Patna High Court
Prahlad Rai Bairoliya And Ors. vs The Union Of India (Uoi) And Anr. on 4 January, 1956
Equivalent citations: AIR1956PAT316, [1956]30ITR678(PATNA), [1956]7STC784(PAT), AIR 1956 PATNA 316
JUDGMENT Ahmad, J.
1. The important question that is prominently involved and that has been with great stress canvassed at the bar in this appeal, which has been brought by the plaintiff, is as to whether a claim for money assessed either under the Income-tax Act or under the Bihar Sales Tax Act against a Hindu undivided family as an assessee or dealer thereunder may at all be realised in execution by arrest and detention in prison of any junior member of that family, the karta or manager of the joint family in the meantime having died.
2. The plaintiffs in this case are the three sons of Gokul Chand Bairoliya. Gokul Chand Bairoliya died some time in November 1950. It is the admitted case of the parties that in the lifetime of Gokul Chand Bairoliya the Hindu undivided family composed of him and his three sons, who are the plaintiffs-appellants in this Court, had a business which was run under the name and style of "Prahlad Rai Sagarmal" at Jainagar within the district of Darbhanga. This business, it appears, ceased to exist sometime before the death of Gokul Chand Bairoliya.
While, however, Gokul Chand Bairolya was alive and the aforesaid business had not ceased to exist, certain assessments had been made under the Indian Income-tax Act against the Hindu undivided family for the income received from that firm. The total amount of such assessments for the period from 1944 to 1951 came to a sum near about Rs. 56,000/- out of which a part was paid and the balance of about Rs. 33,562/- was left unpaid.
Similarly, under the Bihar Sales Tax Act also some assessments were then made against that Hindu undivided family for the period from October 1942 to October 1949 and the total amount assessed under that Act during that period was near about Rs. 11,500/- out of which a part payment was made and the balance of Rs. 5.642-1-9 was left unpaid. On the death of Gokul Chand Bairoliya, the Income-tax department as well as the Sales Tax department issued requisition's for the aforesaid unpaid amounts and sent them to the Collector of Darbhanga for their realisation under the Public Demands Recovery Act.
The certificate office on the receipt of those requisitions started proceedings against all the three sons of Gokul Chand Bairoliya, namely, (1) Prahlad Rai Bairoliya, (2) Sagarmal Bairoliya and (3) Pursottam Das Bairolh'a and in those proceedings the certificates were ordered to be executed by their arrest and detention in prison on default of their payment of the dues under them. The plaintiffs in the meantime having come to know of the aforesaid actions taken against them by the certificate department brought the action under appeal.
The allegations made in the plaint were that due to the sudden death of Gokul Chand Bairoliya in his native place in Rajputana, they "remained completely in dark aoout the liquid assets or liabilities left by their father" and that he did not leave any immoveable property nor the plaintiffs ever came in possession of any immovable property belonging to their father or the Hindu undivided iamily, and, therefore, the dues against the Hindu undivided family could not be realised by their arrest aud detention in prison.
The suit was contested both by the Union of India representing the Income-tax department and the State of Bihar representing the Sales-tax department. Their case was that though the assessee both under the income-tax Act and the Bihar Sales Tax Act was the Hindu undivided family and though the assessment against it was made in the lifetime of Gokul Chand Bairoliya, the then karba of that family, the plaintiffs being members of the Hindu undivided family were as much liable for the payment of the tax as that Hindu undivided family of its the then karta, and, therefore, in law they could be arrested and put into prison in the proceedings taken against them for the realisation of the dues under the certificates issued by the aforesaid departments.
They further pleaded that the suit as framed was not maintainable and that the court-fee paid was also not sufficient. On these pleadings of the parties, the trial Court framed the following issues:
"1. Is the suit maintainable in this Court?
2. Is the court-fee paid sufficient?
3. Are the plaintiffs entitled to the declaration that they are not personally liable to pay up the arrears of income-tax and Sales Tax?"
The trial Court on hearing the parties decided the first two issues in favour of the plaintiffs taut negatived the contention raised in the third one and on that finding dismissed the suit with costs. Hence this appeal by the plaintiffs.
3. It has been conceded by all the parties before us that for the purposes of the Income--tax Act and the Bihar Sales Tax Act the position of a Hindu undivided family is that of a legal entity^ In our opinion, this point is firmly established both on principle and by authorities.
Under the Income-tax Act we get a full support of this view from the wordings of Sections 2 (2), 2 (9), 3 and 14(1), as also from the authorities laid down in 'Bejoy Singh v. Commr. of Income-tax, Calcutta', 1933 P.C. 145 (AIR V. 20) (A) : 'Kotha Govindarajulu Chettiar v. Commr. of Income-tax 1944 Mad. 245 (AIR V. 31} (FB) (B); 'Commr. of Income-tax, B. & O. v. Visheswar Singh', 1935 Pat. 342 (AIR V. 22) (SB) (C) and Commr. of Income-tax, B. & O. v. Sanichar Sah Bhum Sah, 1955 Pat 103 ( (S) AIR V 42) (D). Likewise, the Bihar Sales Tax Act under Sections 2(c), 4, 13 and 20 leads to the same conclusion.
That being so, the only question, as already stated above, that deserves some consideration in this connection is as to whether if an assessee under these Acts is a Hindu undivided family, which as in this case still continues to exist, call the execution for the realisation of the amounts assessed against that unit in the lifetime of the then karta be levied on his death by arrest and detention in prison of the junior members of that family.
Both the income-tax Act and the Bihar Sales Tax Act lay down that the dues for the non-payment of taxes assessed under them may be realised by the issue of requisitions to the Collector and that the Collector on the receipt of those requisitions shall recover them as if they were arrears of land revenue. In the Income-tax Act the mode of recovery is dealt with in Section 46(2) while in the Bihar Sales Tax Act it is dealt with in Section 14(4) and (6).
But it has, however, been made clear in each of them that in the course of the execution the certificates shall be issued only in the name of the assessees though in the case of the Income-tax Act the powers given to the Collector for the realisation of the requisitions app'ear to be wider than those given in the Bihar Sales Tax Act. Section 46(2), Income-tax Act reads:
"The Income-tax Officer may forward to the Collector a certificate under his signature specifying the amount of arrears due from an assessee, and the Collector, in receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land revenue.
Provided that without prejudice to any other powers of the Collector in this behalf, he shall for the purpose of recovering the said amount have the powers which under the Code of Civil Procedure, 1908 (Act 5 of 1908), a Civil Court has for the purpose of the recovery of an amount due under a decree."
And Section 14 (4); and (6), Bihar Sales Tax Act says:
"(4) The amount of tax--
(a) due where the returns are furnished without receipt showing full payment thereof, or
(b) assessed under Sub-sections (1), (2), (3) and (4) of Section 13 less the sum, if any, already paid by the dealer in respect of the said period, or
(c) assessed under Sub-section (5) of Section 13 together with the penalty directed to be paid under that Sub-section, or under Sub-section (3) of Section 12 or subsection 3 (a) of this, section or under Section 24-A, or
(d) due under the first proviso to Section 5 less the sum, if any, already paid by the dealer, shall be paid by the dealer into a Government treasury by such date as may be specified in a notice issued by the Commissioner for this purpose and the date to be so specified shall ordinarily be not less than thirty days from the date of service-of such notice :
Provided that the Commissioner may, in respect of any particular dealer and for reasons to be recorded in writing, extend the date of such payment or allow such dealer to pay the tax due and the penalty, if any, by instalments."
"(6) Any amount of tax together with the penalty, if any, which remains unpaid after the date specified in the notice issued under Sub-section (4) including the penalty, if any, imposed under Sub-section (5) shall be recoverable as an arrear of land revenue:
Provided that when a dealer has presented any appeal under Section 24, the appellate authority may, in its discretion, treat the assessee as not being in default so long as the appeal remains pending."
The effect of the provision in each of the aforesaid sections is that, the dues under the In-come-tax Act as well as under the Bihar Sales Tax Act are made equivalent to public demands as contemplated by Section 3 (6) and Schedule I, item 3, Bihar and Orissa Public Demands Recovery Act, 1914, and may, therefore, be realised under that Act.
4. In the present case the requisitions issued by the Income-tax department and the Sales Tax department, which were sent to the Collector for realisation, were, it is admitted, proceeded with by the Collector as such. The relevant provision as to the execution in that Act is given in its Section 15, which directs:
"Subject to such conditions and limitations as may be prescribed, a Certificate Officer may order execution of a certificate--
(a) by attachment, and sale, if necessary, of any property, or, in the case of immovable property, by sale without previous attachment, or
(b) by arresting the certificate-debtor and detaining him in the Civil prison, or
(c) by both of the methods mentioned in Clauses (a) and (b)."
Here, as already stated above, the Certificate Officer ordered the execution of the certificates issued by the Income-tax department and .the Sales Tax department against the Hindu undivided family by the arrest and detention in prison of the plaintiffs, namely, Prahlad Rai Baiorliya, Sagarmal Bairoliya and Pursottain Das Bairoliya, sons of Gokul Chand Bairoliya.
It needs no argument to say that the execution by arrest and detention in prison cannot be levied in all circumstances; for example, it cannot be levied against the minors or women or against the legal representatives. The execution by arrest and detention in prison presupposes that it can be resorted to only against the body of the certificate-debtors.
If, therefore, the certificate-debtor is not a natural being but a legal entity, the execution by arrest and detention in prison cannot be enforced against such a person, there being no physical body in a legal entity, unless there is a provision made in law that some other natural being shall be as much liable for the dues against a particular legal entity as for the dues against himself in which case such a mode of execution may be enforced against the body of that per-son for the realisation of the dues against that legal entity.
It is clear that under the law, as it stands such a situation cannot arise in the case of junior members of a Hindu undivided family when the assessment is against the latter as such. That being so, the assessment made against a Hindu undivided family under the income-tax Act or under the Bihar Sales Tax Act cannot be enforced against the junior members of that family by their arrest and detention in prison.
It follows from it that if the debtor is the Hindu undivided family, the debt against it can be realised normally only by a mode other than one by arrest and detention in prison; for ex-ample, it may be realised by attachment and sale or by sale alone of the assets of that family though its assets or any part of it may be at that time in the hands of the junior members of that Hindu undivided family. In this connection certain amount of argument was advanced in the footing of Section 25-A in the Income-tax Act. Sub-section (2) of that Section reads:
"Where such an order has been passed, or where any person has succeeded to a business, profession or vocation formerly "carried on by a Hindu undivided family whose joint family property has been partitioned on or after the last day on which it carried on such business, profession or vocation, the Income-tax Officer shall make an assessment of the total income received by or on behalf of the joint family as such, as if no partition had taken place, and each member shall, in addition to any income-tax for which he or it may be separately liable and notwithstanding anything contained in Sub-section (1) of Section 14, be liable for a share of the tax on the income so assessed according to the portion of the joint family property allotted to him or it; and the Income-lax Officer shall make assessments accordingly on the various members and groups of members in accordance with the provisions of Section 23:
Provided that all the members and groups of members whose joint family property "has been partitioned shall be liable jointly and severally for the tax assessed oa the total income received by or on behalf of the joint family as such."
In my opinion, Section 25-A, as is obvious from its language, deals with a special situation that arises in the wake of separation and partition in a Hindu undivided family. In the present case, as alrady stated above, the Hindu undivided family has not yet separated. Therefore, Section 25-A cannot be of any avail in deciding the point, that arises for consideration on the facts of this case.
What was argued on the footing of the proviso to Sub-section (2) of Section 25-A was that as under it all the members of the family are to remain liable jointly and severally for certain assessments specified therein even when partition and separation have taken place between them, so by analogy it can be stated that even when the family is undivided its members are as much liable for the assessment made against it as the undivided family itself. In my opinion, in the first place, on the footing of a special provision given in a statute to meet a special situation, no general principle, as a rule, should be inferred.
Secondly, even if the analogy be accepted as correct, that analogy can best go to the length of deciding the question of liability of the different members in the family but it cannot by itself help in deciding as to the mode of execution against them for the enforcement of that liability. What is here in controversy is as to the mode of execution and not as to the liability of the members.
Therefore, on the analogy of the proviso to Sub-section (2) of Section 25-A, the learned Subordinate Judge was not justified to come to the conclusion that on the facts of this case the execution can be levied against the junior members of the family even by their arrest and detention in prison, In that view of the matter, the judgment of the learned Subordinate Judge on this point has to be set aside.
5. Further Mr. Untwalia has rightly contended that the proviso to Sub-section (2) of Section 25-A has been enacted by the Legislature to meet a special contingency arising under very special set of facts. If the Legislature in fact wanted to apply the same principle even in a situation where the family remains undivided within the meaning of the Income-tax Act, they could have provided a similar provision to that effect specifically in the body of the income-tax Act. That not having been provided, such a rule cannot be inferred by analogy.
6. It has, therefore, to be held that the Certificate Officer has no jurisdiction to execute the certificates issued for the payment of arrears of income-tax and sales tax assessed in the name of the Hindu undivided family by the arrest and detention in prison of the present plaintiffs whose only relation with the family so far brought to our notice is that they happen to be its junior members.
7. Mr. Lal Narain Sinha appearing for the State of Bihar, however, tried to support the judgment of the trial Court on the ground that the suit itself as framed is not maintainable in law. According to his contention, the question as to the mode of execution of a certificate or a decree relates to the execution of that certificate or a decree and as such the proper forum to raise an objection against a particular mode followed in the execution proceeding is the Court of Certificate Officer under Section 46, Public Demands Recovery Act.
The aforesaid section, as contended by him, bars a suit to vindicate any objection relating to the execution of a. certificate. To this extent, in my opinion, the learned Government Advocate is right. But the difficulty arises in accepting that that rule of law applies to the facts of this case also for, in my opinion, other conditions essential for the applicability of that rule as laid down in Section 46, Public Demands Recovery Act, are not present here. Section 46, Public Demands Recovery Act reads :
Except as otherwise expressly provided in this Act, every question arising between the certificate-holder and the certificate-debtor, or their representatives relating to the making, execution, discharge or satisfaction of a certificate duly filed under this Act, or relating to the confirmation or setting aside by an order under this Act of a sale held in execution of such certificate, shall be determined, not by suit, but by order of the Certificate Officer before whom such question arises; or of such other Certificate Officer as he may determine.
Provided that a suit may be brought in a Civil Court in respect of any such question upon the ground of fraud."
Mr. Untwalia appealing for the appellants in this Court drew our attention pointedly to the words "question arising between the certificate-holder and the certificate-debtor or their representatives relating to the making, execution, discharge or satisfaction of a certificate".
According to Mr, Untwalia, his clients, namely the plaintiffs, are neither the certificate-debtors, nor the representatives of the certificate-debtors, which in this case, was the Hindu undivided family and there is no evidence on the record that they have come in possession of any property movable or immovable belonging to that Hindu undivided family.
That being so, I agree with Mr. Untwalia that on the facts of this case the plaintiffs, who are only the junior members of that Hindu undivided family, cannot be said to be in law either the certificate-debtors or their representatives. In this view of the matter, the question raised here is not one between the certificate-holder and the certificate-debtor or his representatives. There-fore, the suit as framed is not barred under the provisions of law laid down in Section 46, Public Demands Recovery Act.
8. The learned Government Advocate further raised another small point. That is to the effect that the facts stated in the plaint are not sufficient to entitle the plaintiffs to the reliefs sought by them in the plaint. What he meant by this argument is that though there is averment made in the plaint that no immovable property was left behind by Gokul Chand Bairoliya yefc the plaint as contended by him, is significantly silent in the point of movables left by him.
Technically, there may be some substance in this contention but on reading the plaint as a whole I think it is apparent that what the plaintiffs meant to allege in the plaint was that Gokul Chand Bairoliya died without leaving any property either movable or immovable and that in any case the plaintiffs did not come in possession of any part of the property movable or immovable which originally belonged to the joint family or still belong to the joint family.
In the plaint the main relief sought by them as it appears to me, is that the certificates for the realisation of the taxes assessed on the Hindu undivided family cannot be realised by the arrest and detention in prison of the plaintiffs. Therefore, this last contention also advanced by the learned Government Advocate fails.
9. In the result, therefore, I think, the appeal should be allowed with costs throughout.
Misra, J.
10. I agree.