- (1.) THIS order will dispose of Civil Writ Petitions Nos. 253 and 785 of 1963. The capacity of the petitioners is different, but the principal question which has been debated before me and which arises in both the petitions is common to them. In order to appreciate the entire controversy it will be proper to set out the facts in considerable detail though it may be mentioned that on facts there is not much dispute. Edwin Hotz, a British subject, died in England on the 9th Sept., 1957. In one of the petitions his date of death is mentioned as 4th July, 1957, but the learned counsel for the petitioners in both these petitions admitted that the correct date of death is 9th Sept., 1957. Edwin Hotz left in India shares in the petitioner-company, Hotz Hotels (P) Ltd. (petitioner in C. W. No. 253 of 1963), and the amount of dividends due thereon. He also left money due to him as a beneficiary of one Mr. Hans Hotz. This money is held by the trustees of Mr. Hans Hotz (petitioner in C. W. No. 785 of 1963) for he created a trust in his lifetime which trust had to pay the amounts bequeathed by Hans Hotz to the respective beneficiaries.
(2.) MRS . Olive Muriel Hotz is the widow of the deceased. She filed a return with the CED at Patiala under the ED Act, 1953 (hereinafter referred to as the Act). On the basis of her return the CED assessed the duty at Rs. 1,34,825.90 nP. She paid a sum of Rs. 39,128 towards the amount of that duty. The balance that still remains unpaid according to the Department is Rs. 95,697.90 nP. The Department issued two notices to the respective petitioners in both the petitions under s. 73(5) of the Act r/w s. 46(5A) of the IT Act, 1922, calling upon them to pay the amount due from the petitioners to or held by the petitioners for or on account of the assessee and belonging to the estate of the deceased, Edwin Hotz, towards the satisfaction of the balance of the estate duty not paid. It was also pointed out that if the amount claimed is not paid it will be recovered through the Collector as arrears of land revenue under s. 46(2) of the IT Act. The petitioners took the stand that they could not be made to pay this amount of duty unless a proper legal representation had been obtained by a person competent to deal with the estate of the deceased. This stand taken by the petitioners was not accepted by the Department and as proceedings for recovery under s. 46(2) were threatened, the petitioners moved this Court by the present petitions under Art. 226 of the Constitution of India praying that the demand made by the Department on the petitioners be quashed by an appropriate writ, order or direction.
(3.) THE petitioners do not dispute that the widow, Mrs. Olive Muriel Hotz, is not one of the heirs of the deceased, Edwin Hotz. All that is stated is that there are other heirs also and she being one of the heirs cannot be regarded as the assessee within the meaning of the expression in s. 46(5A) of the IT Act. In the course of arguments it was also urged that there may be a will by Edwin Hotz and it may ultimately transpire that the widow has no right to the estate whatever. It is in the light of these facts that the following contentions of the learned counsel for the petitioners have to be examined : (1) that in view of the provisions of s. 73(5) of the Act r/w s. 46(5A) of the IT Act the widow is not an assessee and that the petitioners do not hold any money for or on account of the assessee and, therefore, no demand can be made from them ; and (2) that the moment an objection is raised under s. 46(5A) of the IT Act r/w s. 73(5) of the Act, by a person from whom any amount is due to or held for or on account of the assessee and belongs to the estate of the deceased, Edwin Hotz, the Department is bound to stay its hands and can only recover the same from such person after it is settled by a competent Court that such person is in possession of the estate of the deceased and is holding it for or on account of the assessee, the assessee in the nature of things being the person who ought to be assessed to estate duty. However, there is a sharp difference of opinion between the parties as to whether the assessee is the person to whom the estate passes or it is merely the estate itself, for it is the estate which is alone liable to estate duty. It is, however, not disputed that part of the estate of Edwin Hotz is in possession of the petitioners and they have no objection to pay the estate duty provided they get a valid discharge from liability to the persons who are in law entitled to the estate of the deceased.;