' This order will dispose of Writ Petitions Nos, 4262, 4263, 4264, 4265, 4267, and 4266 of 1979. The first five petitions have been filed to challenge the re-assessment of income-tax payable by Mr. Zulfiqar Ali Bhutto, former Prime Minister of Pakistan while the last petition has been filed to challenge the assessm ent made on Mr. Zulfiqar Ali Bhutto for the year 1977-78. The impugned order of re- assessm ent in the first five petitions were passed under section 34/23(4)/24-B (3) of the Income- tax Act while the assessm ent for the year 1977-78 was made under section 23 (4) read with sestion 24-B (3). Section 24-B (3) was added since the income which had escaped assessment in the first five petitions and the income which was assessable in the last mentioned petition is said to have been earned by Mr. Zulfiqar Ali Bhutto during his lifetime but despite notices served on him under section 34 in the first five cases and under section 22 in the last case and despite his having been afforded many opportunities to file the returns, he did not file them till he died on 4-4-1979.
2. Mr. Zulfiqar Ali Bhutto (hereinafter to be known as assessee) had first held the office of the President of Pakistan till the enforcement of the Constitution of 1973 and thereafter held the office of Prime Minister of Pakistan till 5-7-1977. During the period he held these offices he bad been assessed to income-tax for the income-tax years, 1972-73, 1973-74, 197475, 1975-76 and 1976-77. On 8th of May, 1978 the Income-tax Officer found that on the basis of material on record Income for the year 1972-73, to 1976-77 appeared to have escaped assessment. He passed an order directing issuance of notices to the assessee under section 34 for all these years. He sent this order for approval to the Inspecting Assistant Commissioner of Income-tax who accorded his approval on 9-5-1978. The material on the basis of which this order (dated 8-5-1978) was passed by the Income-tax Officer consists of a news item in the Daily Nawa-i-Waqt dated 13-9-1977 furnishing particulars of declaration filed by the assessee under M. L. R.21.
3. Consequent upon this provisional finding about the assessment for the above years having escaped and the approval of the Inspecting Assistant Commissioner, the Income-tax Officer issued notices under section 34 to the assessee requiring him to deliver not later than 27-5-1978 returns on the attached forms, of his total income and total world income assessable for the years 1972-73 to 1976-77. Prior to these notices the Income-tax Officer had already issued a notice under section 22 of the Income-tax Act to the assessee on 28-1-1978 calling upon him to file return of his income for the year 1977-78.
4. It appears from Annexure P. 5 that the notice under section 22 dated 28-1-1978 issued for the income for the year 1977-78 was served on the assessee on 1-2-1978 while notices under section 34 were served upon him on 13-5-1978. Since the assessee did not file any return, a letter was written to him on 11-10-1978 (Annexure P. 5) drawing his attention to this fact and also stating that on 29-5- 1978 Mr. Hyder Ali of Messrs Hyder Bhimji & Co. Chartered Accountants and authorised representatives of the assessee had submitted copies of a letter from Mr. G. A. Memon Advocate dated 7-5-1978 addressed to the said representatives to the effect that in view of hearing of the appeal against the conviction of the assesee on a murder charge, which was pending before the Supreme Court, it was not possible for him to have consultation on tax matters and requisite action should be taken keeping this situation in view. It was also stated that Messrs Hyder Bhimji & Co.
Vide their letter dated 29-5-1978 had also informed the Income-tax Officer that in future notice should be sent directly to the assessee since power of attorney given to them stood suspended by the assessee's daughter's letter dated 22-5-1978. The assessee was, therefore, informed that the next date for compliance was fixed as 31-10-1978.
5. In reply to this letter the assessee wrote on 24-10-1978 (Annexure P. 6) that he was not in a position to comply with the notice since he was in a death cell and reasonable time and opportunity was required to comply with such an important and complicated matter. He requested that the compliance with the notice should wait till the disposal of his appeal pending before the Supreme Court.
6. The Income-tax Officer vide his letter dated 30-10-1978 (Annexure P. 7) informed the assessee that he had already been given the facility of consultation with the Tax Advisor, vide Governor of Punjab Memorandum No, 13/122-50/MS-11. HS/78 dated 9-5-1978. He also informed him that the date of compliance had been extended to 30-11-1978. While receiving this letter on 15-11-1978 at 4- 30 p. m. The assessee wrote for a reasonable opportunity for consultation and joint sitting with his Advisor at a place other than the death cell.
7. The Income-tax Officer wrote back on 4-12-1978 (Annexure P. 8) extending the period of compliance of all the statutory notices till 15-1-1979. As regards the difficulties mentioned in the remarks referred to above, he advised the assessee to take up this matter with the authorities concerned.
8. On 14-12-1978 the assessee wrote (vide Annex. P. 9) to the Income-tax Officer to arrange meeting between him and his Tax Adviser in a separate room and also insisted that a number of meetings would be required with the Tax Adviser and with the Estate Manager for this purpose.
9. Despite these extensions given on different occasions and the facility of assessee's meeting with his Tax Adviser granted by the Governor of Punjab vide his Memorandum No, 13/122-50/MS-11.
HS/78 dated 9-5-1978 no return was filed. The assessee died on 4-4-1979. It was thereafter that ex parte orders of assessm ent, Annexure P. 2 in each case were passed by the Income-tax Officer on 28-6-1979.
10: It appears from these orders that in all the cases of re-assessment previously the assessee had been assessed to income-tax on the basis of his salary and allowances as Member of the National Assembly and the royalty on a book. In the re-assessment orders he was assessed on sumptuary allowance, the amount of benefit of free conveyance, the amount of benefit of free electricity, gas and water bills as well as free furnished accommodation and the money spent by the Exchequer on three houses owned by the children of the assessee i. e. (i) 70 Clifton, Karachi, (ii) 71-Clifton, Karachi, and (iii) Almurtaza, Larkana, which had been declared his official residences.
11. The Income-tax Officer under the last head separated the amount spent on repairs and maintenance of these three houses and the amount spent on additions and alterations which according to him benefited the members of the assessee's family. He made no assessment on the amount spent on account of repairs and maintenance but held the assessee liable to tax on the amounts spent on additions and alterations in the three said houses. Which had benefited the members of the assessee's family. In fact the bulk of the amount of income added to the credit of the assessee was part of either this item or of sumptuary allowance. In the assessment for the year 1977 also the same principle was kept in view.
12. As a result of these orders demand notices (Annexure P. 1 in each case) were issued on 28-6- 1979 for payment of the following amount by 27-7-1979: {{TABLE}} Rs, 1972-73 58,356 1973-74 9,35,987 1974-75 5,76,057 1975-76 7,20,507 1976-77 3,61,398 1977-78 8,27,870 Total: 34,80,175 {{TABLE}}
13. These cases were admitted on first impression whether in the circumstances of these cases assessm ent against a dead person was legally justified.
14. It was conceded that appeals had been filed by the petitioner against all these orders and the same were pending before the Appellate Assistant Commissioner of Income-tax. It was, therefore, urged by the learned counsel for the respondent, though at the close of the arguments of the learned counsel for the petitioner, that there being an adequate remedy in the form of appeal, these petitions were not competent.
15. The learned counsel for the petitioner relied upon a number of cases of the Supreme Court of Pakistan in which the filing of the writ petition was held justified despite the provisions of appeal in the relevant statute and notwithstanding the pendency of appeal.
16. The purport of all the ,authorities produced by the learned counsel for the petitioner is that where a question of jurisdiction of the authority passing the impugned order is raised it is a question which can pre-eminently be decided by the High Court in the exercise of writ jurisdiction. I Messrs S. A. Haroon and others v. The Collector of Customs, Karachi the extraordinary jurisdiction of the Court was exercised since a question of jurisdiction was raised that the Collector of Customs had no authority to seize any particular goods, unless there was prima facie evidence to suggest at least that the goods were covered by a notification imposing any restriction or ban on its import. In Lt.-Col. Nawabzada Muhammad Amir Khan v. The Collector of Estate Duty the point was whether section 74-A of the Estate Duty Act was a complete bar to the Controller of Estate Duty taking any further action. It was held that the pendency of appeal was no bar to the entertainment of a writ petition in the ordinary circumstances on the ground that the order was wholly without authority. In another case Premier Cloth Mills Ltd., Lyallpur v. The Sales Tax Officer, the Supreme Court allowed1 2 3 the appeal against the order of the High Court dismissing the writ petition and remanded the matter for consideration of the following questions which went to the root of jurisdiction:-
(1) Whether the assessm ent was not barred by time?
(ii) Whether the Sales Tax Authority was justified in imposing a penalty upon the appellant without affording him an opportunity?
' In that case the writ petition had been dismissed by the High Court on ground of appeal providing a more efficacious remedy. In Salahuddin and others v. Frontier Sugar Mills, temporary injunction was refused by the civil Court For this reason the pendency of the civil suit was held to be no bar to the entertainment of a petition for exercising the writ jurisdiction.
17. These are cases in which the appeal or civil suit was pending but there are a number of other cases in which an alternative remedy was provided for but the Court held that the writ jurisdiction was attracted where the complaint was against the exercise of a jurisdiction not vested in the authority. The Burmah Oil Co. (Pakistan Trading) Ltd., Chittagong v. The Trustee of the Port of Chittagong, Pakistan and another v. Qazi Ziauddin, Nagina Silk Mill, Lyallpur v. The Income-tax Officer and another, Abdul Ghani and another v Subedar Shoedar Khan Company and others, Messrs Usmania Glass Sheet Factory Ltd., Chittagong v. Sales Tax Officer, Chittagong and The Murree Brewery Co. Ltd. v. Pakistan etc..
18. Learned counsel for the respondent placed reliance upon Batala Engineering Co. Ltd., Raja Habib Ahmad Khan v. Income-tax Officer, Nizamuddin Ahmad v. Commissioner of Sales Tax and 3 others and Messrs The International Body Builders v. Commissioner of Income-tax, Lahore and another for the proposition that no writ is competent without exhausting any legal remedy provided by the concerned legislation. Thus the writ is not competent where an appeal is pending or where a reference under the provisions of the Income-tax Act can be made to the High Court.
19. I agree with the learned counsel for the respondent that where there is another adequate and efficacious remedy open to the petitioner, a petition under Article 199 of the Constitution of 1973 would be incompetent unless the legal remedies including remedies as provided in the Income-tax Ac are exhausted. But one essential condition for applicability of this rule I that the alternative remedy should be adequate and efficacious. It appear clear from the authorities cited at the Bar that where the question of jurisdiction of the Authority passing the impugned order is raised, the remedy o appeal is not as adequate or efficacious as the writ jurisdiction of the High Court and consequently in such cases a petition under Article 199 would be competent.
20. Though the learned counsel in the present cases raised a number of points legal as well as on merits but ultimately he confined his arguments to questions which were about the Income-tax Officer having acted without lawful authority or without lawful jurisdiction. He conceded very fairly that the other points were points which could be urged only before the appellate authority and he reserved those points for raising them there. The preliminary objection, therefore, fails.
21. The learned counsel for the petitioner has confined his arguments to the following questions:- (i)Whether under the provisions of the Income-tax Act, 1922, an assessment or re-assessment can be made on a person who is dead and if so whether it can be made without notice to the legal representatives?
(ii) Whether the notice under section 34 was a valid notice although it did not communicate either the particulars on the basis of which the respondent had formed his opinion about the fitness of the case for re-assessm ent or the fact that he (respondent) had obtained the approval of the Inspecting Assistant Commissioner of Income-tax as alternatively required by section 34?
(iii) No reasonable opportunity was afforded even to the assessee before the re-assessment or assessm ent was made.
22. The learned counsel also raised a point that the proceedings were entirely tainted with mala fide but when I pointed out to him that this point was not raised in the letter dated 9-7-1979 (copy4 5 6 7 8 9 10 11 12 13 14 of which is Annexure P. 10) written to the Commissioner of Income-tax for stay of demand and it appeared to be an after thought, he did not address any argument on it.
23. The primary argument of the learned counsel for the petitioner was that 'person' as defined in section 2 (9) of the Income-tax Act, 1922 included only an individual and this definition could not be strained to include a dead person who was a non-entity for purpose of income-tax. Section 3 or 4 the only charging sections do not allow either specifically or even impliedly the tax to be charged against a dead person. Section 24-B even if it allows action to be taken under the Income-tax Act against a dead person is only a machinery section as distinguished from the charging section and could not confer any jurisdiction upon the respondent to assess a dead person unless he was assessable to Income-tax under the charging section 3. Since section 3 of the Income-tax Act is not applicable to a dead person no action could be taken by resort to section 24-B to assess a deceased assessee.
24. The learned counsel also submitted that section 24-B on its own language was not applicable to a case of re-assessm ent under section 34. It could at most apply to case of first assessment made on notice served under section 22 (1-A) of the Income-tax Act. In any case no assessment under section 24-B can be made without service of notice upon the heirs of the deceased assessee.
25. He further submitted that the notice issued under section 34 was not a valid notice in so far as it did not disclose that there was any material before the Income-tax Officer to infer escapement of assessm ent, nor did it indicate that the necessary. Approval of the Inspecting Assistant Commissioner had been obtained. He also submitted that there was no material on the record to prove that any income of the assessee had escaped assessment. When his attention was drawn to the order of the Income-tax Officer dated 8-5-1978, on which the Inspecting Assistant Commissioner had put the seal of his approval on 9-5-1978, the learned counsel argued that the material on record consisted only of a news-item in the Daily Nawa-i-Waqt about the alleged declaration filed by the assessee in compliance with the provisions of Martial Law Regulation 21.
Lastly the learned counsel denounced as grossly insufficient the opportunities given to a person confined in jail, to file the return.
26. On the first point whether the word 'person' as defined in section 2(9) of the Income-tax Act includes a deceased person the learned counsel relied upon the Commissioner of Income-tax v.
Mr. Elis C. Reid and The Punjab Province v. The Federation of Pakistan. The learned counsel also referred to Salmond on Jurisprudence XI, Edn., para. 113 which deals with the legal status of a dead man. The principle is stated there as follows :- "Dead men are no longer persons in the eye of the law. They have laid down their legal personality with their lives, and are now as destitute of rights as of liabilities. They have no rights because they have no interests. There is nothing that concerns them any longer, neither have they any more a portion for ever in anything that is done under the sun. They do not even remain the owners of their property until their successors enter upon their inheritance."
27. The learned counsel pointed out the distinction between the provisions of the Income-tax Act of 1922 and the Act of 1979. He submitted that in the present Act care has been taken to include the liability of a deceased person in the charging section also, because the definition of 'assessee' in section 2(6) of the Act of 1979 also includes a person who is deemed to be an assessee and section 74 specifically deals with the liability of a dead person. He submitted that though section 74 is on the same lines as section 24-B but while in the new definition of 'assessee' even a person who is deemed to be an assessee is included, this deeming clause was not added to the definition of 'assessee' in the Act of 1922 and this made all the difference because the charging section would not be applicable under the old Act to a person "who is deemed to be an assessee". He also referred to another case, Commissioner of Income-tax v. Amarchand N. Shroof.15 16 17
28. The quotation relied upon by the learned counsel belongs to the realm of jurisprudence and abstract law and cannot be applied to Statutes which inhere a deceased person also with rights and liabilities. This would be clear from the footnote of section 113 of Salmond on Jurisprudence where an example is given which is as follows : "(j) The concept of hereditas iacens in Roman law made some approach to the idea of continuing the deceased's personality. It was said that the inheritance, in the interval between the death and the entry of the heirs, represented a persona (personae vice fungitur : 46.1.2?. After some disagreement it became settled that the persons represented was that of the deceased ; but it was so only for some purposes, not for all. See Buckland, Text Book of Roman Law (2nd Edn. 1932), 306 ff. ; Buckland and McNair. Roman Law and Common Law (2nd Edn.) 154-5 ; Duff, Personality in Roman Private Law (1938), Chap. VII.
' A good example of this is found in the amendment of Order XXII of the Code of Civil Procedure by the Law Reforms Ordinance, 1972. Under the pre-amendment law a suit or appeal abated on the death of a plaintiff or defendant if the right to sue or be sued did not survive to the plaintiff (plaintiffs) or defendant (defendants). The suit or appeal could not, therefore, proceed unless the legal representatives of the deceased were brought on record within the time fixed by the Limitation Act. By the amendment a concept of treating the dead person as alive in the absence of his legal representatives, has been introduced and it is now provided that the Court may continue with the suit or appeal notwithstanding the death of the plaintiff/appellant or the defendant/respondent and proceed to announce the judgment which will take effect as if it had been announced before the death took place. Similar is the effect of section 24-B (3) of the Income-tax Act.
29. It is unnecessary to add illustrations. The power of authority of the present day Legislature is not limited to the following of principles of jurisprudence and treat a dead man as a non-entity which in actual fact is the legislature can treat the dead man as alive as for certain purposes, it can treat a living human being as dead for example in cases of bankruptcy or insolvency.
30. In Commissioner for Income-tax v. Mr. El. C. Reid a notice was served under section 22(2) before the death of the person earning the income. The return was filed by Mr. Reid as administrator after the death of Sir Henry and Mr. Reid was assessed to income-tax in his capacity as administrator.
The Bombay High Court held that the definition of 'assessee' in the Income-tax Act applied only to a living person. It was held that where an assessee is served under section 22 of the Income-tax Act requiring him to make return for income-tax and he dies before making the return of his income, it is not legal for the Income-tax Officer to make an assessment under section 23(4) of the Act on the deceased assessee.
31. Considering the definition of 'assessee' which means "a person by whom income-tax is payable it was held that the definition applied only to a living person. After going through the relevant provisions of the Act it was held that it is to be noticed that there is throughout the Act no reference to the decease of a person on whom the tax has been originally charged, and it is very difficult to suppose the omission to have been unintentional and as such a deceased person cannot be held liable without doing violence to the language of section 23(4) and section 27.
32. It was in view of this judgment of Bombay High Court that section 24-B was inserted by section 11 of Act 18 of 1933 known as the Income-tax (Second Amendment) Act, 1933. This section was thus introduced to remove the difficulty pointed out by the Bombay High Court in the above case. Its last two subsections underwent slight change by virtue of Act VII of 1939 and Ordinance XV of 1959 but those changes are not for the present material. It is, therefore, not necessary to refer to them at this stage. However in view of the amendment of law by introduction of section 24-B the difficulty as pointed out in the Bombay authority was removed. The principle of that authority can no longer be applied to the interpretation of Income-tax Act, 1922.
33. The case of Punjab Province v. Federation of Pakistan, is not relevant since in that case what was held was that the Punjab Province though it might be a person was not an association of persons for the purpose of Income-tax Act.
34. Section 24-B as it stands at present is as follows :- "24-B.-(1) Where a person dies, his executor, administrator or other legal representative shall be liable to pay out of the estate of the deceased person to the extent to which the estate is capable of meeting the charge the tax assessed as payable by such person, or any tax which would have been payable by him under this Act if he had not died.
(2) Where a person dies before expiry of the time limit prescribed under subsection (1-A) of section 22 or before he is served with a notice under subsection (2) of section 22 or section 34, as the case may be, his executor, administrator or other legal representative shall, on the serving of the notice under subsection (2) of section 22 or under section 34, as the case may be, comply therewith, and the Income-tax Officer may proceed to assess the total income of the deceased person as if such executor, administrator or other legal representatives were the assessee.
(3) Where a person dies, without having furnished a return which he has been required to furnish under the provisions of section 22, or having furnished a return which the Income-tax Officer has reason to believe to be incorrect or incomplete, the Income-tax Officer may make an assessment and for this purpose may, by the issue of the appropriate notice which would have had to be served upon the deceased person had he survived, require from the executor, administrator or other legal representative of the deceased person any accounts, documents or other evidence which he might under the provisions of sections 22 and 23 have required from the deceased person."
35. All the three subsections start with the words "where a person dies" making it perfectly clear that section 24-B in all these three subsections deals with a situation where a person dies and his income requires to be assessed or re-assessed. The first subsection makes the executor, administrator or other legal representatives liable to pay out of the estate of the deceased person to the extent to which the estate is capable of meeting the charge of the tax already assessed against such person who has now died or any tax which would have been payable by him under this Act if he had not died.
36. It might be recalled that the learned counsel for the petitioner had argued that the words "which would have been payable by him under the Act" added in the definition of 'assessment' in the Act of 1979 has now made it possible for the income of a deceased person to be subject to assessm ent. Similar language used in section 34-13 "or any tax which would have been payable by him under this Act if he had not died" is a clear answer to the argument of the learned counsel. It would hardly make any difference if these words are not added to the definitions of `assessee' or `person' or in the charging section 3. In fact it would be clear from the use of this language that an estate of a deceased person in the hand of executor, administrator or his legal representative shall be liable to E pay tax which would have been payable by the deceased person under the Income- tax Act if he had not died, which proves that the section is not merely a machinery section but also has the ingredients of the charging provision.
37. In Commissioner of Income-tax, Bombay v. D. N. Mehta a Division Bench of the Bombay High Court while dealing with a similar question held "It is, I think, correct to say that section 3 of the principal Act charges the tax upon every one coming within the purview of the Act who was alive at the beginning of the financial year, but in the case of a person dying before assessment, that liability was inchoate only, and crystallized into an enforceable liability for the first time on the passing of the Amendment Act. It is, therefore, not quite accurate to say that the Amendment Act merely deals with machinery ; it does for the first time impose an enforceable liability."18 ' This case provides clear answer to the argument of section 24-B being merely a machinery provision. It lays down that, that section imposes an enforceable liability.
38. The argument that the charging section does not cover the case in hand is without force for another reason also. The applicability of the charging section 3 should be judged from the point of view that in case the assessee had been alive, whether he would have been chargeable with or assessable to the income of the year 1972-73 to 1977-78. The leading case on this point is Whitney v. Commissioner of Inland Revenue. Lord Dunedin stated the law as follows :- "Now, 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 liable. Next there is the assessm ent. Liability does not depend on assessment that ex hypothesi has already been fixed. But assessm ent particularizes the exact sum which a person liable has to pay. Lastly come the methods of recovery if the person taxed does not voluntarily pay."
' It has, therefore, been accepted as a true principle of taxation that the liability imposed by the charging section and the subsequent provision enable the liability only to be quantified "and when quantified to be enfore against the subject, but the liability is definitely and finally created by t charging section and all the materials for ascertaining it are available immediately." See (1947) 15 I T R 302 (308). In Wallace Brothers and Co. Ltd. v. Commissioner of Income-tax Bombay City it was observed that : "the rate of tax for the year of assessme nt may be fixed after the close of the previous year and the assessm ent will necessarily be made after the close of that year. But the liability to tax arises by virtue of the charging section alone and it arises not later than the close of the previous year though quantification of the amount payable is postponed."
39. There was no dispute in regard to the proposition of law stated above. Following this principle it would be seen that all the income on which the re-assessment has been made by invoking the provisions o section 34 had accrued to the assessee during his lifetime. The first stag as pointed out by Lord Dunedin had been completed when the assesse was alive. The assessment had also been made. It was only the re-assess ment that was not made. The liability under the charging section 3 had accrued at the close of each financial year, 1972-73, 1973-74, 1974-75, 1975-76, 1976- 77 and 1977-78 during the lifetime of the assessee. The assessee was, therefore, assessable to income-tax under the charging section 3 since the assessment can be made in regard to the income received by the assess during his lifetime, even after his death and the recovery can be mad from the estate left by him. Assuming for the sake of argument that section 24-B is not a charging section but can be relegated only to the position of a machinery provision the liability of the assessee to the payment o tax for the years under dispute under' the charging section 3 had already accrued during his lifetime. Even as a machinery provision section 24-could be undoubtedly invoked for the assessment or re-assessment of that liability. The law has taken ample care for assessing income-tax even after the death of the assessee and making recovery of the tax from the estate left by him.
40. The learned counsel for the petitioner laid much stress upon Commissioner of Income-tax, Bombay City v. Amarchand N. Shroff but that case is distinguishable. The facts of the case were that there were three partners in the firm, Messrs Amarchand, Mangaldas and Mr. Hiralal. Mr. Ramesh son of Mr. Amarchand joined the firm as a partner on 1-12-1949 and an arrangement was arrived at between him and the continuing partners after the death of Mr. Amarchand. In respect of the work done prior to 7-7-1949 (the date on Which Amarchand died), the realisation was to be divided between all the three previous partners; in respect of work done between 8-7-1949 and 30- 11-1949 it was to be divided between the two old partners and the new partner Mr. Ramesh. Mr. Emarchand was being taxed on cash basis. Large sums of moneys were realised during the subsequent five years after his death and these amounts were paid to his estate. The Income-tax19 20 Department sought to tax these realisations as income in respect of the work done by Mr. Amarchand prior to his death. These amounts were assessed in the hands of an entity "styled as the heirs and legal representatives of late Mr. Amarchand N. Shroff" and the status of that entity was described as that of a Hindu undivided family. This assessment fell through as it was held not to be on the income of an undivided Hindu family. Some time later the Income-tax Department initiated proceedings under section 34 in respect of the same income in the hands of an entity styled as "Shri Amarchand N. Shroff by his legal heirs and representatives.' This assessment was set aside by the Appellate Assistant Commissioner and the Income-tax Tribunal also held in favour of the assessee on the ground that no assessment could be made on a dead person. On reference to the High Court it was held that since it was not the income of the assessee, it could not be taxed as such under section 24-B which referred only to the income of the assessee. It was further held that "the income, therefore, which can be assessed is either the income of the deceased assessee before his death or the income of the executor, administrator or other legal representative received by him in that capacity and the latter is to be regarded for all purposes of income-tax law as the assessee".
41. This case went up in appeal before the Supreme Court, Commissioner of Income-tax, Bombay v.
Amarchand N. Shroff. It was held that the fiction of the assessee to be treated as living cannot be extended beyond the object for which section 24-B was enacted.
42. Now it is clear from the facts of this case that the income which was being assessed to tax was the income realised after the death of Mr. Amarchand N. Shroff and not the income earned by him when he was alive. Section 24-B deals only with the income which has either been assessed to income-tax during the lifetime of the assessee or "any tax which would have been payable by him under this Act if he had not died". Obviously it does not cover the cases of income received by the assessee's estate after his death. This case, therefore, does not support the contention of the learned counsel for the petitioner on the facts of the present case.
43. The learned counsel then argued that only subsections (2) and (3) of section 24-B deal with the assessm ent of income earned by a deceased person. Subsection (2) is applicable to cases of assessm ent as well as of reassessm ent since it refers to section 34 specifically but that subsection applies only to cases where the death of the assessee has occurred before he is served with a notice under subsection (2) of section 22 or section 34 as the case may be. But in the present case the notice had already been served upon the deceased assessee. The only other subsection under which assessm ent order could be passed against a deceased person is subsection (3) but it cannot be applied to a case of re-assessment under section 34 since it does not make any reference to that section. It is at most applicable to a case of first assessment under sections 22 and 23.
44. He further submitted that a notice under section 22 is different from a notice under section 34 and consequently when reference is made in subsection (3) to section 22 only it could not be treated as inclusive of the proceedings under section 34. In support of his argument about the distinction between notices under sections 22 and 34 the learned counsel relied upon Income-tax Officer v. Cement Agencies Ltd..
45. Subsection (2) provides that where a person dies before the expiry of the time limit prescribed under subsection (1A) or before he is served with a notice under subsection (2) of section 2 or section 34, as the case may be, his executor, administrator or other legal representative shall, on the serving of the notice under subsection (2) of section 22 or under section 34, as the case may be, comply therewith, and the Income-tax Officer may proceed to assess the total income of the deceased person as if such, executor, administrator or other legal representative were the assessee."21 22
46. Subsection (3) deals with a case where a person dies, without having furnished a return which he has been required to furnish under the provisions of section 22 or a return having been furnished is believed by the Income-tax Officer to be incorrect or incomplete. In such a case the Income-tax Officer is empowered to make an assessment of the total income of such person and determine the tax payable by him on the basis of such assessment.
47. The provisions of the two subsections provide for a contingency, where a person after earning the income for which he was assessable to Income-tax died without assessment or complete assessm ent. The two sub-1 sections permitted assessment of such income in post decease period while subsection (1) permitted its recovery from the assets of the deceased in the hands of his executor, legal heirs or administrator.
48. Subsections (2) and (3) vary in the procedure of such assessment. While subsection (2) deals with a case where proceedings were never started during the lifetime of the assessee subsection
(3) relates to a matter where such proceedings have been initiated during his lifetime but require to be continued after his death. Subsection (2) is thus attracted to an event when the person assessable to tax dies before the expiry of the time limit prescribed under subsection (1-A) of section 22 or before he is served with a notice under subsection (2) of section 24 or section 34 that is when he dies before he is called upon to file a return of his income. In such a case the assessm ent can be made on his executor, administrator or legal representative after service on them of notices under subsection (2) of section 22 or section 34, as if the latter were the assessee though no doubt their liability to pay may be limited to the extent of the estate of the deceased in their hands. Subsection (3) can be invoked only in a case where the time as prescribed in subsection (1-A) of section 22 has expired or notice to the deceased for filing the income of his return was served upon him during his lifetime but he either did not furnish a return during his lifetime or furnished a return which is believed by the Income-tax Officer to be incorrect or incomplete. In such a case the Income-tax Officer is empowered to continue the proceedings of assessm ent against the deceased assessee as distinguished from his executor, administrator or legal representative without serving any fresh notice upon the latter except a notice, if he so requires, for production of accounts, documents or other evidence.
49. It will be noticed that while subsection (2) refers to issuance of notice to the legal heirs of the deceased or his executor or the administrator both under section 22(2) and section 34, subsection
(3) does not make any reference to any notice under either provisions. It deals with a case where notice has already been issued but a return as provided in section 22 has not been furnished.
50. The argument of the learned counsel for the petitioner to the extent of there being a difference between a notice under section 22 and a notice under section 34 and that the former notice cannot be equated with the latter notice is unexceptionable. The authority of the Supreme Court.' is helpful to this extent but it does not solve the problem. The principle of this authority can he applied only to the interpretation of subsection (2) and is not applicable to subsection (3).
51. The procedure as provided by section 22 is that a person whose total income during the previous year exceeded the maximum amount which was not chargeable to tax or any person who was assessed to tax for any year within five years preceding that year was bound to furnish a return of his total income during the previous year by the date fixed in subsection (1-A) of section
22. In case such a return was not filed and in the opinion of the Income-tax Officer the total income of a person rendered him liable to Income-tax he was authorised to serve a notice upon him requiring him to furnish within a period specified in the notice a return in the prescribed form.
Subsection (3) of section 22 dealt with a case where inter alia a person did not furnish a return in response either to a notice or within the limit imposed by subsection (1-A). The other provisions of this section and section 23 dealt with the procedure to be adopted for assessment. Thus subsection (4) of section 23 stated that if any person failed to make the return either under subsection (I) of section 22 or in compliance with a notice under subsection (2) of that section, the Income-tax Officer had to make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment.
52. Subsections (1-A) and (2) of section 22 thus provided for a notice while the other subsections of that section dealt with the procedure of returns. Section 23 provided for procedure of assessment.
53. Section 34(1) may also be similarly split up into portions. It provided that if for any reason inter alia the income had escaped assessment in any year, the Income-tax Officer, may serve on the person liable to pay tax a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 22. It further provided that he shall thereafter proceed to assess or reassess such income and the provisions of this Act, shall, so far as may be apply accordingly as if the notice was a notice issued under that subsection, which means a notice under section 22(2).
54. The only thing which is not common between the two provisions of sections 22 and 23 on the one hand and section 34 on the other is the issuance of notice for filing of the return and obviously the notice under section 34 though required to be in the same form as a notice under section 22(2) yet cannot be equated with a notice under the provisions of section 22. But the rest of the procedure as provided for the assessment or the re-assessment is common whether the notice is under section 22(2) or under section 34. The other provisions of section 22 in regard to the actual furnishing of the return or its correction suo motu or at the instance of the Income-tax Officer and the provisions of assessm ent as given in section 23 are thus common to both the cases whether the notice is under one section or the other since section 34 does not provide for any special procedure of assessm ent but by reference applies the provisions of assessment as given in section 22 and section 23. For laying a foundation for this it creates a legal fiction "as if the notice (under section 34) were a notice under that subsection".
55. Subsection 24-B(3) thus does not provide for the service of notice. It assumes that a notice for the filing of the return has been served upon the assessee but he has not filed any return or filed an incorrect or incomplete return of actual assessment as distinguishable from the first stage of initiation of proceedings of assessm ent by service of notice calling upon the assessee to file a return. The Supreme Court authority which deals with the distinction between notice under sections 22 and 34 is not applicable or helpful to the interpretation of subsection (3) of section 24-B.
56. The argument that subsection (3) is not applicable to proceedings under section 34 does not merit any serious consideration. Subsections (1) and (2) clarify that they are applicable to an assessm ent under section 34 as much as section 22 subsection (1) is in general terms and makes the estate of the deceased liable to tax either already assessed under the Act or 'any tax which would have been payable by him under this Act'. It refers to assessment or assessability under the Act which provides for assessm ent in its section 34 also. Subsection (2) specifically mentions section 34 under which the executor, administrator or the legal heirs of the deceased can be assessed after his death. It will be highly anomalous to hold that while these two subsections deal with assessm ent under section 34 also and notwithstanding the death of the person assessable to tax his legal representatives etc can be proceeded against under section 34, the latter section would not apply to a case falling within the procedural ambit of subsection (3) of section 24-B. It may be mentioned that this anomaly was there in subsection (3) as originally enforced but it was removed by a later amendment. Subsection (3) as enforced by the amending Act XVIII of 1933, read as follows:- "Where a person dies, without having furnished a return which he has been required to furnish under the provisions of subsection (2) of section 22.
' The reference thus was made not to the procedure of section 22 but to the notice served under subsection (2) of that section. It is possible that the person drafting subsection (3) might have considered the two notices one under section 34 and the other under subsection (2) of section 22 as identical in view of the requirement in section 34 of the contents of the two notices being identical. However, the question of applicability of subsection (3) to proceedings of section 34 was raised in Commissioner of Income-tax, Bombay v. D. M. Mehta. The Bombay High Court did not agree with the contention that section 34 was at all attracted to the facts of the case and held that this question did not arise. However, Beaumont, C. J. Made the following observation against the applicability of section 34 to the third subsection of section 24-B: "The second question in terms does not arise, but as the subject has been discussed in argument, and the Advocate-General has invited the Court to give some guidance upon it to the Commissioner, I would say that, had I been of opinion that section 24-B was retrospective, I should still have thought that section 34 had no application in the present case." Underlining is mine.
' Section 24-B(3) was consequently amended by the Income-tax (Amendment) Act, 1939, and the words, brackets and figure of subsection (2) were omitted. With this omission the anomaly was totally removed. Subsection (3) as it stood after this amendment was- "Where a person dies, without liming furnished a return which he has been required to furnish under the provisions of section 22 .. . "
' Now on a notice under section 34(1) also the return has to be furnished under section 22. The language of subsection (3) does no more admit of any doubt that it applies to proceedings initiated against the deceased by service of notice under section 34 since the procedure of assessm ent including furnishing of return whether on a notice under section 22(2) is the same i. e.
The procedure as laid down in section 22. To argue that section 34 not only deals with assessment but also reassessm ent while subsection (3) deals with assessment only would be no more than quibbling. Re-assessm ent is nothing more or less than assessment and the former is included in the latter, the distinction not being of nature or degree. Reassessment is only a review of the first assessm ent and is in the ultimate analysis an 'assessment' only.
57. Before finishing this topic I would like to consider an argument of the learned counsel that wherever the Income-tax Act intends to include section 34 within its ambit, it makes specific reference to it and in the absence of such reference in subsection (3) the liability to re-assessment under section 34 would not arise. He referred to sections 28, 48, 49-F and 51.
58. This argument is without force since section 28 deals with penalty for non-compliance with notices. Since a notice under one section cannot be equated with a notice under another section reference had specifically been made to a notice under section 34. Similarly section 51 also specifically deals with the notice issued under the two subsections. The other provisions relied upon by the learned counsel are not so specific about this point. I am, therefore, of the view that the provisions of section 24-B(3) clearly permit the Income-tax Officer to proceed to act under section 23(4) without any notice to the legal representatives when a notice under section 34 had already been served upon the assessee during his lifetime and several opportunities were given to him to furnish the return. The Income-tax Officer has not, therefore, acted without lawful authority.
59. In support of this finding at which I have arrived she learned counsel for the respondent cited a case of the Calcutta High Court, Ganashyamdas Jattia v. Income-tax Officer. It was held that- "where a person dies after notice is served on him under section 34(1-A) but before furnishing a return, it is not necessary that a fresh notice under the provision should be issued on his legal representatives. Subsection (2) of section 24-B mentions section 34(1-A) but no specific mention of the provision is made in subsection (3) of section 24-B. However, subsection (3) provides for a situation where a person dies without furnishing a return which he is required to furnish under the provisions of section 22. Section 34(1-A) provides that a notice might be served containing all or any of the requirements which may be included in section 22. Hence, where a notice has been* 23 served on a person under section 34(1-A) further proceedings can be taken against the legal representatives of such person under section 24-B(3) without issue of a fresh notice."
' The Calcutta High Court relied upon an Indian Supreme Court case, K. S. Rashid & Sons v. Income- tax Officer.
60. I am not, therefore, in agreement with the argument of the learned counsel on this question too.
61. The learned counsel submitted that section 24-B(3) also provides for service of a notice on legal representatives and as such the Income-tax Officer was duty bound to serve such a notice upon the petitioner.
62. This argument would be of no help to the petitioner since a notice which is provided for in subsection (3) to the legal representatives is the notice for production of accounts, documents or other evidence which the Income-tax Officer might under the provisions of sections 22 and 23 have required from the deceased person. It clearly deals with the requirement of the Income-tax Officer who in the present case appears to have acted on Government record and did not require any record from the petitioner or other legal representatives of the assessee. But for that requirement no such notice would be necessary. The subsection does not make it incumbent upon the Income- tax Officer to serve a notice upon the legal representatives of his intention before proceeding to an-ex parte assessm ent.
63. The only question that remains to be considered is whether the notice under section 34 is not specific and in accordance with the provisions of that section. The question whether the notice under section 34 would be valid unless it enumerates the evidence on the basis of which the Income-tax Officer has formed his belief or mentions the approval given by the Inspecting Assistant Commissioner, Income-tax, has been the subject-matter of a case, decided by a Division Bench of the Lahore High Court, Messrs Paramount Electric Company v. The Commissioner of Income tax. It was held that it was not at all necessary that the .Notice issued under section 34 of the Act must indicate on the face of it either that it was issued on the basis of definite information that had come into the possession of the Income-tax Officer or that prior approval of the Inspecting Assistant Commissioner of Incomet-ax had been obtained in writing, or for the matter of that the precise reasons which led the income tax Officer in impelling him to issue the notice. In fact, in terms of subsection (1) of section 34, it is sufficient if the notice addressed to the assessee merely indicates that the Income-tax Officer has "reason to believe" that his assessable income (a) has escaped assessm ent (b) been underassessed (c) been assessed at too low a rate (d) been subject to excessive relief. However, it should appear from the record that he had definite information in his possession or that he had already obtained the prior approval of the Inspecting Assistant Commissioner before initiating the proceedings.
64. The learned counsel relied on an observation to the contrary in Commissioner of Sales Tax v.
Sheikh Inayat Ullah.
65. That question was also considered in the above case. It was held that observation was a mere obiter dicta.
66. The learned counsel also relied upon Messrs Sutlej Cotton Mills Ltd., Okara v. The Commissioner of Income-tax, North Zone, but the effect of that case has also been considered by the Division Bench in the case of Messrs Paramount Electric Company v. The Commissioner of Income-tax Lahore Zone, Lahore. In view of this Division Bench authority which is binding upon me it will be futile to consider this matter further. However, it was conceded, at the Bar that section 34 deals with two options, i. e. The Income-tax Officer should either have definite information or before initiating proceeding should obtain the approval in writing of the Inspecting Assistant Commissioner of Income-tax. Thus even if it is assumed that the Income-tax Officer did not have definite information, he has initiated the proceedings after obtaining approval of the Inspecting Assistant Commissioner. The argument is, therefore, without force for this reason too.24 25 26 27
67. Learned counsel also argued that the Income-tax Officer could not have "reasons to believe" only on the basis of a news item published in the Daily Nawa-i-Waqt but it is not necessary to pursue this line in view of his having acted after obtaining approval of the Inspecting Assistant Commissioner Income-tax. I however, do not agree with the argument of the learned counsel that the information received from a news item is not such an information as is envisaged in section 34.
The section does not deal with proof. It deals with the definiteness of information and a reasonable belief. There can be, therefore, no objection to his entertaining a belief on an information received from a newspaper in which are reproduced the particulars of the declaration said to have been made by the deceased assessee in pursuance of M. L. R. No, 21.
68. I find no merit in these petitions and dismiss them with costs. PLD 1959 SC (Pak.) 177 PLD 1961 SC 119 1972 SCMR 257 PLD 1975 SC 244 PLD 1962 SC 113 PLD 1962 SC 440 PLD 1963 SC 322 PLD 1968 SC 131 PLD 1971 SC 205 PLD 1972 SC 279\ (1974) 29 Taxation 190 (SC) (1974) 29 Taxation 208 (SC) (1975) 31 Taxation 71 (SC) 1971 PTD 513 AIR 1931 Born. 333 PLD 1956 FC 72 (1959) 1 Taxation 108 1935 I T R 147 (1926) A C 37 (1948) 16 T R 240 (1963) 7 Taxation 257 (SC) PLD 1969 SC 322 [Here in Italics] (1973) 87 I T R 683 (1964) 52 I T R 355 PLD 1976 Lah. 1147 L D 1966 Lah. 509 PLD 1965 SC 443