LexMADAN LAL LOHIA versus ASSISTANT CONTROLLER & ORS.
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• 489 MADAN LAL LORIA A v. ASSISTANT CONTROLLER & ORS. April 11, 1977 [P. N. BHAGWATI AND S. MURTAZA FAZAL ALI, JJ.j B · Garnishee Proceedings-Estate Duty A.ct, 1953 (Act 34 of 1953 ), S .. 73(5) r/w. s. 46(5A) of the Income Tax Act, 1922-Scope of. The appeUant, a tenant" in the building situate at No. 13 India Exchri.nge Place, Calcutta and belonging to one Rai Bhupathi Nath Deb Bahadur who died on September 23, 1959, was inducted in as a tenant through a registered lease deed dated 5th March 1960 for a period of thirty one years effective from 18th March 1960 and on a monthly rent of Rs. 1,400/· by nine persons who claimed to be the nephews and nieces of the said Bhupathi Nath Deb. C Respondents Nos. 3 and 4 claiming respectively to be the son and daughter of the deceased Bhupathi Nath, in their capacity as executors of the WiU dated 20th November 1957 said to have been made by the deceased prior to his death filed an account in form No. ED-1, of the properties including the building at 13 India Exchange Place, in respect of which, according to them estate duty was payable on the death of the deceased. The Assistant Controller of Estate Duty, after assessing the principal value of the estate under s. 58 of the Act determined a sum of Rs. 1,40,090/28 as the amount of duty payable by the accountable persons. Being unable to recover the amount, the Assistant Controller of Estate Duty, in view of the fact that the rent payable by the appeilant was a fortiorari an amount which in law belonged to the estate issued a notice to the appellant uls. 73 (5) of the Act r /w section 46(5A) of the Income Tax Act, 1922, pointing out that "a sum of Rs. lA0,090/20 is due from Tutsi Charan Deb and others on account of estate duty as accountable persons to the estate of late Rai Bhupathi Naith Deb" and requiring him to pay forthwith "any amount due from you to or, held by you, for, or on account of the said estate of Bhupathi Nath Deb Bahadur" upto the amount of Rs. 1,40,090/20. The appellant on receipt of the notice paid a sum of Rs. 2800 /- being the rent for the months of December 1961 and January 1962. From February 1962 to May 1962, the appellant paid the rent to his lessors on the strength of a notice dated 24th February 1962 from the lessor's attorney to the effect that the Assistant Controller had no jurisdiction to demand from the appellant the rent, since the lessors were not the accountable persons as they were not assessed to estate duty. No further pay- ment of rent, therefore· was made either to the 1essors or to Revenue; but instead the appeI!ant preferred a claim for refund of Rs. 2800 /- on the ground that this payment had been made by him under a bonafide 1nistake of law. By his order dated 25th March 1964, the Assistant Controller, holding that the appellant had acted in contravention of the notice dated 9th January 1962 issued against him, imposed a penalty of Rs. 3000/- under s. 73(5) of the Estate Duty Act, 1953 r/w. s. 46(1) and required the appellant to pay up the amounts of Rs. 35,000/- and Rs. 3,000/- on or before 6th April 1964. The writ petition filed by the appellant challenging the said order was rejected by the Calcutta High Court. Allowing the appeal by special leave in part, the Court, HELD: (I) Two conditions must be fulfilled before penalty can be imposed u/s. 46(1) of the Income Tax Act, 1922 : one is that the person on whom penalty is so_ught to be imposed· must be ~ assessee and the other __ is t~at_ tl!_e assessee must be in default within the tnean1ng of s. 45. Where a garn1shee IS required by notice issued under sub-section (SA) of section 46 to pay to the Income Tax Officer so much of the money due or which may become due frOm the garnishee to the assessee or held or which, may s~boequently be held by the garnishee for or on account of the assess(;e, aS 1s ~uffic1ent to pay the amount due by the tax-payer in respect of the arrears of income tax, he does not become an assessee as defined in section 2, sub-section (2). The garnishee merely pa vs the amonnt which is due from him to the assessee. and such payment. is ,in .dis- charge of the debt owed by hhn to th~ ass_, It LS not a paym~nt tlie l1aq1!1ty for which is created under any proVISion of the Act. There LS 110 provmon D E F H A B c D E F G H 490 SUPREME COURT REPORTS [1977] 3 S.C.R. in. the Act which by. a legal fkti.on makes him an assessee. Unlike s. 226(3 )
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