Decided on March 07,1960


Referred Judgements :-


Cited Judgements :-

DEVI DAYAL VS. BHUPINDER KUMAR [LAWS(DLH)-1972-9-8] [REFERRED = (1960) 39 ITR 196,10-11]


KAPUR, - (1.)THE following Judgment of the court was delivered by :
(2.)THIS is an appeal by special leave against the report of the Income-tax Investigation Commission made in R. C. No. 332A and the orders passed thereon by the Central government dated 19/11/1949 and No 21/11/1949, the former under S. 8(2) and the latter under S. 8A(1) of the Taxation on Income (Investigation Commission) Act, Act XXX of 1947 (hereinafter to be referred as the Act). The appellant is Debendra Nath Dutta and the respondents are the Income-tax Investigation Commission constituted under S. 3 of the Act (hereinafter referred to as the Commission) and the Union of India. The facts giving rise to the appeal are that Captain N. N. Dutta, a brother of the appellant was the Managing Director of a concern called the Bengal Immunity Co. Ltd. During the last war he made large profits which were neither disclosed to nor detected by the Income-tax Department and thus escaped Income-tax on what may be termed 'concealed income'. On 23/03/1949, the Commission made a report to the central government under S. 5(4) of the Act asking for reference to itself of the case of Captain N. N. Dutta. Almost simultaneously the Commision directed a search to be made of four premises belonging to or in the occupation of Captain N. N. Dutta and his relations as a result of which complete sets of books containing receipts and disbursements of secret profits made by Captain N. N, Dutta came into the possession of the Commission and thus the case of Captain N. N. Dutta came to be investigated after reference to the Commission by the central government. THIS case was R. C. No. 332A. Captain N. N. Dutta at the time of search was away from Calcutta and after his return he offered to make full disclosure and agreed to pay whatever tax the Commission would find due from him but a few days after this offer i.e., on 6/04/1949, he died leaving brothers, nephews and nieces who are shown in the following pedigree table:
Kamini Kumar Dutta was his elder brother and the appellant Debendra Nath Dutta the younger brother. The deceased himself was unmarried. Another elder brother of his had died sometime before leaving a widow Charunalini Dutta. As a result of the investigation it was found that a substantial portion of the concealed profits was invested by the late Captain N. N. Dutta in the names of his nephews, the sons of Kamini Kumar Dutta and their respective wives, his niece Maya and his widowed sister-inlaw Charunalini Dutta. These profits were invested in government securities and bank deposits.

On the death of Captain N. N. Dutta his two brothers Kamini Kumar Dutta and the appellant Debendra Nath Dutta were brought on record as legal representatives. Kamini Kumar Dutta wrote to the Commission that he had no connection with the business of his late brother but as his legal representative he accepted his obligation to pay in full anything due to the State and he also advised his sons to disclose the true state of affairs and to pay whatever sum was justly due. As a result of their co-operation and from the books and materials which had been obtained on search of the premises the total amount of concealed income earned and received by Captain N. N. Dutta during the accounting years 1940-41 to 1947-48 was found to be Rs. 58,24,023.00 and this was accepted to be the concealed income both by Kamini Kumar Dutta and the appellant. The appellant took no part in the enquiry but after the investigation was completed he was summoned to be present at the final hearing. He was informed of the amount which was found to be concealed income and was invited to examine the materials and make such submissions as he thought necessary in regard to that amount. He accepted the amount but he submitted that he had no assets of the deceased in his hands.

On 5/07/1949, Kamini Kumar Dutta's branch made an application for composition under S. 8A of tne Act. This was recommended by the Commission who in their report stated that the settlement was for the purpose of recovery and was only with regard to Kamini Kumar Dutta and his sons and daughters-in-law but was not made with the appellant. They recommended that for the purpose of assessment to tax the total concealed income should be allocated between the 8 accounting years in equal amounts. They also recommended a concession in regard to Kamini Kumar Dutta and his branch of the family. The amount to be recovered from that branch came to Rs. 29,74,480.00. The Commission in its report made it quite clear that the appellant was no party to this composition and no order was being made against or in regard to him but should any assets of the deceased be found to be in his possession or may subsequently come into his possession as a result of the litigation which he was threatening to commence or otherwise, the Government would be entitled to recover from him the full tax on the concealed income i.e. on Rs. 58,24,023.00 "whether in the first instance" or so much of it as may not be recovered from the other branch. Thereupon the Central government passed two orders, one under S. 8(2) of the Act on 19/11/1949, directing that appropriate proceedings under the Indian Income-tax Act and Excess Profits Tax Act 1940 be taken against Kamini Kumar Dutta and the appellant, heirs of the deceased, "with a view to assess or reassess the aggregate income of Rs.58,24,023.00 1319 referred to in paragraph 24 of the said report" (Report of the Commission). The other order was passed on 21/11/1949, accepting the terms and conditions of settlement offered by the branch of Kamini Kumar Dutta; it directed that demand notices be served by the Income-tax Officer under S. 29 of the Income-tax Act and all proceedings under the Income-tax Act or any other Act which might be necessary be taken. On 24/03/1950, the Income-tax Officer District III-A Calcutta passed 8 income-tax assessment orders, 6 Excess Profits tax assessment orders and two Business Profits tax assessment orders each in regard to 1/8 of the total sum concealed. The assessees in all these orders were both the brothers of the deceased i.e. Kamini Kumar Dutta and the appellant. We have been informed that the branch of Kamini Kumar Dutta have been paying in accordance with the terms of the composition and their liability has been very substantially discharged.

(3.)ON 15/04/1950, the appellant applied to the Commissioner of Income-tax, West Bengal, under S. 8(5) of the Act for a reference to the High court of Calcutta of 15 questions of law which ultimately were reduced to three. As there were 16 assessment orders the appellant was asked by the Commissioner to submit 16 applications which he did but by an order dated 3/10/1951, he rejected the applications as in his opinion no question of law arose out of the 'various assessment orders. The appellant 'then applied to the High court of Calcutta under S. 8(5) of the Act read with S. 66(2) of the Income-tax Act and Rules were issued by the High court but on 3/03/1952, they were discharged. Against this order the appellant applied to this court for special leave but on September 28, 1953, leave was refused. In his affidavit the appellant has stated that this court had observed that the appellant's proper remedy was for special leave to appeal against the decision of the Commission contained in their report of 16/11/1949. We have verified from the records of this court that the only order made by this court was refusing to grant special leave and there is no such observation as the appellant has mentioned in his appeal, affidavit and statement of case. The appellant then obtained special leave against the report of the Commission dated November 16, 1949, and the orders made thereon and that is how this appeal has come before us.
It is unnecessary to decide whether in view of the High court's refusal to direct a case to be stated on the questions of law raised or in view of the refusal by this court to grant special leave against the order of the High court the appeal is competent because in our opinion there is no substance in the appeal. It was argued on behalf of the appellant that the effect of S. 24B(1) of the Incometax Act is that the liability of the executors, administrators or other legal representatives in regard to the tax payable is the same as was the liability of the deceased person and that the tax is one and therefore the liability of the heirs of the deceased was one and joint. Consequently any composition made with any one of the legal representatives, in this case with Kamini Kumar Dutta and his branch of the family operated as a discharge of liability of all the heirs and there was no further liability left which could be foisted on to the appellant or attach to any assets which might come into his possession hereinafter. Reliance was placed on certain decided cases to support that argument. The first case is Shaikh Sahed v. Krishna Mohan Basak, 24 Cal LJ 371: ( AIR 1917 Cal 829). In that case a co-sharer landlord brought a suit for arrears of rent against the heirs of the original tenant of whom two appeared and the third did not. A money decree was passed against the absent heir for the entire claim but it was held by the High court that the suit being against the heirs they must be taken to have been recognised as one body of registered tenants holding a single holding and it was not a case of a joint contract which could be enforced against any of the joint contractors and S. 43 of the Contract Act was inapplicable where parties became jointly interested by operation of law in a contract by a single person. The next case relied upon i.e. Kasi Kinkar Sen v. Satyendra Nath Bhadra, 15 Cal WN 191 was a case under S. 43 of the Contract Act where it was held that whether a promise is joint or several is a question of construction depending upon the intention of the parties to the contract and where several persons jointly inherit a tenancy one of the heirs cannot be made separately liable for the entire rent. Reference was also made to Salmond's Jurisprudence, 11th Ed., page 482.


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