# COMMISSIONER OF INCOME-TAX BIHAR AND ORISSA v. MANAGER, COURT OF WARDS ESTATE, BETI'IAH February 24, J 967

- **Citation:** [1967] 2 S.C.R. 748
- **Court:** Supreme Court of India
- **Decided:** 1967
- **Case number:** Civil Appeal No. 1172 of 1965
- **Bench:** M. Hidayatullah, J. M. Siielat, 0. K. Mitter
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-income-tax-bihar-and-orissa-v-manager-court-of-wards-estate-4177
- **Pages:** 3

## Headnote

Practice and Procedure-Tax liabi/iry-LiabiUty dependent on
OIUcome 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 statomCDt 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.

## Text

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
OIUcome 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 statomCDt 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 corresponding 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 succession 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 property, 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 Government 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 assessment 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
been issued by the Government on the death of the Maharani or
later to the effect that the estate had vested in the State of Bihar
by escheat, there was no certainty as to whq would be found to
be the ultimate heir in view of the pending litigation.
The High Court on the case stated, referred to Arts. 289 and
296 of the Constitution and taking note of the contentions urged
on behalf of the parties observed :
"In the circumstances of the nresent case,"it is manifest that the Income-tax authorities cannot v"lidly
impose a tax upon the Manager, Court of Wards,
7 50
SUPREME COURT REPORTS
[1967] 2 S.C.R.
Bettiah Estate, merely because a tille suit has been filed
with regard to the heirship of the Bettiah Estate without
deciding the question as lo whether the claim of the
State of Bihar that the properly has vested in it by
eschca1 is established or not."
On this view, the first question was answered in favour of the
:i,;es>ec and no :mswer was given to the second question beca~
it was academic.
It was asserted on behalf of the respondent-and not denied
hy the appellant-that the suit of Surcsh Nandan Singh had been
uismisscd, but an appeal had been preferred therefrom and was
pending. On the fact~ as the same appear to us at present, it is
not possible to bold that the estate of Bcttiah has escheated to
the Stale of Bihar. It is obvious that in case of such cscheat there
c:m be no assessment to income-tax.
The positio!l will be clarified af:cr the appeal by Surcsh Nandan Sinha is disposed of. In
this view of the matter, the judgment of the Patna High CQun
is set asid'. The proceedings should be finalised after the disposal
of the licigation and the High Court may c~ll for a suppkmcntary
statclllC!ll of case, if it thinks necessary.
The qt.estion as to
whether the estute has cscheatcd to the State of Bihar is tcft open,
and the costs of this appeal will abide by the ultimate decision of
the High Court.
Jn case it he found that the escheat bad taken
pl~cc, the appellant before us will have to pay the costs of this
:ippcal and if there is no escheat, the Commissioner will have the
cn~ts of this appeal.
Y.P.
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