COMMISSIONER OF INCOME-TAX BIHAR AND ORISSA versus MANAGER, COURT OF WARDS ESTATE, BETTIAH

Citation: [1967] 2 S.C.R. 748 · Decided: 24-02-1967 · Supreme Court of India · Bench: M. HIDAYATULLAH · Disposal: Disposed off

Judgment (excerpt)

COMMISSIONER OF INCOME-TAX BIHAR AND ORISSA 
A 
v. 
MANAGER, COURT OF WARDS ESTATE, BETI'IAH 
February 24, J 967 
[M. HIDAYATULLAH, J. M. SIIELAT AND 0. K. MITTER, JJ.] 
Practice and Procedure-Tax liabi/iry-LiabiUty dependent on 
OIU-
come of litigation-Assessment made while title suit was pending-Hlgli 
Court setting aside assessment-Propriety of-Procedure to bt foUowtd. 
B 
During the pendency of a s1•it by a penon claiming lb be the heir 
of the Bettiah estate which was in the possession of the Manager, Court 
C 
of Wards, the Income Tax Officer made an assessment on the Manager. 
Jn those proceedings the State of Bihar and the Manager 
claimed that 
the estate had ves!ed in the State by escheat and therefore the income 
was not liable to tax. 
The Jncome4ax Officer. the 
Appellate Assistant 
Commissioner and the Tribunal held that as the litigation was pendin& 
·: could not be soid of the estate that the same had vested in the Stale 
by e;cheat. The High Court on relcrcnce 
held that the 
income tax 
authorities could not impose the tax. 
Setting aside the judgment of the 
D 
High C<iurt this Court in appeal. 
HELD : The proceedings should be made final after the disposal of 
the litigation and the H'gh Court could call for a supplementary stato-
mCDt of the case if necessary [750 DJ 
CJv11. APPELLATE JURISDICTION : Civil Appeal No. 1172 
of 1965. 
Appeal from the judgment and order dated December 17, 
1963 of the Patna High Court in Misc. Judicial C':,.: No. 566 of 
1960. 
R. H. Dhebar for R. N. Sachthey, for the appellant. 
S. P. Varma, for the respondent. 
The Judgment of the Court was delivered 
0Jy 
Mitter, J., This is an appeal from a judgment and answer 
of the High Court of Judicature, Patna, on a certificate granted 
by it under s. 66-A(2) of the Income-tax Act of 1922 correspond-
ing to s. 261 of the Income-tax Act of 1961. 
The Tribunal 
referred two questions of law to the High Court under s. 66(1) : 
"l. Whether on the facts and circumstances of the 
case, co~1!d assessment be made upon the Manager of 
Court of Wards, Bcttiah Estate, in respect of the income 
from the Bettiah Estate ? 
2. If the assessment could be made on the Manager 
of the Court of Wards in respect of the income from the 
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C.I.T. v. COUJ.T OF WARDS (Mitter, J.) 
749 
Bettiah Estate, was it chargeable to tax at maximum 
rates under s. 41 (I) of the Income-tax Act?" 
The facts of the case are as follows :- Maharani Janki Kuer 
wl:to was the last holder of the Bettiah Estate in Bihar died on 
November 27, 
1954~ For many years past before her death, 
the estate was under the management of the Court of Wards and 
continued under such management even after her death as it 
was not known whether she had left any heirs. Under s. 13 of 
the Bengal Court of Wards Act (IX of 1879) 
"Whenever, on the death of any ward, the succes-
sion to his property or any part thereof is in dispute, 
the Court may either direct that such property or part 
thereof be made over to any person claiming such pro-
perty, or may retain charge of the same until the right 
to possession of the claimant has been determined under 
Bengal Act VII of 1876, or until the dispute has been 
determined by a competent Civil Court." 
"Court" here means the Court of Wards. 
One Suresh Nandan 
Sinha filed a suit claiming the eotate on the allegation that he 
was the nearest heir of the deceased Maharani. After the death 
of the Mahar:mi, the Income-tax Officer made an assessment on 
the Manager of the Court of Wards as representing the estate of 
Bettiah, the assessment relating to the assessment year 1956-57 
the accounting year being the financial year 1955-56. The Gov-
ernment of Bihar claimed that the estate had vested in the State 
Government by escheat and the Manager, Court of Wards put 
forward that claim before the Income-tax authorities. Tbere was 
a further contention raised by the Manager that even if the assess-
ment was made on him representing the estate, the income should 
not be taxed at a maximum rate under s. 41 ( 1) of the Income-tax 
Act, 1922. As the litigation was pending, the Income-tax Officer 
and the Appellate Assistant Commissioner both held that it could 
not be said of the estate that the same had vested in the State by 
escheat and they also held that the income was taxable at the 
maximum rate. 
The same plea was raised before the Arriellat" 
Tribunal and the Tribunaf observed that as no notification had 
bee

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