Vinod Kala Vs CIT (Madhya Pradesh High Court)
Summary: The Madhya Pradesh High Court allowed the writ petition filed by Vinod Kala challenging the order dated 15/07/2004 passed under Section 119(2)(b) of the Income Tax Act, 1961, refusing to condone the delay in filing the return of Late Shri B.L. Jain for Assessment Year 1995-96. Shri B.L. Jain, who was engaged in Electrical Installation Work in the name and style of B.L. Jain, died on 20/08/1996 after executing a will dated 28/07/1996 appointing the petitioner as executor. The petitioner had filed returns for Assessment Years 1995-96, 1996-97 and 1997-98 as legal representative of the deceased. The return for AY 1995-96 was filed beyond the period prescribed for a belated return and a refund was claimed in respect of Tax Deducted at Source. The petitioner sought condonation under Section 119(2)(b), relying upon CBDT Circular No. 670 dated 26/10/1993 and order F.No.225/208/96-ITA-II dated 12/10/1993. The Court held that the petitioner came within the definition of legal representative under Section 2(29) of the Income Tax Act and Section 2(11) of the CPC. Referring to Section 159 and the cited precedents, the Court held that the respondent erred in questioning the petitioner’s capacity as legal representative, quashed the impugned order and directed the respondent to condone the delay under Section 119(2)(b).
FULL TEXT OF THE JUDGMENT/ORDER OF MADHYA PRADESH HIGH COURT
This writ petition under Article 226 of the Constitution of India has been filed for quashment of order dated 15/07/2004 passed by the respondent under Section 119(2)(b) of the Income Tax Act, 1961 (hereinafter for short referred as ‘IT Act’) refusing to exercise the powers conferred under that section and refused to condone the delay caused in filing the return of the deceased for the Assessment Year 1995-96 and for directing the respondent to exercise the powers under Section 119(2)(b) of the IT Act and granting refund on the basis of claim made by the petitioner in the capacity as legal representative of the deceased.
2. The petitioner is claiming the following reliefs:
“”A) a writ of certiorari and/or any other appropriate writ, direction or order, requiring the Respondent to certify to this Hon9ble Court all the records of this case in which the impugned order dated 15/7/04 ( communicated vide letter dated 20/6/06) Annexure P/15 has been passed and after examining the legality and /or propriety thereof, quash the same.
B) a writ of Mandamus and/ or any other appropriate writ, direction or order, directing the Respondent to condone the delay u/s 119 (2) (b) and direct his subordinate to grant refund on the basis of return filed for the AY 1995-96 along with interest.
C) any other appropriate writ, direction or order and grant such other appropriate relief which this Hon9ble Court may deem fit in the facts and circumstances of this case. D) To award the cost of this petition in favour of the petitioner.””
3. 3. The facts in nutshell are that the petitioner is the son of Late Shri Babulal S/o Gabbulalji Jain (Kala), who during his lifetime was engaged in the business of Electrical Installation Work in the name and style of B.L .Jain and regular assessee of the Income Tax Department, who had filed is income tax return upto the Assessment Year 1994-95. Shri B.L. Jain, who died due to some ailment on 20/08/1996 had executed a will on 28/07/1996 in favour of the petitioner making arrangement in respect of his estate. By this will the deceased had appointed the petitioner as executor of his will with responsibility to execute and distribute the same as per the directions in the will (Annex.-P/2). After the death of his father, the petitioner had filed all the income tax return in respect of the income derived by his father during his lifetime for the periods during which his father was alive, who could not file his tax returns because of his own ailment. The income tax returns for the period from 01/04/1994 to 31/03/1995, 01/04/1995 to 31/03/1996 and 01/04/1996 to 31/03/1997, the corresponding Assessments Years 1995-96, 1996-97 and 1997-98 which are annexed with the petition as Annex.-P/3 to P/5.
4. The petitioner being executor of the will is deemed to be the legal representative of the deceased and as such all the above returns were filed by the assessee in his capacity as legal representative of the deceased Shri B.L.Jain. The returns for the Assessment Year 1996-97 and 1997-98 (Annex.-P/6 and P/7) were belated returns covered within the period prescribed under Section 139(4) as such the petitioner had all the rights to file the said returns and get the assessment done on the basis thereof. The assessing authority completed the assessment for the aforesaid years by passing the order under Section 143(3) and while completing the said assessments, the assessing authority has not disputed the factual position that the petitioner is liable to be assessed as the legal representative of the deceased.
5. Income Tax Returns for the Assessment Year 1995-96 was filed even beyond the period prescribed for the belated return and since there was a refund receivable in respect of Tax Deducted at Source from the income of the deceased Shri B.L.Jain, the petitioner vide his application dated 04/12/1998 approached the Chief Commissioner of Income Tax Madhya Pradesh, Bhopal and requested him to condone the delay in filing the said return as also in making the refund claim relied upon the circulars No.670 dated 26/10/1993 and order F.No.225/208/96-ITA-II dated 12/10/1993 issued by the Central Board of Direct Taxes.
6. During the course of above proceeding, the Commissioner for the first time raised a doubt as to the validity of the return filed by the petitioner Vinod Kala, claiming him to be the legal representative of the deceased in the capacity as the executor of the will of the deceased. The petitioner submitted reply dated 03/02/2003 stating that executor of the ‘Will’ is squarely covered within the expression legal representatives and hence, is liable to be assessed in respect of the income of the deceased during the period when he was alive in accordance with the provisions of Section 159. Near about after two years on 20/06/2006 Commissioner of Income Tax-II, Indore for the first time on 03/02/2003 informed the petitioner that an order under Section 119(2)(b) has been rejected, therefore, the impugned order has been challenged by way of this writ petition. 7. 7. Learned counsel for the petitioner submits that impugned order passed by the Commissioner is illegal, bad in law and without jurisdiction as the same is contrary to the statutory provision of Section 159 of the IT Act and also against the order dated 12/10/1993 issued under Section 119(2)(b) by the CBDT and also against the circular No.670 dated 26/10/1993. He squarely covered by the definition of legal representative as provided under Section 2(29) of the IT Act and Section 2(11) of the CPC, which runs as under:
“”2(29) “legal representative” has the meaning assigned to it in clause (11) of section 2 of the Code of Civil Procedure, 1908 (5 of 1908).
2(11) “legal representative” means a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or sued in a representative character the person on whom the estate devolves on the death of the party so suit or sued;””
8. Learned Commissioner failed to appreciate the Section 159 of the IT Act as it provides for the assessment of the income of the deceased in the hands of legal representative as a representative assessee. To bolster his contention, learned counsel placed reliance on para 5 to 11 of the judgment by this Court in the case of Raghunathdas Kakani Vs. Addl. CIT reported in [1980] 122 ITR 952[1980] 122 ITR 952; para 12 to 18 of CIT Vs. A.M.L. Price reported in [2007] 295 ITR 45[2007] 295 ITR 45; and para 19 to 26 of the case CIT Vs. G.B.J. Seth and Another Another reported in [1982] 133 ITR 192[1982] 133 ITR 192. On these submissions, learned counsel prays for allowing the writ petition.
9. On the other hand, learned counsel for the respondent supporting the impugned order opposed the prayer.
10. Heard and considered the rival submissions raised by learned counsel for the parties and perused the record.
11. It is not in dispute that petitioner is the son of the deceased Shri B.L.Jain. He comes under the definition of ‘Legal Representative’ as contained under Section 2(29) of the IT Act and Section (11) of CPC as mentioned hereinabove. The will dated 28/07/1996 (Annex.-P/2) has not been challenged by any of the family member of the petitioner.
12. Section 159 of the IT Act provides about the legal representative, which runs as under:
159. Legal representatives –
(1) Where a person dies, his legal representatives shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.””
13. The Division Bench of this Court in the case of Raghunathdas Kakani (Supra) has observed that Section of IT Act creates as fiction and provides for assessment by legal representative on behalf of the deceased, which runs as under:
“”Section 159 of the Act creates a fiction and provides that where a person dies his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. Therefore, although the assessee was dead, a fiction is created where under he is kept alive for the purposes of payment of the tax and the legal representative is made responsible for the payment thereof. It is not disputed that an executor is also included in the term ” legal representative ” because the said term is defined to have the same meaning as assigned to it in Clause (ii) of Section 2 of the CPC which states that ” legal representative ” means a person who in law represents the estate of a deceased person. The executor is a person who in law represents the estate of the deceased person.””
14. In the case of CIT Vs. A.M.L. Price (Supra) referring Section 211 of the Indian Succession Act, 1925, the Allahabad High Court has held as under:
“….. executor of a deceased person is his legal representative for all the purposes, and all the property of the deceased persons vests in him as such. Thus, for all practical purposes, the executor is to be treated to be the person in whom the property of the deceased vests as a legal representative.”
” Similar view has been taken by the Division Bench of this Court in the case of CIT Vs. G.B.J. Seth (Supra).
15. In light of the judgment relied upon by the petitioner as mentioned hereinabove and also the provision as contained under Section 2(29) and 159 of the IT Act and Section 2(11) of CPC, we are of the considered view that the respondent has committed an error in raising a doubt with regard to the capacity of the petitioner as legal representative of the deceased B.L.Jain and passing the impugned order rejecting his claim for assessment on behalf of the deceased.
16. Ex consequentia, this petition has substance, succeeds and is hereby allowed. Impugned order dated 15/07/2004 communicated to the petitioner vide letter dated 20/06/2006 (Annex.-P/15) is hereby quashed. It is also directed to the respondent to condone the delay under Section 119(2)(b) of the IT Act.
17. Accordingly, writ petition stands allowed and disposed off. Certified copy as per rules.
