the property was valued only at Rs. 4,75,780/-. although the High Court in its Criminal .Jurisdiction had stated in 1920 that the estate of the said Binod Lal Ghosh was over Rs. 40,00,000/-;

le) That the grants in any event. are useless and inoperative;

(f) That there was no filing of accounts; lg) That the grants were issued hy concealing the fact~ of the intention of the said testator to revoke the will;

(h) That the deceased never lived within the Ordinary Original Civil Jurisdiction of this Hon'ble Court".

The application was opposed by Latikabala Dasi chiefly on the ground that no citation to Girish Chandra Ghosh was necessary, that in any event, he was cognisant of the probate proceedings and of the estate being administered by the executors and that he stood by. It was denied by her that the said Girish Chandra Ghosh was the nearest inale relative of the testator or thflt Charu had murdered his adoptive father. It was also denied that the testator had revoked hts will and that he died intestate as a result of which the petitioner and his three brothers became entitled to succeed to his estate. Achintva Nath Basu took similar grounds in opposition to the application for revocation. Debi Prosad Mitter by an affidavit of his own denied that there had been any just cause for revoking the probate but added that he had been discharged on his own application from further acting as one of the executors of the testator's will.

Though no issues were framed. the m1in grounds for revocation or annulment of the probates were as stated in para. 23 set out above.

Mr. Justice P. B.

Mukherjee who dealt with the case on the Original

Side, after an elaborate consideration of the facts and circumstances of the case. passed orders revokin~

and annulling the grants aforesaid and directing "that 1955 the will be proved in solemn form on notice to the AnilBehari Ghosh applicant 11, nd the other sons of Girish and also after s L v: l

I · II d . h mt. at1ka Ba a a genera c1tat10n to er persons mtereste m t e Dassi and others estate".

He also appointed the applicant, the appellant before us, as an administrator pendente lite with usual powers to take charge of the estate, with costs to the applicant to be paid out of the estate. He directed the other opponents-respondents to bear their

own costs. On the points in controversy he came to the conclusion that Girish was related to the testator as a cousin, that there was no acquiescence on the part of Girish barring the appellant from pursuing his remedy. that the non-citation of Girish was by itself not sufficient to invalidate the grant, but that circumstance in conjunction with other facts, viz., of material concealment of the fact that Cham had murdered the testator and that the testator had entertained an intention to revoke the will, though it had not actually been revoked, was sufficient ground for revoking the grant. He held further, on the authority of the decision in Mokshadayini v. Karnadhar(') that the question whether the will had as a matter of fact been revoked would form the subject matter for final determination after the revocation of the grants when fresh proceedings will be taken after due citation.

He also held that in the circumstances of this case, though there was no averment of wilful default in exhibiting an inventory and accounts 0f the testator~ est::itc. the executors were actually guilty of such a default and there was thus just cause for revoking the grant. He did not hold the other grounds of attack against the grant made out by the applicant; that is to S(IV, he did not find it established that the estate was vorth over Rs. 40,00,000 and that the declaration of the value of the testator's estate at Rs. 4,75,780 war; false or fraudulent or that the grant had become useless or inoperative otherwise. or that the case could not be heard by the Calcutta High Court, on the Original Side.

On appeal by latikabala Dasi, the Appellate Bench . . m 19 rw. N. t 10&.

36-8 SCI/ND/82

Sinha J.

1955 consisting of Sir Trevor Harries, C.J. and Banerjee, J ., A11il Belwri Ghosh allowed the appeal and dismissed the application for

Smt. Laika Bala revocation of the probate with costs of both the Dassi and others courts.

They held that the will in question was

Sinha J. genuine and valid in view of the evidence and of the fact that its genuineness or validity had not been questioned specifically in the pleadings. They also held that there was no revocation of the will or even an intention on the part of the testator to revoke the will.

They also held that Girish was entitled t0 citation but that the non-citation did not materially affect the grant of the probate and that at any rate, Girish being fully aware of the grant stood by, and therefore acquiesced in the grant, and did not take any steps at the right time t0 question the grant.

They therefore did not think it just and expedient to reopen the proceedings when they were satisfied that there was no real and substantial attack against the genuineness and validity of the will itself.

Jn this appeal it has been argued on behalf of the appellant on the authority of the decision in Mokshadayini v. Karnadhar(') that the Appeal Court should have agreed with the Judge on the Original Side in holding that there was material concealment of facts which considered along with the admitted position that no citation had been taken against Girish Chandra Ghosh had vitiated the proceedings for the grant of probate and that the question of the genuineness or validity of the will should have been left over for determination at a later stage of the proceedings.

It was also argued that the omission to exhibit the accounts was in the circumstances of this case wilful default without reasonable cause within the meaning of the Jaw and was sufficient by itself to entitle the applicant to a revocation.

It was also argued that no grounds had been made out in fact to support the legal conclusion drawn by the Appeal Court that there had been an acquiescence on the part of Girih. On behalf of the 1st respondent the conclusion of the Appeal Bench has been supported on all the grouT)ds.

On behalf of the respondent Debi Prasad Mitter. it

(I) 19 C. W. N.1108.

was contended that he had been unnecessarily im- 1955 pleaded at all the stages and that he should have been Anil Behari Ghosh 2ranted his costs out of the estate of the deceased. s L v:k B l mt. all a a a The grant of probate was made under the provisions of the Probate and Administration Act V of (1881); but the Indian Succession Act (XXXIX of

1925) consolidated the law relating to intestate and testamentary succession and thus incorporated the other Acts relating to the same subject1 including Act V of 1881. In order to be entitled to a revocation or annulment of the grant aforesaid the appellant has to bring his case within the purview of section 263 of the Indian Succession Act (XXXIX of 1925), which Nill hereinafter be referred to as the Act).

Section 263 of t-he Act is substantiallv in the same terms as section 50 of Act V of 188 ( Section 263 provides that "The grant of probate or letters of administration may be revoked or annulled for just cause" Under the Explanation-

"Just cause shall be deemed to exist where--

(a1 the proceedings to obtain the grant were defective in substance, or

(.b) the grant was obtained fraudulently by making a false suggestion, or by concealing from the court something material to the case, or

(c) the grant was obtained by means of an untrue allegation of a fact essential in point o( law to .iustify the grant, though such allegation was made in ignorance or inadvertently, or

(d) the grant has become useless and inoperative through circumstances, or

(e) the person to whom the grant was made has wilfully and without reasonable cause omitted to exhihit an inventory or account in accordance with the provisions of Chapter VII of this Part, or has exhibited under that Chapter an inventory or account which is untrue in a material respect".

After the explanation. there are eight illustrations of the grounds on which a grant of probate may be revoked. of which the first three are material. They are as follows:-

Dassi and others

Sinha J.

1955 "(i) The court by which the grant was made had Anil .Behari Ghosh no jurisdictfon.

sm1. 1:-arika Bala

(ii) The grant was made without citing parties Dam and others who ought to have been cited.

Sinha J.

(iii) fhe will of which probate was obtained was forged or revoked".

In this case the appellant tried to take advantage of the first illustration also, by suggesting in one of the grounds set out in para. 23 of his petition quoted above that the testator never lived within the Ordinary OnginaJ Civil Jurisdiction of the Calcutta High Court in exercise of which the grant in question had been made.

But that ground was negatived by the trial Judge and as it was not pressed before us, no more need be said about it.

It was vehemently argued at all stages oi the case including the appeal before us that admittedly no citation was issued against Girish Chandra Ghosh aforesaid and as he was the person most interested iri the testator's estate besides the. legatees named in the will, the case came directly within the purview of clause (a) of the Explanation and Illustration (ii) quoted above. Girish Chandra Ghosh has been found by the Judge in the first instance to have been the

peron most vitally interested in the estate of the testator, whether he died intestate or leaving a will, in the events which had happened. The learned counsel for the contesting respondent suggested that it had not been found by the lower Appellate Court as a fact upon the evidence adduced in this case, that Girish was the nearest agnate of the testator or that Cham had murdered his adoptive father, though these matters had been assumed as facts. The courts below have referred to good and reliable evidence in support of the finding that Girish was the nearest reversioner to the estate of the testator. If the will is a vaJid and genuine will, there is intestacy in respect of the interest created in favour of Charu, if he was the murderer of the testator.

On this question the courts below have assumed on the basis of the judgment of conviction and sentence passed hy the Hfoh Conrt in the sessions trial that Cham was the

murderer. Though that judgment is relevant only to 1955 show that there was such a trial resulting in the con- A11il Behari Ghosh

viction and .sentence of Charu to transportation for smi. La7ika Bala life, it is not evidence of the fact that Cham was the Dassi and others murderer.

That question has to be decided on evi- Sin/ta J. dence. However, for purposes of this case we shall assume in favour of the appellant that Charu was the murderer. The result of such an assumption is that Girish being the nearest reversioner to the estate of the testator, in case of intestacy after the death of the testator's widow in 1921; or in case of testamentary succession after the death of the t\yo legatees, the testator's daughter-in-law and the nephew's wife aforesaid, and the failure of the legacy in favour of Charu on account of the murder would, in either event, have sufficient interest in the estate of the testator to entitle him to challenge the grant and to obtain revocation.

But it is noteworthy that Gidsh who died in 1940, lived for about 19 years after the grant and took no steps in that direction. There may be some doubt as to Girish's knowledge of the probate proceedings and of the grant until 1933; but, in om opinion, there is ample evidence 1!1 support of the finding arrived at by the Court of Appeal below that Girish was aware of the grant at the latest in 1933 when Debi Prasad Mitter took proceedings to obtain a grant in his own favour also. In his application, as indicated above, he clearly stated that Charu was the murderer of his adoptive father and that Girish would succeed to his estate, which otherwise would have gone to Charu. If Girish had initiated proceedings for revocation of the grant and had insisted on the will being proved in his presence, the courts would have had no difficulty in having all the necessary evidence before it because the chief person who had played the most leading part in. the execu-

:tion of the will, in its registration and in its being admitted to probate, viz., Anil Nath Basu, was then alive and could have been examined. But for reasons 'not made clear in these proceedings Girish did .. ot think it worth his while to take any steps in court to

1955 challenge the will or the grant. The estate was worth

411il Beliari Glwsli anything between five to forty lakhs, perhaps nearer

smi Laika Bala ve lakhs than forty lakhs.

Girish was a mere pen- Dassi and others s10ner belonging to a middle class family. Either he

Sinha J. did not think it worth his while to embark on a liti- _gation with all its uncertainties or he had not the wherewithal to do so.

The record as it stands does not satisfactorily explain the reasons why Girish refrained from making any attempts to get this large estate. If the will was not genuine or valid, Girish would take the reversionary estate at once because the testator's widow died in 1921 and there was no other impediment in his way, except to get rid of the will. If, on the other hand, the will was genuine and valid, even then he would stand to gain all the interest which had been bequeathed in favour of Charu.

The fact that Girish did not take advantage of his position as the nearest reversioner as on partial intestacy goes a long way to support the great probability of the will being valid and genuine, especially :as it had been probated and because the appellant in his long petition for revoking the grant has not made the least suggestion casting any doubt on the genuineness and validity of the will.

But it was argued on behalf of the appellant that that stage had not yet arrived and that it would be open to the appellant after obtaining an order of revocation of the grant to show that the will was either not genuine or had not been validly executed. Great reliance 'Nas placed in this connection on the judgment of a Division Bench of the Calcutta High Court in Mokshadayini Dasi v.

Karnadhar Manda[(') where the following observations have been made:-

"No question of the genuineness of the will arises for consideration till the court has decided that the pr0bate must be revoked on one or more of the grounds specified in section 50 of the Probate and Administration Act. The only matter for consideration at this stage is, whether the appellants have made out a just cause for revocation of the probate which was granted without notice to them: Brindahan v. Suresh-

(1) 19 C.W.N. 1108.

war(').

The question of genuineness cannot be con- 1955 sidered till a case for revocation is made out: Durga- A11il Behari Ghosh vati v.

Sourabini!')". v.

Smt. Latika Bala The observations relied upon by the appellant were Dassi and Olhers

made with reference to the facts of that case and Sinha .1. were not intended to be of universal application. As pointed out above, section 263 of the Act also contemplates a case for revocation based on the single ground that the will in respect of which the grant in question was obtained was a forged one. In such a case, whether or not the will was a forged one would .. be the only question to be canvassed before the court before the order of revocation could be made.

It was further argued on behalf of the appellant that the appeal should be allowed and the grant revoked on the simple ground, apart from any other considerations, that there had been no citation issued to Girish.

Jn our opinion, this proposition also is much too widely stated. Section 263 of the Act vests a judicial discretion in the court to revoke or annul a grant for just cause.

The explanation has indicated the circumstances in which the court can come to the conclusion that "just cause" had been made out. In this connection the appellant relied upon clause (a) quoted above which requires that the proceedings resulting in the grant squght to be revoked should have been "defective in substance".

We are not inclined to hold that they were "defective in substance". "Defective in substance" must mean that the defect was of such a character as to substantially affect the regularity and correctness of the previous proceedings. If there were any suggestions in the present proceedings or any circumstances were pointed out to show that if Girish had been cited he would have been able to enter a caveat, the absence of citation would have rendered those proceedings "defective in

.,; ubstance''. It may be that Girish having been found to have been the next reversioner to the testator's estate in case of intestacy and on the assumption that Charu had murdered the testator, Girish might h:1ve been entitled to a revocation of the grant if he

(1) 10 C.L.1. 263 at p. 273.

(2) I.L.R. 33-C.I. 1001.

1955 had moved shortly after the grant of the probate on Anil Behari Ghosh the simple ground that no citation had been issued v. to him. The omission to issue citations to persons Snu. Latika Bala Dassi and others who should have been apprised of the probate pro-

Sinha!. ceedings may well be in a normal case a ground by itself for revocation of the grant. But this is not an absolute right irrespective of other considerations arising from the proved facts of a case. The law has vested a judicial discretion in the Court to revoke a grant where the court may have prima facie reasons to believe that it was necessary to have the will proved afresh in the presence of interested parties.

But in the present case we are not satisfied in all the circumstances of the case that just cause within the meaning of section 263 had been made out. \Ve cannot ignore the facts that about 27 years had elapsed after the grant of probate in 1921, that Girish in spite of the ki; iowldge of the grant at the latest in 1933 did not take any steps in his lifetime to have the grant revoked, that there was no suggestion that the will was a forgery or was otherwise invalid and that the will was a registered one and had been executed eight ye1rs before the testator's unnatural death. Hence the omission of citations to Girish which ordinarily may have been sufficient for a revocation of the grant was not in the special circumstances of this case sufficient to justify the court to revoke the grant.

Learned Counsel for the appeilant made pointed reference to the deeision of their Lordships of the Judicial Committee of the Privy Council in Ramanandi Kuer v. Kalawati Kuer('). But that case is ;1n !authority for the proposition that where two grounds :are taken for revocation of a grant, viz., (I) that persons who ought to have been cited were not cited. and (2\ that the will was a forgery, if the first ground is esta hlished. the onus is upon the opponents to prove that the will is genuine. That case is no authority for the proposition that in every case where there is a defect in citation. the court must order a revocation or annulment of the grant. The annulment is a matter of substance and not of mere form. The court

(I) L.R. SS I.A. 18.

!may refuse to grant annulment in cases where there 1955 is no likelihod of proof being offered that the will Anil Behari Gho!h !admitted to probate was either not genuine or had s L v:k 8 1 b I "di d . h 1 . t d mt. at1 a a a not een v~ I y execute . But, as ng t y pom e Dassi and others out by the lower Appellate Court, in the present case where the validity or genuineness of the will has not been challenged. it would serve no useful purpose to revoke the grant and to make the parties go through the mere formality of proving the will over again.

In our opinion. therefore, the omission of citation has had no effect on the regularity of the proceedings resulting in the grant of 1921.

It was next contended that there had been fraudulent concealment of material facts from the court in the proceedings of 1921, and that therefore the case came within the purview of clause (b) of the Explanation quoted above. It was said in this connection that the petition for the grant of probate made in 1921 did not disclose the following material faots:

1. That Charu was the murderer of the testator;

2. That the testator had revoked the will or had at least intended to revoke the will; and

~. That a false declaration as regards the value of the property constituting the estate of the deceased kstator had been made, that is to say, the applicants for probate had concealed from the court the true valne of the property which was forty lakhs of rupees !and not only Rs. 4,75,780/- as stated by them.

It is true that -in para. 4 of the petition for probate it was only stated that Charu had been found guilty of murder by the High Court and was sentenced to transportation for life and had not till then been released from iail. Our attention was also called to the prayer portion of the petition in which the right of Charu to make an application for probate had been

?reserved. We can easily dispose of the last su£!gestion bv observing that it was a mere formal reservation. It has no such sinister significance as is attrihuted to it.

Tt is also true that there is no statement in the aoolication that Charu had murdered the testr.tor.

While agreeing with the Judge' in the first ronrt thnt this was rather disingenuous: we must also

17-R fI!Nf 182

Sinha J.

Anil Behar/ Ghosh

Stnt. Larika Bala

Da.'isi and others

SJ11!ta J.

hold that that concealment, if it was deliberate, was not material to the case. Even if that statement had been made in the petition, that would have had no effect on the grant of probate to the petitioners who were before the court. The fact of the murder is relevant only to this extent, that it would affect the legacies in favour of Charu, but the other legacies would stand and the will would still be open to probate.

The last allegation relating to concealment is on th;: question of the value of the property left by the testator by his will. It is not necessary to consider whether if such a concealment had been made out it would have been sufficient to revoke the grant. It is encugh to point out that neither of the courts below has found that the property was really worth anything like forty lakhs of rupees. This ground has not ibeen pressed before us either. It must therefore be held that the appellant has failed to bring his case within the rule of material concealment.

The most serious allegation which c0uld have a determining effect on the grant. if made out, is that the testator had revoked the will. Such an allegation would directly come within the third illustration quoted above. But unfortunately for the appellant he made no attempt to prove hisallegation that there was any such revocation. Apart from showing that in or about the year 1917 the testator had entertained the intention either of materially altering his will or of altogether revoking it, there is absolutely no evidence in support of the allegation that the testator actually revoked the registered will in question. For proving that the will had been revoked, it had to be -shown that the testator had made another will or codicil or by some writing declared his intention to revoke the will. Such a document. is required by section 70 of the Act to be executed in the same manner as a will. Such a revocation could also have been proved. as the section Jays down, by l:iurning, tearing or otherwise destroying the will by the testator

himelf ot by some other person in his presence and by his direction, thus clearly indicating his intention

of revoking the will. No such proof has been offered 1955 in this case.

But it was argued that the appellant A11il Betuiri Gliosli would have offered such proof after the order of revo-

51111. Laika Bala cation was made by the court. That would be to put D11.,,; and 01/im

the cart before the horse. If an applicant for revoca- Sinlza J. tion of a grant alleges as a ground for such revocation that the testator had revoked the will, he has got to prove that alleged fact at least prima facie before he can be entitled to an order of revocation.

There may be cases where such a proof may be offered at a later stage where the revocation is founded upon other grounds, for example, where the court is satisfied that there was substantial defect in the previous proceedings resulting in the grant, or that the grantee had wilfully and without reasonable cause omitted to exhibit an inventory or account; or some such other ground recognized by section 263 as just cause for annulling the grant has been established.

It was also argued on behalf of the appellant that even though he may not have proved that the testator had as a matter of fact revoked the will, he is still entitled to an order of revocation on the ground that he had entertained the intention of revoking the will. No authority had been cited before us in support of this contention. _It is open to a person who has made a will at any lime to alter or to revoke it; but if he has died leaving a registered will and has not taken any tangible steps to revoke such a wilL it is not enough to allege that the testator had at one time entertained the intention of doing so, because such an intention without being translated into action has no effect on the will actually left by him which must be treated as the last will and testament.

It remains to consider the last point. viz., whether the case is within clause (e) of the explanation to section 263.

In this connection ground (f) in paragraph 23 of the petition quoted above is the

mly allegation.

The omission to submit accounts is not always synonymous with "wilfully and without reaornble cause" omitting to exhihit accounts.

Tn certain circumstances omission to submit accounts

Anil Behari Ghosh

Smt. Latika Bala Dassi and others

Sinha J.

may bring the case within the purview of clause (e)

aforesid because the circumstances may tend to' show that the omission was wilful and without -reasonable cause. We have therefore to consider whether in the circumstances of this case the omission to file accounts has the effect of entitling the appellant to an order. of revocation.

Under. the will the testator intended that Anil Nath Basu should function as the managing executor during his lifetime, as will appear from the relevant portion of paragraph 17 of the will which is as follows:

"I direct that my executor Babu Anil Nath Basu shall act alone without interference of my other executors in drawing money from or depositing money to any bank, courts or any other place or places and also in drawing interest of Government Promissory Note, debentures, etc. and in collecting rents of the houses and also in defending and instituting all suits relating to my estate and for the purpose above to sign cheques, rent bills and all papers relating to any suit in connection with my estate".

It would thus appear that Anil Nath Basu was not only the most competent man being a trained lawyi!r to administer the estate but had also been in terms vested with the power to handle the cash and the a"ccounts by himself without interference by the other executors. He must therefore have hanulcd the incomings and the outgoings and been respimsible for keeping true and proper accounts. Whether or not he did so we do not know, because Girish, as already indicated, never made any attempt to question the will or the grant or to call. him to account. We have already made reference to Debi Prasad M itter's correspondence with Anil Nath Basu, the managing executor, bearing on the question of accounts. There is nothing on the record to show what happened on that demand for accounts by Debi Prasad Mitter. The managing executor was alive up till July I 948 and unfortunately for the appellant, he initiated the revocation proceedings more than a year after his death. 1f these proceedings had hcen started in Anil Nath Basu's lifetime. he would have been the best person

to inform the court as to how matters stood with 1955 reference to the accounts. The fact remains that no Auil n;;;;;;; Ghosh accounts appear from the record of this case to have Smt. La; ika Bala been submitted by the executors. An application Dassi aud others was made before us to take notice of the fact that accounts had been submitted up to date by the l st respondent who is in charge of the testator's estate.

But whether or not the respondent has filed accounts during the pendency of this appeal is wholly irrelevant. We have to determine whether the omission to submit accounts in the circumstances of this case entitles the appellant to have an order of revocation.

In the first place, no proper pleading had been made on this part of the case. It has not been alleged that there has been a wilful default without any reasonable cause. Hence no proper foundation was laid in the pleadings for reception of evidence either way.

On that ground alone, in our opinion, the appellant must fail on this part of the case. It may also be pointed out that in all the circumstances of this case referred to above, particularly in view of the fact that it was never suggested that the will in question was not genuine or had not been validly executed, it must be held that the proceedings leading up to this appeal have been misconceived. If the appellant has any locus standi, his remedy lay not against the will or against the grant of probate, but under the will. But it is not for this court to advise what the appellant should have done.

As, in our opinion, all the grounds raised on behalf of the appellant for revoking the grant have failed, it is not necessary to go into the question whether Girish had acquiesced in the grant in question and had therefore barred the door against the appellant from raising any further questions about it.

For the reasons aforesaid we uphold the decision of the court below and dismiss the appeal with costs to the contesting respondent No. 1. There wili be no order as to costs in respect of the other respondent.

Si11/ia J.

ANTL BEHARI GHOSH

LATIKA BALA DASSI AND OTHERS

VIVIAN BOSE

JAGANNADHADAS

SINHA, JJ.

Indian Succession Act, 1925

s. 263

s. 263

Indian Succession Act

Supreme Court

s. 263

L.R. 55 I.A. 18

Anil Befluri

Section 263

Indian Succession Act

P. N. Sen

A. K. Dutt

S. Chose

M. C. Setall"ad

A .N.

Sinha

D. N. Mukherji

Bi nod Lal

Calcutta

O Anil Nath Basu

Brindaban Chandra Mitter

Charu Chandra Ghose

ii Beliari Ghosh

Latika Bala

Sinha

Nath Basu

.Brindaban Chandra Mitter

Debi Prosad Mitter

Haimabati Dasi

Charu

Latikabala Dasi

Muktakesi Dasi

Sushamabala pasi

Sushama Bala Dasi

5th March 1920

Calcutta High Court

Anil Nath

Baranagar

29th July 1912

Brindaban Chandra Mitter

22nd

May 1921

Bengal

30th September

1921

24th July 1933

Anil Nath Basu

Latika Bala

Latikabala Da5i

Sushamabala

Debi Prasad Mitter

Binod Lal Ghosh

Cham

Haimabati

Girish Chandra Ghosh

Lalikabala Dasi

4th December 1933

Anil Behari Ghnsh

Dn.ui

17th September, I 949

30th September, 1921

16th September, 1933

29th Ju!y, 1912

29th July, 1912

Binod Lal

Anil Beltari

latika Bala

Achintva Nath Basu

P. B.

Mukherjee

AnilBehari Ghosh

Girish

latikabala Dasi

Trevor Harries

Banerjee

A11il Belwri Ghosh

Laika Bala

Dassi

Girih

Debi Prasad Mitter

Anil Behari Ghosh

Indian Succession Act

section 263

Indian Succession Act

Nill

Section 263

section 50

Section 263

Dassi

Anil .Behari Ghosh

Gidsh

Girish

section 50

Sinha

section 263

Section 263

Latika Bala Dassi

section 263

Anil Behari Gho!h

Dassi

Anil Behar/

section 70

A11il Betuiri Gliosli

section 263

section 263

Anil Behari Ghosh

Latika Bala Dassi

Babu Anil Nath Basu

Debi Prasad M itter


Aµrif 18

29G

SUPREME COURT REPORTS [1955]

MESSRS CHATTURAM HORILRAM LTD. v.

COMMISSIONI;:R OF INCOME TAX. BIHAR

AND ORISSA.

[VIVIAN BOSE, JAGANNADHADAS and SINHA JJ.]

Indian IHcorne Tax Act, 1922 (Act XI of 1922), s. 34--Assessn-tcn/ set a...1:ide ozving to Indian I•inance Act of 1939 not being in

force during the assessment year-Indian Finance Act of 1939 b, ought into force retrospectively by Bihar Regulation IV of 1942- Fresh notice under s. 34 issued-Whether such fresh no-lice valid.

The appellant in this appeal had been assessed to Income Tax which was reduced on appeal but that assessn1ent was set aside by the Income Tax Appellate Tribunal on the ground that the Indian Finance Act of 1939 was not in force during the asscssr11ent yar in Chota Nagpur.

On a reference by the Tribunal the High Court confirmed the setting aside of this assessment.

By the promulgation of Bihar Regulation IV of 1942 by the Governor of Bihar (which wa. a5'ented to by the Governor-General) the Indian Finance Act of 1939 was brought into force in Chota, Nagpur retrospectively as from the 30th March 1939.

On the 8th "February 1944 the Income

lax Officer passed an order in pursuance of which a fresh notice was issued under s. 34 which resulted in the assessment of the ap-. p:.:llant to incon1~ tax. 1'he question for detcrn1ination in this ap· peal. \Vas \Vhl'.ther the notice under s. 34 was validly issl1ed.

Held (i) that for the purposes of s. 34 of the !\ct the income, profits or g:Jins sought to be assessed were <.:hargcable to jncorne tax according tu the schcnc of the Act and the provisions of "' 3 and 4 of the Act;

(ii) that it was a cac of chargeable inco1nc escaping ascssn11."llt within thL' 1nc<.111ing of s. 34 and was not a case of mere non-asscss- 1ncnt of i<1comc tax because the earlier assesment proceedings in the

present case had in 'fact been taken but failed to result in a valid assessment owing to some lacuna which \V, as not attributable to the assessing authorities.

C.l. T. Bombay v. Sir Ma/wn:ed Yusuf Ismail ([1944] 12 l.T.R. 8), Fazal Dhala v. C./.T., B & 0. ([1944] 12 l.T.R. 341), Raghavalu Naidu & Sons v. C.I.T., Mddras ([1945] 13 l.T.R. 194), Raia Benoy K11mar Sahas Roy v. C.l.T.. West Bengal [(1953] 24 !.T.R. 70), Chatturam v. C.I.T., Bihar ([19471 F.C.R. 116), Whitney v. Commissioners of hland Revem.e r[l926] AC. 37), C.l. T. Bombay &

Adm; '" lOum1d1and Ramdas ([1938] 6 !.T.R. 414 Jt 428). Sir Rajendranath Mukheriee v. C.I.T., Bengal ((1934] 2 l.T.R. 71), Madan Mahan Lal v. C.l.T., P11niab ([1935] 3 !.T.R. 438), C.I.T., llmnhav v. l'irnjbai N. r:ontractnr ([19:171 5 l.T.R . .138), I<unwar

Bishwanath Singh v. C.l.T., C.P.

([1942) 10 I.T.R. 322), Raia 1955 Bahadur Kamakshya Narain Sin.gh Y C.l.T.; B., & 0. ([1946) 14 Messrs Chatturam I.T.R. 683) and Cbatturam \". C..1.1 ., B. & 0 1.[1946] 14 I.T.R.

Hori/ram Ltd. 695 ), referred to. v.

Commissio11er of CIVIL APPELLATE JURISDICTION: Civil Appeal No. I11come'!f;;· Bihar 38 of 1954. alld ssa

Appeal from the Judgment and Decree dated the 14th day of March 1951 of the High Court of Judicature at Patna in M.J.C. No. 230 of 1949.

Mahabir Prasad, Advocate-Genernl for the State of Bihar (R.J. Bahadur and S. P. Varma. with him), for the appellant.

C.K. Daphtary, Solicitor-General for India (Porus A. Mehta and P.G. Gokhale, with him), for the respondent.

1955. April 18. The Judgment of the Court was delivered by

JAGANNADHADAS J.-This is an appeal by the assessee on leave granted under section 66-A of the Indian Income-Tax Act. The assessee by name Chatturam Horilram Ltd., who is the appellant before us, is a private limited company carrying on in Chota Nagpur the business of exporting mica for sale to foreign countries. The assessment in question is for the year 1939-40 and the accounting year is the calendar year 1938. These proceedings were initiated on a notice issued to the assessee under section 34 of the Indian Income-tax Act, 1922, (Act XI of 1922) (hereinafter referred to as the Act). It is the apolicability of this section to the facts of this case that is the sole matter for consideration in this appeal.

The circumstances under which the above mentioned notice under section 34 was issued are as follows. The appellant had nreviously been assessed to tax on an income of Rs. 1.09,200 for the same year 1939-40 by an order dated the 22nd December, i 939. which was rednced on appeal by Rs. 31J15. That assessment was set aside by the Income-Tax Appellate Tribunal on the 28th March, 1942. on the ground that the Indian Finance Act of 1939 was not in force during

1955 the assessment year 1939-40 in Chota Nagpur, which Me.ms .c1ia1111ram was a partially-excluded area. On a reference by the Hori/ram Ltd.

Tribunal at the instance of the Income-tax authoricommisioner of ties. the High Court of Patna agreed wfrh this \iew Jwomr 111.;. Bi11ar and pronounced on the 30th September. 1943, its anti ?:•ssa judgment confirming the setting aside of the assess- JacamradhadasJ. ment. Meanwhile, the Governor of Bihar promulgated Bihar Regulation IV of 1942, which was assented to by the Governor-General on the 30th June. 1942.

By this Regulation, the Indian Finance Act of 1939 (along with Finance Acts of other years with which we are not concerned) was brought into force in Chota Nagpur retrospectively as from the 30th March

1939. The relevant portion of the Regulation was in the following terms. 'The Indian Finance Act, 1939, shall be deemed to have come into fore in the area to which this Regulation extends on the 30th day of March, 1939".

On the 8th February, 1944, the Income-tax Officer passed an order as follows :

"Due to recent judgment of the High Court the assessment under section 23(3) stands cancelled and with it the notice under section 34 issued in this case becomes ineffective and is withdrawn. Assessee derives income from mica mining and dealing, moneylending, mining rents and non-agricultural sources of zamindary, and this has escaped assessment in its entirety. Issue notice under section 22(2) read with section 34 again to file a return of income in the prescribed form and within the prescribed time, and inform the assessee that the original notice under section 34 has been cancelled".

It. may be mentioned, in passing, that the notice under section 34 which is referred to in the above order as having become ineffective and as, therefore, withdrawn was a prior one which was issued on the 8th July, 1941, i.e., during the pendency of the assessee's appeal relating to the earlier assessment before the Income-tax Appellate Tribunal. It is not quite clear from the record in what circumstances that notice came to be issued. But it looks probable tJiat it retires to certain items appearin~ in the nrrounts ns

cash•credits to the tune of four lakhs which, as will 1955 appear presently, were treated in the later proceed- Messrs -C''- . 1 d · h b f r1attura111 mgs as concea e mcome m t e a sence o any pro- Horilram Ltd. per explanation by assessee.

This prior notice Comm v: ,, . 34 h . b . hd h b tsstoner o1 under section , avmg een wit rawn, as no ear- Income tax, Bihar ing on the question at issue before US in this appeal and Orissa and has not been relied on by either side. In pursu- JagannadhaJ/ts J. ance of the order dated the 8th February, 1944, quoted above, a fresh notice under section 34 of the Act was issued to the appellant on the 12th February, 1944.

The income of the assessee-company was thereupon determined at a sum of Rs. 4,86,351, which on appeal tO the Assistant Commissioner, was reduced by Rs. 11,187. Out of this amount a sum of Rs. 4,04,618 related to two items of cash-credits appearing in the name of the partners of the Company which in the absence of any satisfactory explanation, was treated by the Income-tax authorities as secreted profits of the Company. Before the Income-tax Appellate Tribunal two points were raised. ( 1) Whether the notice dated the 12th February, 1944, under section 34 of the Act was validly issued. (2) Whether the Incometax authorities were right in holding that the cashcredit items were secret profits. 'Both the points were decided against the assessee. On the assessee's application to refer both the points for the decision of the High Court, the Tribunal declined to make a reference as regards the second point but referred the first for the opinion of the Court in the following terms:

"Whether in the circumstances of the case, the notice issued on 12-2-1944 under section 34 of the Indian Income-tax Act was validly issued for the assessment year 1939-40?"

The question was answered against the assessee by the High Court arid hence this appeal before us.

The assessee attempted to reopen the second question relating to secret profits before the High Court but the learned Judges declined to allow it to be canvassed, since the Tribunal did not refer the question to them.

W are, therefore, concerned in this appeal only with the question relating to the validity of the notice

38-q SCJ/ND/32

1955 issued on the 12th February, 1944, under section 34 Messrs chatt•ram of the Act. It is obvious that if this notice is found Hori/ram Ltd. to be invalid the assessee would get relief for the en- Commis; ioner of tire amount including the amount of secret profits.

Income tax, Bjhar and Orissa

Jag, n ladhadas J.

The answer to the question which arises for consideration in this appeal depends on a correct appreciation of the requirements of section 34 of the Act. Now, it has to be mentioned that section 34 of the Act, as it originally stood in the Act of 1922, was amended by Act VII of 1939 and this was in turn amended by Act XLVIII of 1948. At the relevant date, i.e., for the assessment year 1939-40, section 34

(1) as amended by Act VII of 1939 (and before its amendment in 1948) was in force. It was as follows:

"If in consequence of definite information which has come into his possession the Income-tax Officer discovers that income, profits or gains chargeable to income-tax have escaped assessment in any year, (or have been under-asessed, or have been. assessed at too low a rate. or have been the subject of excessive relief under this Act) the Income-tax Officer may, (in any case in which he has reason to believe that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years and) in any other case at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or, in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included iµ a notice under sub-section (2) of section 22, and ma v proceed to assess or re-assess such income, . profits or gains. and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section". ·

Omitting from the above sub-section those portions which are inapplicable to the facts of the present case -marked out within brackets-it may be seen that the facts which require to be established for the validity of the notice under this sub-section are (J) the income, profits or gains sought to be assessed should be chargeable to income-tax and have escaped assessment in any year, and

(2) the Income-tax Officer 1955 should have discovered it in consequence of definite Messrs Ch 11 information which has come into his possession.

Hori/ram °£, d.am The contention of the learned counsel for the appelcommlsion 1 lant is that, with reference to the facts of this case, Income tax .• ihr none of these conditions can be said to have been andOrissa satisfied. It is urged that the income sought to be Jacannadhadas J. assessed under these proceedings was not, as a fact, chargeable to income-tax during the assessment year 1939-40. It is said that in any case there can be no question of the income having escaped assessment because, as a fact, the income-tax authorities did proceed to assess the income and that what happened is that the proceedings became infructuous by reason of the High Court having pronounced them to be void.

It is also contended that there is no question of discovery of any relevant fact or information, because the non-assessment of the income of the ass'essee fot the period in question was in spite of all the information relating to the income of the assessee having been previously furnished and being in the possession of tl_ie Income-tax Officer as would appear from the order of the Officer dated the .22nd December, 1939.

It is convenient to deal with this last objection in the first instance.

It may be true that all the information relating to the relevant income of the assessee which is now sought to be taxed was in the possession of the Income-tax Officer in the year 1939 itself when the return was submitted in compliance with the notice under section 22(2) of the Act then issued. But what was required under section 340) was not merely fresh information as to the income that escaped assessment but information as to the fact of escapement from assessment of the chargeable income. In the present case the income-tax authorities proceeded to assess the appellant in the normal way during the assessment vear 1930-40 itself. Those proceedings became infructuous, by virtue of the decision of the Income-tax Appellate Tribunal and the decision of the High Court confirming it, which disclosed that the Indian Finance Act of 1939 was not in operation in

39-8 SCI{ND/S2

1955 the relevant area at the relevant period and that in

Messrs c1w1turam the absence thereof no valid assessment could be Harif, o "Ltd. made. The fact therefore that the income of the \' ' ' . . cam1111.nio11er "! appellant for the relevant year remamed without any I11comc wx: Biko valid assessment emerged only on the High Court

""'1 Onssa finally giving its decision that the assessment pro- .Tagmmadtuulas .1. ceedings previously taken were invalid. If. in the circumstances, there was "escapement of chargeable income from assessment"-a question to be dealt with presently-there can be no doubt that this fact can be reasonably said to have been discovered by the Income-tax Officer only when he got definite information as to (I) the passing of the Bihar Regulation IV of 1942 applying the Indian Finance Act of 1939 retrospectively for the relevant accounting period. and (2) the judgment of the High Court pronouncing prior proceedings to be invalid.

It is knowledge of both these facts, together, that would, with reference to the circumstances of the present case. constitute the discovery of the relevant fact in consequence of definite information received by the Income-tax Officer. The information as to both these facts taken together could only be after the decision of the High Court on the 30th September, 1943. As already stated, the notice under section 34(1), whose validity is in question, was based on the order of the Income-tax Officer dated the '8th February, 1944, after the judgment of the High Court was pronounced. That order which has been extracted above, shows clearly that it was in consequence of the judgment of the High Court in the background of the promulgation of Regula-. ti on IV of 1942 that fresh action under section 34( I) was being initiated.

A number of cases IC.l.T. Bombay v. Sir Mahomed Yusuf Ismail('); Faw/ Dhala v. C.l.T., B & 0. I'); Raglwvalu Naidu & Sons v. C.l.T .. Madras<'); and Raja Benoy Kumar Sahas Roy v. C.l.T .. West Hengall')) have been cited before us to show how the phrase "definite information" and the word "discovery" used in this section have been interpreted by the various

(I) [1944J 12 l-T.R. R.

(31 [1945 13 1.T.R. 194.

(2) f1944] 12 I.TR. 341.

(4) [1953] 14 1.T.R. 70.

High Courts. It is unnecessary to deal with these

IY55 cases at any length. There is here no question as to ,\f,,,,.1rs c1ia1111ram any new subjective facts such as change of opinion Horilr11111 Ltd. . . "· consequent on a correct appreciation of law by the Co111111i.11io11cr qf very same. or another. or higher officer that is pressad 11"'0111'' tax. Bi!uir. . , . . ' ""' and 01'!ssa lllto service as bringing about ''definite information" --- and "discovery". We are quite clear that the pro- Jatwuradizadas J. mulgation of the Regulation and the decision of the High Court are objective facts, information regarding which became available to the Income-tax Oflicer when he passed the order dated the 8th February. 1944, and it is only when these facts came to l'; is knowledge, that the Income-tax Officer can be said to have discovered that chargeable income escaped assessment in the relevant year.

The main question that requires consideration in this case is whether. on the facts, it can be said that "income chargeable to income-tax has escaped assessment in the relevant year". The contention of the learned counsel for the appellant is that during the relevant year 1939-40 the income was not chargeable to tax as a [act and that the retrospective operation of the Finance Act for the relevant year by virtue of a later legislation does not make a difference for this purpose. To decide this question it is necessary to have a clear idea of the scheme of the Income-tax Act and its correlation to the Finance Act of each year.

The Income-tax Act is a standing piece of legislation which provides the entire machinery for the levy of income-tax. The Finance Act of each year imposes the obligation for the payment of a determinate sum for each such year calculated with reference to that machinery. As has been pointed out by the Federal Court in Chatturam v. C./.T., Bihar(') quoting from the judgment of Lord Dunedin in Whitney v. Commissioners of Inland Revenue(') "there are three stages in the imposition of a tax. There is the declaration of liability, that is the part of the statute which determines what persons in respect of what property are

ell [1947] F.C.R ll6a1 126.

(2) [1926) A.C 37.

SUPREME COURT REPORTS [1955] !955 liable. Next, there is tht;) assessment.

Liability does Messrs Cllatturam not depend on assessment. That, eX hypothesi, has Hori/ram Ltd. already been fixed. But assessment particularises the Commis;!o11er. ef exact sum which a person liable has to pay. Lastly, 111<;;::', f 'J:;,_!har come the methods of recovery if the person taxed - does not voluntarily pay". The same idea has been Jagannadhadas 1 expressed in slightly different language by Lord Romer in the judgment of the Privy Council reported in C./.T., Bombay & Aden v. Khemchand Ramdas(').

Chapter III of the Income-tax Act headed "Taxable Inc0me" contains the various provisions with reference to which taxable income is determined. The tax is leviable under section 3 and is in respect of the total income of an assessee in the previous year. The total income is defined in section 2, sub-section (15).

The application of the Act to the total income in the hands of an assessee is governed by sections 4, 4-A and 4-B and is determined with reference to concepts relating to residence, receipt and accrual, as indicated therein. Section 3, under which the actual charge of income-tax arises, is as follows :

"Where any Central Act ena1.:ts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually''.

It is by virtue of this setion that the actual levy of the tax and the rates at which the tax has to be computed is determined each year by the annual Finance Acts. Thus, under the scheme of the Incometax Act, the income of an assessee attracts the quality of taxability with reference to the standing provisions of the Act but the payability and the quantification of the tax depend on the passing and applica-, tion of the annual Finance Act. Thus, income is chargeable to tax independent of the passing of the

(I) (1938) 6 I.T.R. 414 at 428.

Finance Act but until the Finance Act is passed no

JY55 tax can be actually levied. A comparison of sections Messrs c11111111ram 3 and 6 of the Act shows that the Act recognises the Hori/ram Ltd. distinction between chargeability and the actual Con11nissio11er of operation of the charge Section 6 says "save as Income tax: Bihar . and Orissa otherwise provided by this Act, the following heads - of income, profits and gains, shall be chargeable to Jagannadhadas 1 income-tax in the manner hereinafter appearing, etc."

while section 3, as already quoted above, says that "where any Central Act enacts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates, shall be charged for that year, etc." Though, no doubt, sections 3 and 4 are the charging sections in the Act as pointed out in Chatturam v. C./.T., Bihar(') at page 125, the wording of section 3 assumes the pre-existence of chargeable income as indicated in section 6.

Hence, according to fhe scheme of the Act the quality of chargeability of any income is independent of the passing of the Finance Act.

In this view, therefore, though, as a fact, on account of the Finance Act not having been extended to the relevant area during the year 1939-40, legal authority was then lacking for the quantilication of the tax and impositio11 of the liability therefor, the income of the assessee for the relevant year was nonetheless chargeable to tax at the time. in the sense explained above. Indeed, it, can also be sc:id that the very fact of Regulation IV of 1942, having brought the Finance Act of 1939 into operation retrospectively, in this area, has factually brought about. in any case, the chargeability of the tax during that very year. The relevant portion of the Regula ti on says that "the Indian Finance Act of 1939 shall be deemed to have come into force in the area to which this Regulation extends .on the 30th day of March, 1939".

By virtue of this deeming provision the Indian Finance Act of 1939 must be c:ssumed even factually to have come into operation on the date specified and the tax must be taken to have become chargeable in that very year, though the actual

liability for payment could not arise until proper and

l) [1947) F.C.R. 116.

1955 valid steps are taken for quantification of the tax.

Messrs -Chatturam The contention, therefore, of the appellant that the Hori/ram Ltd. income was not chargeable to tax in the year l 93"9-40

Commis; ioner r cannot be accepted.

J11come tax, Bih(Jr

and Orissa

Jagannadhadas J.

The next question that arises is whether the income, though chargeable to tax in the year, can be said to have scaped assessment in the relevant year.

The argument of the learned counsel for the appellant is that since assessment proceedings had in fact been taken during the year 1939-40 by an order of assessment dated the 22nd December, 1939, it cannot be said that the income "escaped" assessment.

He urges that what happened was that, in spite of assessment having been made, the assessment proceedings became infructuous on account of the decision of the Income-tax Appellate Tribunal setting aside the same and High Court agreeing with it. He contends that, in the circumstances, this is no more than a failure of the assessment proceedings but that it is not an escapement from assessment. He relied upon the Privy Council case in Sir Raje11dranath Mukherjee v. C.l.T., Bengal('), where their Lordships say that "the expression 'has' escaped assessment" cannot be read as equivalent to 'has not been assessed"' and that "such a reading gives too narrow a meaning to the word 'assessment' and too wide a meaning to the word 'escaped"'.

Learned counsel for the respondent relies on a number of subsequent cases of the various High Courts (Madan Mohan Lal v. C.l.T..

Punjab('); C.l.T., Bombay v.

Pirojbai N. Contractor("); and Kunwar Bishwanath Singh v.

C.l.T., C.P.(')) which have explained this decision of the Privy Council anu pointed out that the particular passage in that judgment which is relied. upon had reference to the facts of that case, viz., the proceedings by way of initial assessment being still pending.

While no doubt the Privy Council case is thus distinguishable, the contention of the learned counsel for the appellant that the escapement from assessment is not to be equated to

(1) [1934] 21.T.R. 71 at 77.

(3) [1937] 5 I.T.R. 338.

(2) [19.15] 3 1.T.R. 438.

(4) [1942] 10 I.T.R. 322.

non-assessment simpliciter is not without force. Here 1955 again, it is unnecessary to lay down what exactly Me.1srs ·---c,; a11ma111 constitutes "escapement from assessment". Fot the Horilrm Ltd. purpose of the present case it appe1rs to us sufficient Co111111issio11er_ of_ to say that, where earlier assessment proceedings had li 11;,;;/' ;),';:,~' 1 "" in fact been taken but failed to result in a valid as- • - -- / / sessment owing to some lacuna other than that attrib- .tac.""w.ti"''"" ·

utable to the assessing authorities, notwithstanding the chargeability of income to the tax, it would be a case of chargeable income escaping assessment and not a case of mere non-assessment of income-tax. The proceedings for assessment in the present case have failed to result in a valid assessment by virtue of a legal lacuna, viz., the fact of the Indian Finance Act of 1939 not liaving been extended to the relevant area for the relevant assessment year. Learned counsel for the appellant suggests that the failure of the assessment proceedings in this case must be taken to have been due to the lapse of the income-tax authorities.

It is said that inasmuch as Regulation IV of 1942 was actually passed during the pendency of the reference in the High Court in respect of the prior proceedings, the result would have been different, if the Regulation had been brought to the notice of the High Court.

There is, however, no reason to think so. The High Court's jurisdiction was only to answer the particular question that was referred to it by the Income-tax

App~Jlate Tribunal and it is extremely doubtful whether they could have taken notice of a subsequent legislation and answered a different question. Learned coun.<:el for the appellant also urged that in any case the deeming provision enacted in Regulation IV of 1942, may be taken to have validated the assessment proceedings previously taken in the year 1939 r, nd at hest to have restored the assessment order passed by the Income-tax Officer on the 22nd December, 1939. and confirmed by the Assistant Commissioner.

But

thi~ overlooks the fact that the order had in fact been set aside hy the Income-tax Appellate Tribunal and th; it the setting aside was confirmed hy the High Ccmt on the reference made to it.

Admittedly the

Rc.wb!ion w::is passed after the decision of the

1955 Income-tax Appellate Tribunal. Notwithstanding that Mes.m ·-c:;,11, wam the Regulation IV of 1942 purported to be retrospec-

Hor; Jr,011 Ltd. live, it cannot have the effect of effacing the result

cam1111 , iooer of brought about by the decisin of the Income-tax Jwome 10.r. 1wwr Appellate Tribunal and the High Court on reference,

and nm"' unless there are clear and express words to tha\ '

.laga1111adiiad11s .1. effect. It might have been quite a different matter, if by the date of the Regulation the assessment proceedings themselves were still pending, as in fact happened with reference to assessment proceedings in this area, in respect of a number of assessees for the subsequent assessment year, 1940-41, which were pending by the date of the relevant Regulation and were continued up to their termination. They were held to be valid both by the High Court and by the Federal Court when challenged by the assessees: (See Raja Ba!iadur Kamakshya Narain Singh v. C./.T, R & 0. ('); Chatturam v. C.l.T., R & 0. ('): as also Chatturnm v. C.l.T., Bihm ('). It follows. therefore, that, in our view, the income of the assessee chargeable to income-tax escaped assessment in the relevant vcar 1939-40. The High Court was, therefore, ri!(ht in answering as it did the question referred to it.

Thr appeal accordingly fails and is, dismissed with costs.

(11(1946)14 l.T.R G83. i2) (1946) 14 l.T.R. G95.

(3) 1947 F.C.R. 116a11'.Y;.

MG!PCBE-S -!-& llC!/ND/82-20-6·83-IOOO.

CHATTURAM HORILRAM LTD

COMMISSIONER OF INCOME TAX, BIHAR AND ORISSA

VIVIAN BOSE

JAGANNADHADAS

SINHA JJ.

Indian IHcorne Tax Act, 1922

s. 34

Indian Finance Act

s. 34

Income Tax Appellate Tribunal

Chota Nagpur

Bihar

Chota

Nagpur

30th March 1939

8th "February 1944

s. 34

s. 34

s. 34

s. 34

Mahabir Prasad

R.J. Bahadur

S. P. Varma

C.K. Daphtary

Porus A. Mehta

P.G. Gokhale

section 66

Income-Tax Act

Chatturam Horilram Ltd.

section 34

Indian Income-tax Act, 1922

section 34

22nd December, i 939

Hori/ram Ltd.

High Court of Patna

JacamradhadasJ.

30th March

1939

Indian Finance Act, 1939

30th day of March, 1939

8th February, 1944

section 23(3)

section 34

section 22(2)

section 34

section 34

section 34

8th July, 1941

JagannadhaJ

section 34

12th February, 1944

section 34

section 34

Income-tax Act

section 34

section 34

section 34

section 34

section 22

Jacannadhadas

.22nd December, 1939

section 22(2)

section 340

30th September, 1943

section 34(1)

section 34( I)

8th February.

Income-tax Act

Income-tax Act

Dunedin

Jagannadhadas

Romer

Chapter III of the Income-tax Act

section 3

section 2

sections 4, 4

Section 3

Finance Act but until the Finance Act

Section 6

section 3

sections 3 and 4

section 3

section 6

[1947) F.C.R. 116

Orissa

Jagannadhadas

1947 F.C.R. 116