Decided on October 07,1965



Manchanda, J. - (1.)THE short question for decision upon this petition is whether the petitioners, appointed by the court as joint receivers upon the decease of the previous receiver, can be assessed in respect of income chargeable for an assessment year prior to their appointment.
(2.)ONCE upon a time, the John family were the exclusive owners of three spinning mills and one roller flour mill, all situated at Agra, and popularly known as the John Mills of Agra. During the passage of time, with the vicissitude of fortune, the exclusive ownership of the John family gave way to co-ownership with a number of others. In 1949, one Seth Loon Karan Sethiya filed a suit for money in the court of the Civil Judge, Agra, against the co-owners. In this suit, the court appointed two receivers over the mills for the purpose of protecting and preserving them. To their powers was subsequently added the power of realising rent and income accuring from the property. Pursuant to directions issued by the court, the several mills were given out on lease on payment by the lessees of specific sums as lease money by the month. The joint receivers were replaced about the year 1955 by a single receiver, Bishambhar Dayal Agrawal and upon his death in 1958, Rameshwar Nath Agarwal was appointed to fill the office. This receiver continued until his death on April 17, 1963. By an order dated May 1, 1963, the court at Agra appointed the petitioners as joint receivers, and it is admitted that they assumed charge as receivers on being so appointed.
The respondent, the Income-tax Officer, served on the petitions three separate notices dated February 14, 1964, under section 148 of the Income-tax Act, 1961, in respect of three assessment year 1959-60, 1960-61 and 1961-62. The notices which were addressed to M/s. John Mills through Sarvari Prem Narain Agarwal and Roop Kishore Mehra, Advocates, Agra recited that the Income-tax Officer had reason to believe that income chargeable to tax for the respective assessment years had escaped assessment within the meaning of section 147 of the Act.

On the same date, February 14, 1964, the respondent made a provisional assessment under section 141 of the Act in respect of the assessment year 1962-63 and served it upon the petitioners calling for the payment of Rs. 1,43,179.73 as tax. Upon default by the petitioners in making the payment, the respondent initiated penalty proceedings. The petitioners challenged the validity of the provisional assessment by a petition (Civil Misc. Writ No. 162 of 1964) in this court, and on October 20, 1964, Manchanda J. allowed the petition and quashed the provisional assessment with its notice of demand.

(3.)THE petitioners were then required by the respondent to file returns in respect of the assessment years 1959-60 onwards but the petitioners demurred on the ground that they were not liable to file any returns for the period prior to their appointment as receivers. THE respondent pressed for the returns, taking his stand on the contents of the judgment to Manchanda J. which he understood as determining that the petitioners were liable to assessement as successors of the earlier receiver. THEreupon the petitioners filed the instant petition for certiorari and prohibition against the notices dated February 14, 1964, and the consequential proceedings.
At the outset a preliminary objection has been raised by the respondent. It is pointed out that in the petition heard by Manchanda J. two grounds had been taken, among others, by the petitioner : (1) that the petitioners were not liable to assessment in respect of the income chargeable for the assessment years before they were appointed as receivers and could not be treated as legal representatives or successors of Rameshwar Nath Agarwal, the proceeding receiver, and (2) that they were not liable to be assessed in the status of an association of persons. These grounds, it is said, were rejected by Manchanda J. who allowed the petition only on the ground that the Income-tax Officer had not applied his mind to the determination of the status in which the petitioners were to be assessed. The preliminary objection is without substance. It is true that the petitioners raised a number of grounds in support of the relief claimed by them, the relief essentially being that the provisional assessment and the consequent notice of demand be quashed. The relief was granted by Manchanda J. on the ground to which I have referred and the remaining grounds were disposed of by the observation that most of them had no force. The doctrine of res judicata does not operate where no appeal can be filed by a party because the relief sought by him has been granted. Manchanda J. granted all the relief which was essential to the decision of the petition; it was not open to the petitioners to file an appeal against his judgment. Consequently, if the judgment contained any finding against them on some of the grounds, that cannot operate as res judicata.


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