The Judgment of the Court was delivered by

Sen, J.:— This reference under s. 256(1) of the I.T Act, 1961, arises out of assessment to tax of income accruing to the Estate of late Karam Chand Thapar in the assessment year 1964–65, the relevant accounting year being the year ending on the 31st March, 1964. The facts found and/or admitted are, inter alia, as follows:

The assessment was made in the name of “Estate of late Lala Karam Chand Thapar, represented by executors and legal representatives, (1) Sri I.M Thapar, (2) Sri B.M Thapar, (3) Sri L.M Thapar, (4) Sri M.M Thapar and Others” under s. 143(3) of the said Act read with s. 168.

2. Lala Karam Chand Thapar died on the 29th March, 1962, leaving a will dated the 20th June, 1961, under which all his assets and properties were equally divided between his four sons and his wife and two executors were appointed. Probate of this will had not been obtained and administration of the estate was also not completed during the relevant year. In an appeal preferred from the assessment before the AAC it was contended that the assessment was not valid because the same had been made on the legal representatives of the deceased as also on the executors to the estate. This contention was rejected by the AAC.

3. The assessee preferred a further appeal before the Tribunal. It was contended that the assessment should have been made only on the executors and not on both the legal representatives and the executors. The Tribunal held that the assessments were made on the legal representatives as well as the executors out of abundant caution and no illegality had been committed thereby.

4. At the instance of the assessee, the Tribunal has drawn up a statement of case and has referred the following questions:

“1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that there was no illegality in the assessment as framed by the Income-tax Officer.”

2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the capital losses suffered by late Lala Karam Chand Thapar during his lifetime could not be set off against the capital gains of Rs. 65,254 earned and assessed in the hands of the executors and legal representatives of the deceased?”

5. Dr. Debi Pal, learned counsel for the assessee, contended at the hearing that the assessment in the instant case made admittedly under s. 168 of the I.T Act, 1961, was erroneous inasmuch as persons other than the executors had been treated as assessees.

6. In support of his contentions Dr. Pal cited a decision of this court in Asit Kumar Ghose v. Commr. of Agrl. J.T, [1952] 22 ITR 177. Here the assessee was the sole residuary legatee under the will of the testator and had filed a suit against the executors and trustees nominated under the will for administration of the estate. The assessee was appointed receiver and was put in possession of the estate from August, 1948. Prior thereto, a notice under s. 24(2) of the Bengal Agrl. I.T Act, 1944, had heen served on the executors and they had filed a return for the accounting year 1945–46 pursuant thereto. Even after the assessee obtained possession of the estate, notices under s. 24(4) and s. 25(2) of the said Act were served on the executors. Subsequently, fresh notices under the said sections were served on the assessee and ultimately an assessment was made on the assessee in his capacity as receiver or beneficiary to the estate. The assessee challenged the assessment. The question referred to this court was whether the assessment on the receiver was valid when the return had been filed and the income had been received by the executors. It was held that the proceedings were validly initiated against the executors who had received the income not on behalf of anybody as the administration was not complete, but the direct assessment on the receiver was not justifiable.

7. Dr. Pal also cited a decision of the Supreme Court in Administrator-General of West Bengal for the Estate of Raja P.N Tagore v. CIT, [1965] 56 ITR 34. The facts in the case were that under his will the testator made a number of legacies and bequeathed his residury estate to his five sons. The executors and the trustees in 1938 were required to manage the estate for a period of 15 years within which the legacies had to be paid off. After the death of the testator on the 2nd July, 1938, probate of his will was obtained on the 24th August, 1938. On the 10th May, 1948, the Administrator-General of West Bengal was appointed Administrator-de-bonis-non of the estate, and submitted returns of income of the estate for the assessment years 1950–51 and 1951–52, the accounting years being 1949–50 and 1950–51. The question arose whether the Administrator-General represented himself in the assessments or whether he represented the various beneficiaries having different shares in the estate. The Supreme Court held that as the administration of the estate had not been completed the Administrator-General received the income of the estate on his own behalf and not on behalf of the beneficiaries.

8. Mr. Suhas Sen, learned counsel for the revenue, has contended on the other hand that the assessment had been made in the hands of the repre-sentative-assessees and it did not matter if the legal representatives were included in the assessment along with the executors. He drew our attention to the provisions of Chap. XV of the I.T Act, 1961, and submitted that persons and bodies referred to therein, namely, legal representatives, guardians, agents of foreign principals and non-residents, executors, successors to a business, liquidators and others, all representative-assessees, were governed by the provisions of the Chapter.

9. He did not dispute that the assessment in the instant case being an assessment under s. 168 of the Act ought to have been made on the executors alone and not on the legal representatives and that the legal representatives should not have been included in the assessment, but he submitted that the irregularity, if any, in such joinder did not invalidate the assessment.

10. In support of his contentions Mr. Sen cited a decision of the Supreme Court in First Addl. ITO v. Mrs. Suseela Sadanandan, [1965] 57 ITR 168. The facts in this case were that one S.P Sadanandan had died on the 10th July, 1948, leaving a will whereby three executors, namely, his widow, his eldest son, one E.D Sadanandan, and a chartered accountant were appointed as executors. The deceased had been assessed to income-tax for the years 1945–46 to 1949–50, but after his death the ITO discovered some tax evasion and on that ground issued notices under s. 34 of the Indian I.T Act, 1922, addressed to “late S.P Sadanandan by his legal heirs, E.D Sadanandan and others”. A return was submitted signed by E.D Sadanandan as the legal heir, in the status of an individual. The reassessments made pursuant thereto were appealed against but the appeals were dismissed by the AAC. Thereafter, when the properties of the estates were sought to be attached and sold for the purpose of recovering the tax due, the other executor, viz., the widow, moved the Kerala High Court under art. 226 of the Constitution for quashing the notice of attachment and restraining the recovery of the tax dues. The High Court allowed the petition on the ground that the deceased had not been properly represented in the proceedings and, therefore, the assessment was void. There was an appeal to the Supreme Court from this decision.

11. It was contended by the revenue before the Supreme Court that either on the basis of the existence of a will or on the basis of intestacy the notices served on one executor on behalf of all the legal representatives of the deceased were sufficient to sustain the assessment. The Supreme Court considered s. 24B of the Indian I.T Act, 1922, and found that under sub-s. (2) thereof the ITO was entitled to serve notices under s. 34 on the administrator, executor or other legal representatives of the deceased and proceed to assess the total income as if the said legal representatives were the assessee. The Supreme Court held that if a person died executing a will appointing more than one executor or died intestate leaving behind him more than one heir, the ITO could proceed to assess the total income of the deceased against all the executors or the legal representatives, as the case may be.

12. On the facts, the Supreme Court noted that three executors had been appointed in the will which was not probated. Under s. 13 of the General Clauses Act any of the executors could represent the estate of the deceased. As to an unprobated will the Supreme Court quoted with approval Williams on Executors and Administrators, 14th edn., Vol. 1, p. 58, as follows:

“Where an executor is appointed by a will, he derives title from the will, and the property of the deceased vests in him from the moment of the testator's death, so that probate is said to have relation to the time of the testator's death. Thus, though he cannot rely on his title in any court without production of probate, probate is merely operating as the authenticated evidence of the executor's title.”

13. The Supreme Court noted the definition of a legal representative under the Code of Civil Procedure and on the analogy of the Code of Civil Procedure observed that if all the executors or some of them administered the estate of a deceased without obtaining probate, all of them or some of them who had administered the estate may be held to be the legal representatives of the deceased and liable to the extent of the property taken possession of by them. The matter was remanded to the High Court for being considered afresh on further facts and materials and the Supreme Court made it clear that no opinion was being passed finally on questions of law or fact in the case.

14. Mr. Sen lastly cited a decision of the Gujarat High Court in Chooharmal Wadhuram (Deed.) v. CIT, [1968] 69 ITR 88. This was also a case of reassessment of the income of an assessee after his death. The notice under s. 34(1)(a) of the Indian I.T Act, 1922, was issued in the name of the deceased to his legal representatives naming one of them and adding the word “Ors”. The status of the assessee was recorded as an “association of persons”. One of the questions referred to the High Court was whether the service of a notice under s. 34(1)(a) only on one of the legal representatives was legal in view of the fact there were other known representatives. The High Court held that though the status of the assessee had been wrongly described, it would not invalidate the reassessment proceedings inasmuch as the assessee proceeded against was the same in respect of whom sanction was given by the Commissioner. The High Court held further that if the ITO after diligent and bona fide enquiry believed the person, on whom the notice was served, to be the sole representative of the deceased, then the proceedings would be valid.

15. Drawing inspiration from the above authorities, Mr. Sen sought to argue that the mistake in the instant case, if any, resulted in improper joinder of persons in the assessment and on the analogy of the Code of Civil Procedure would not be fatal to the proceedings. Mr. Sen contended that both the executors were parties to the assessment which was confined to the estate of the deceased and, therefore, there was nothing fundamentally wrong in including other legal representatives in the assessment by way of abundant caution as none of them would incur any personal liability.

16. From the facts found it is not clear in what capacity the said two persons have been joined in the assessment as legal representatives. Section 2(29) of the I.T Act, 1961, defines legal representatives as follows;

“‘Legal representative’ has the meaning assigned to it in clause (11) of section 2 of the Code of Civil Procedure, 1908 (V of 1908).”

17. Section 2(11) of the Code of Civil Procedure, 1908, defines ‘legal representative’ as follows

“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 is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued.”

18. Section 211 of the Indian Succession Act, 1925, inter alia, provides as follows:

“The executor or administrator, as the case may be, of a deceased person, is his legal representative for all purposes, and all the property of the deceased person vests in him as such.”

19. In the instant case, the executors having been appointed in the will legally represent the estate of the deceased. It is found further that the administration of the estate is not complete and, therefore, it is only the executors who can represent the estate. The fact that probate of the will has not been obtained is of little relevance. As observed by the Supreme Court in the case of Suseela Sadanandan [1965] 57. ITR 168, the executor is entitled to represent the estate of the deceased even without a probate. Only when it is necessary for the executor to establish his title in a court of law the question of probate becomes important.

20. Therefore, it is not clear to us as to how the other two persons have been treated as the legal representatives of the deceased. It has not been found that the said persons in spite of the executors having been appointed have intermeddled with the estate.

21. In any event, the Tribunal has sought to justify the inclusion of the said legal representatives on the ground of abundant caution. In our view, there is no scope for exercise of caution in view of the specific statutory provisions. If a person who is not legally liable to be assessed is included in the assessment and his name continues to be recorded in the proceedings as an assessee, he will be subject to various obligations and liabilities as laid down in the I.T Act. So far as he is concerned, he cannot take the plea of abundant caution and claim exemption from such obligation. In our opinion, the error in the assessment is not a mere irregularity but affects the substance of the matter.

22. For the reasons given above, the contentions of the assessee will succeed. The question No. 1 is answered in the negative and in favour of the assessee. Dr. Pal for the assessee stated on instructions that he does not press question No. 2 and, therefore, we decline to answer the same. In the facts and circumstances of the case, there will be no order as to costs.

C.K Banerji, J.:— I agree.