CHAKRAVARTTI, J. - (1.) THE proceeding which has led to this Reference gave rise to an important and attractive question of law, but unfortunately it suffered such drastic pruning at the hands of the Tribunal in the course of their editing of it that it has reached this Court only in a very attenuated and even misleading form. THE parties, however, agreed that the question might be reframed in order that its real basis and meaning might be brought out.
(2.) THE facts are as follows :One Akshoy Kumar Ghose died in October, 1931, leaving a will under which three persons were to be executors and trustees. Of them two obtained a probate of the will and took upon themselves the administration of the estate. In May, 1933, one Asit Kumar Ghose, who is the assessee before us, was adopted to the testator. In 1947 Asit Kumar brought a suit against the executors on the Original Side of this Court for administration of the estate and accounts and in that suit he was appointed receiver by an order made on the 12th Aug., 1948. He took possession of the estate on the 23rd August next and it is found by the Tribunal that all the assets of the estate were handed over to him, except that the executors were allowed to retain with them the account books and a sum of Rs. 5,000 on account of certain costs and expenses. In the meantime, in December, 1946, a proceeding under the Bengal Agrl. IT Act had been commenced against the executors in respect of the agricultural income of the estate for the accounting year 1352 B. S. for which the corresponding assessment year was 1946-1947. Before Asit Kumar took over the possession of the estate, the executors had already filed a return upon the service of a notice under s. 24(2) of the Act upon them. At the date he took over possession, the assessment proceeding was still pending. Even after that date, notices under ss. 24(4) and 25 (2) of the Act were issued to the executors in ignorance, it is said, of the appointment of Asit Kumar as receiver. However, when subsequently the ITO came to know of the appointment, he issued fresh notices under ss. 24(4) and 25(2) on Asit Kumar in the dual capacity of "receiver and beneficiary to the estate of late Akshoy Kumar Ghosh". Asit Kumar responded to those notices and it appears that at his instance one of the executors was examined on the account books for the period. Ultimately on the 24th Aug., 1949, an assessment under s. 25(3) of the Act was made on Asit Kumar in the dual capacity to which I have already referred. Hereafter I shall refer to Asit Kumar as the assessee. It was in his appeal to the Asstt. CIt that the assessee first raised the objection which has given rise to this reference. It was contended on his behalf that the assessment made on him was wholly invalid, inasmuch as it was the executors and not he who had received the income assessed and inasmuch as he not being the person to whom the preliminary notice under s. 24(2) had been issued and who had filed the return, the subsequent notices served upon him and the assessment made on their basis were unauthorised by the Act. The Asstt. CIt rejected that contention and so did the Tribunal on further appeal.
(3.) IT is perfectly clear that the objection of the assessee was of a two fold character, one branch relating to the substantive question of his liability for the tax and the other relating to the procedural regularity of the assessment. The Tribunal in its appellate order dealt with both, although in a somewhat confused manner, and more by reference to certain so-called general principles of taxation that to the terms of the sections to which they referred. In substance, they held that the initiation of the proceedings against the executors was valid under s. 13(b) of the Act which provided for the assessment of receivers and administrators who received income on behalf of another person. The ultimate assessment of the assessee was valid under s. 16(2) which made the beneficiary, on whose behalf the income was received by another person, equally liable to assessment. The substitution of the assessee for the executors was valid, because he was a successor in office and therefore, in law, the same person. The whole assessment proceeding was in order, because it was the income of the estate of Akshoy Kumar Ghose which was being assessed and because under the Income-tax laws taxable income could be validly assessed wherever it was found. In the present case, it was found in the hands of the assessee, because at the time when the assets of the estate were handed over to him, he "must have got the agricultural income in question" among other assets. The Tribunal further observed that if in a case where an executor was succeeded by a receiver or one receiver was succeeded by another, there could be no substitution of the successor in the assessment proceedings, the ITO would have to start afresh each time a change occurred and it might well be that in certain cases the income would escape assessment altogether, the bar of limitation intervening. I have tried to set out the reasoning of the Tribunal as clearly as I could, although it lies buried under a mass of statements of general principles and some high flown language. There is not the slightest discussion of the terms of any of the sections relied on. After the decision of the Tribunal, the assessee made an application for a reference to this Court of four questions of law, between which he distributed his contentions. The Commr. of Agrl. IT admitted that a question of law arose and he formulated a single question of his own. The Tribunal did not approve of the form of the questions formulated by the parties and framed a question of their own in the following terms : "Whether on the facts and in the circumstances of the case the assessment which was started with a notice under s. 24(2) on the executors but completed with notices under ss. 24(4) and 25(2) on the receiver was valid and sustainable by law." ;