# KAPURCHAND SHRIMAL v. TAX RECOVERY OFFICER, HYDERABAD & ORS

- **Citation:** [1969] 1 S.C.R. 691
- **Court:** Supreme Court of India
- **Decided:** 1968-08-14
- **Case number:** CIVIL APPELLATE/ORIGINAL JURISDICTION : Civil Appeals Nos. 1319 and 1320 of 1966
- **Bench:** J. C. Shah, V. Ramaswami, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kapurchand-shrimal-v-tax-recovery-officer-hyderabad-ors-4467
- **Pages:** 7

## Headnote

Income-tax Act (11 of 1922)-Hindu undivided family-Defaults in
payment of tax-Whether Karta can be detained.
A Hindu undivided family committed default in payment of incometax, and a certificate fdr recovery of tax due to the family was issued by
the Income Tax Office in exercise of the power conferred by rule 76 01.
C
Sch. II of the Income Tax Act, 1961. The Tax Recovery Officer directed
the arrest and detention in prison of the karta of the family for non-payment of tax. The Karta then moved a petition in the High Court of
Andhra Pradesh challenging his detention on the ground that he was not
a defaulter.
The petition was rejected.
The Karta appealed.
He also
moved a petition under Art. 3 2 of the Constitution in the Supreme Court
for an order for his release from custody.
D
E
F
G
HELD :-The Legislature having treated a Hindu undivided family
as a taxable entity distinct from the individual members constituting it,
and proceedings.for assessment and recovery of tax having been taken
against the Hindu undivided family, it was not open to the Tax Recovery
Officer to initiate proceedings against the manager of the Hindu undivided
family for his arrest and detention. The manager by virtue of his status
is competent to represent the Hindu undivided family, but on that account
he cannot for the purpose of s. 222 of the Act of 1961 he deemed to he
the assessee when assessment is made against the Hindu undivided family
and certific~te for recovery is also issued against the family. [695 B-D]
For the purposes of cl. (a) of s. 2(7) the person against whom,
any proceeding under the Act has been taken is deemed an assessee : but
that postulates that the proceeding should he lawfully taken against the
person before he may be deemed to he an assessee for the purpose of s.
222 or r. 2 and r. 73. There is no provision in the Act which deems the
manager to be the assessee for the purpose of assessment and
recovery
of tax, when the income of the Hindu undivided famfly of which he is the
Manager is assessed to tax. Nor is there any provision in the Act enabling
the Income-tax Officer or the Tax Recovery Officer to treat the manager
of the Hindu undivided family as an assessee in default in respect of tax
due by the Hindu undivided family. The Legislature has again made no
provision for recovery of tax · by resort to the personal property of the
manager of the Hindu undivided family assessed to tax or by his arrest
and detention for default by the family in paying the tax due. [695 H6960]
CIVIL APPELLATE/ORIGINAL JURISDICTION :
Civil Appeals
Nos. 1319 and 1320 of 1966.
H
Appeals by special leave from the judgments and orders dated
February 16, 1966 and February 1, 1966 of the Andhra Pradesh
High Court in Writ Appeals Nos. 143 of 1966 and 166 of 1965
r~spectively and Writ Petition No. 103 of 1966.
L13Sup.CI/68-13
•
()92
SUPREME COURT REPORTS
(1969] I S.C.R.
Petition under Art. 32 of the Constitution of India for the
A
enforcement of fundamental rights.
B. C. Misra, Om Prakash Gupta and M. V. Goswami, for the
appellant/petitioner (in all the matters).
B. Sen and R. N. Sachthey, for the respondent (in all the
matters).
The J udgrnent of the Court was delivered by
B
Shah, J .. Kapurchand Shrimal-a Hindu undivided family-
.committed default in payment of income-tax due by it for the
assessment years 1955-56 to 1959-60.
The Income-tax Officer,
Special Investigation Circle, Hyderabad, issued certificate on
C
June 16, 1959, under s. 46 of the Income-tax Act, 1922, for
recovery of tax due by the family.
Pursuant to the certificate,
properties of the Hindu undivided family movable and immovable
and outstandings were attached for realizing the tax dues.
In exercise of the powers conferred by r. 76 of Sch. JI of the
D
Income-tax Act, I 96 I, the Tax Recovery Officer directed on
August 10, 1965, that Kapurchand Shrimal manager of the family
be detained in civil prison for fifteen days.
The manager then
moved a petition in the High Court of Andhra Pradesh a

## Text

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691
A
KAPURCHAND SHRIMAL
v.
TAX RECOVERY OFFICER, HYDERABAD & ORS.
August 14, 1968
B
[J. C. SHAH, V. RAMASWAMI AND A. N. GROVER, JJ.)
Income-tax Act (11 of 1922)-Hindu undivided family-Defaults in
payment of tax-Whether Karta can be detained.
A Hindu undivided family committed default in payment of incometax, and a certificate fdr recovery of tax due to the family was issued by
the Income Tax Office in exercise of the power conferred by rule 76 01.
C
Sch. II of the Income Tax Act, 1961. The Tax Recovery Officer directed
the arrest and detention in prison of the karta of the family for non-payment of tax. The Karta then moved a petition in the High Court of
Andhra Pradesh challenging his detention on the ground that he was not
a defaulter.
The petition was rejected.
The Karta appealed.
He also
moved a petition under Art. 3 2 of the Constitution in the Supreme Court
for an order for his release from custody.
D
E
F
G
HELD :-The Legislature having treated a Hindu undivided family
as a taxable entity distinct from the individual members constituting it,
and proceedings.for assessment and recovery of tax having been taken
against the Hindu undivided family, it was not open to the Tax Recovery
Officer to initiate proceedings against the manager of the Hindu undivided
family for his arrest and detention. The manager by virtue of his status
is competent to represent the Hindu undivided family, but on that account
he cannot for the purpose of s. 222 of the Act of 1961 he deemed to he
the assessee when assessment is made against the Hindu undivided family
and certific~te for recovery is also issued against the family. [695 B-D]
For the purposes of cl. (a) of s. 2(7) the person against whom,
any proceeding under the Act has been taken is deemed an assessee : but
that postulates that the proceeding should he lawfully taken against the
person before he may be deemed to he an assessee for the purpose of s.
222 or r. 2 and r. 73. There is no provision in the Act which deems the
manager to be the assessee for the purpose of assessment and
recovery
of tax, when the income of the Hindu undivided famfly of which he is the
Manager is assessed to tax. Nor is there any provision in the Act enabling
the Income-tax Officer or the Tax Recovery Officer to treat the manager
of the Hindu undivided family as an assessee in default in respect of tax
due by the Hindu undivided family. The Legislature has again made no
provision for recovery of tax · by resort to the personal property of the
manager of the Hindu undivided family assessed to tax or by his arrest
and detention for default by the family in paying the tax due. [695 H6960]
CIVIL APPELLATE/ORIGINAL JURISDICTION :
Civil Appeals
Nos. 1319 and 1320 of 1966.
H
Appeals by special leave from the judgments and orders dated
February 16, 1966 and February 1, 1966 of the Andhra Pradesh
High Court in Writ Appeals Nos. 143 of 1966 and 166 of 1965
r~spectively and Writ Petition No. 103 of 1966.
L13Sup.CI/68-13
•
()92
SUPREME COURT REPORTS
(1969] I S.C.R.
Petition under Art. 32 of the Constitution of India for the
A
enforcement of fundamental rights.
B. C. Misra, Om Prakash Gupta and M. V. Goswami, for the
appellant/petitioner (in all the matters).
B. Sen and R. N. Sachthey, for the respondent (in all the
matters).
The J udgrnent of the Court was delivered by
B
Shah, J .. Kapurchand Shrimal-a Hindu undivided family-
.committed default in payment of income-tax due by it for the
assessment years 1955-56 to 1959-60.
The Income-tax Officer,
Special Investigation Circle, Hyderabad, issued certificate on
C
June 16, 1959, under s. 46 of the Income-tax Act, 1922, for
recovery of tax due by the family.
Pursuant to the certificate,
properties of the Hindu undivided family movable and immovable
and outstandings were attached for realizing the tax dues.
In exercise of the powers conferred by r. 76 of Sch. JI of the
D
Income-tax Act, I 96 I, the Tax Recovery Officer directed on
August 10, 1965, that Kapurchand Shrimal manager of the family
be detained in civil prison for fifteen days.
The manager then
moved a petition in the High Court of Andhra Pradesh against
the order of detention.
The petition was rejected by a single
Judge of th.e High Court holding that the manager had, in conE
travention of r. 16(2) of Sch. II of the Income-tax Act, 1961,
dealt with the properties of the family after receiving notice of
the issue of the tax recovery certificate.
In appeal against that
order, the inanager applied for leave to raise the contention that
where a Hindu undivided family had committed default in payment of the tax, its Karla not being the asses.see against whom
tho certificate is issued, is not liable to be detained for recovery of
F
tax due by the Hindu undivided family.
The High Court declined to allow the contention to be raised and held that the manager
having acted in contravention of r. 16 (2) of Sch. II of the Ineometax Act, 1961, the ingredients of r. 73 were attracted and he was
liable to be detained in civil prison.
A day before this order was
passed the appellant filed another petition under Art. 226 of the
G
Constitution challenging the validity of the proceedings against
him on the ground that he was not a "defaulter".
That petition
was dismissed by the High Court holding that the earlier judgment
of the High Court operated to bar investigation into the plea
raised.
Appeals Nos. 1319 & 1320 of 1966 arise out of the orders
made by the High Court in the two petitions under Art. 226 of
the Constitution.
The manager was, after the order of the Hi~
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KAPUR CHAND v. TAX RECOVERY OFFICER (Shah, J.)
693
Court, arrested and sent to prison for six months.
The manager
then filed petition under Art. 32 of the Constitution praying for a
writ in the nature of habeas corpus for an order for his release
from the custody of Superintendent District Prison, Hyderabad.
In our judgment the claim of the manager that he is not liable to
be arrested and detained in prison for failure to satisfy the tax due
by the Hindu undivided family in enforcement of the certificate
issued under s. 222 of the Income-tax Act, 1961,, must be upheld.
By virtue of s. 297(2) (j), notwithstanding the repeal of the
Indian Income-tax Act, 1922, any sum payable by way of
income-tax, super-tax, interest, penalty or otherwise under the
Income-tax Act, 1922, may be recovered under the Act of 1961,
but without prejudice to any action already taken for the recovery
of such sum under the repealed Act.
Proceedings could therefore be taken for recovery of the tax due for the assessment years
1955-56 to 1959-60 by the Hindu undivided family under the
Income-tax Act of 1961.
Section 220 of Act 1961 deals with
payment of tax and the conditions in which an assessee may be
deemed to be in default. Under the Act tax assessed has to be
paid within thirty-five days of the service of a notice of demand :
if the amount is not paid within the time limited at the place and
to the person mentioned in the said notice, the assessee shall be
deemed to be in default.
Section 222 provides for the issue of
certificate to the Tax Recovery Officer. It provides, in so far as it
is material :
'
" ( 1) When au assessee is in default or is deemed to
be in default in making a payment of tax, the Incometax Officer may forward to the Tax Recovery Officer a
certificate under his signature specifying the amount o1'
arrears due from the assessee, and the Tax Recovery
Officer on receipt of such certificate, shall proceed to
recover from such assessee the amount specified therein by one or more of the modes mentioned below, in
accordance with the rules laid down in the Second
Schedule-
(a) attachment and sale of the assessee's movable
property;
(b) attachment and sale of the assessee's inunovable
property;
( c) arrest of the assessee and his detention in prison;
. ( d) appointing a receiver for the management of
the assessee's movable and inunovable properties. 0
By\· l(b),of Sch. II of the Incom<>-tax Act, 1961, "defaulter"
means the assessee mentioned in the certificate. Rule 2 provides
694
SUPREME COURT REPORTS
[1969] I S.C.R.
that when a certificate has been received by the Tax Recovery
Officer from the Income-tax Officer for recovery of arrears under
Sch. II, the Tax Recovery Officer shall cause to be served upon
the defaulter a notice requiring the defaulter to pay the amount
'pccitied in the certificate within fifteen days from the date of
service of the notice and intimating that in default steps would be
taken to realise the wnount under the Schedule.
Ruic 16 provides that where a notice has been served on a defaulter under r. 2,
the defaulter shall not be competent to mortgage, charge, lease or
otherwise deal with any property belonging to him except with
the permission of the Tax Recovery Otlicer.
Rule 73 provides
that no order for the arrest and detention in civil prison of a
defaulter shall be made unless the Tax Recovery Ofliccr ha<> issued
and served a notice upon the defaulter calling upon him to appear
on the date specified in the notice and to show cause why he
should not be committed to the civtl prison, and unless the Tax
Recovery Officer, for reasons to be recorded in writing, is satisfied-( a) that the defaulter with the object or effect of obstructing
the execution of the certificate, has, after the receipt of the certificate in the office of the Tax Recovery O!ficer, dishonestly transferred, concealed, or removed any part of his property; and ( b)
that the defaulter has, or has had since the receipt of the certificate
in the office of the Tax Recovery Officer, the means to pay the
arrears or some substantial part thereof and refuses or neglects or
has refused or neglected to pay the same.
Ruic 76 provides for
the issue of an order of detention of the defaulter by the Tax
Recovery Officer.
The scheme of the Income-tax Act. 1961, is to treat the
assessce failing to pay the tax due within the period prescribed a
defaulter.
The Income-tax Officer may, where the
assessee
is
found to be in default, issue a certificate for recovery and forward
it to the Ta" Recovery Officer specifying the amount of arrears
due from the assessee.
The amount due may be recovered by
resort to any one or more of the four modes prescribed by s. 222
of the Act. If the defaulter fails to comply with a notice issued
by the Tax Recovery Officer requiring the defaulter to pay the
·amount within fifteen days from the date of the service of the
notice, proceedings for recovery may be taken against the assessee
for recovery of the tax.
But under the scheme of the Act and
the Rules, the assessec alone may be treated in default.
The Act
and the Rules contemplate that the notice for payment of the tax
arrears may be issued against the asscssee, and proceedings for
recovery of the. tax may be taken against the assessee alone.
Under the Income-tax Act, 1961. a Hindu undivided family ts a
distmct taxable entity, apart from the individual members who
constitute that family.
Section 4 of the Income-tax Act cha~e.<
to tax for any assessment year. the total income of the prev10us
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KAPUR CHAND V, TAX RECOVERY OFFICER (Shah, J,)
695
year of every person and 'person' is defined in s. 2 ( 31) as in~lud
mg-(i) an individual, (n) a Hindu undivided family, (in) a
company, (iv) a firm, (v) an association of persons or a body of
individuals, whether incorporated or not, (vi) a local authority
and (vii) every artificial juridical person, not falling within any
of the preceding sub-clauses.
The Legislature having treated a
Hindu undivided family as a taxable entity distinct from the individual members constituting it, and proceedings for
assessment
and recovery of tax havmg been taken against the Hindu undivided family, it was not open to the Tax Recovery Officer to initiate
proceedings against the manager of the Hindu undivided family
for his arrest and detention.
It is true that if properties of the
family ·movable and inunovable are to be attached, proceedings
may be started against the Hindu undivided family and the mana-
, ger represents the family in proceedings before the Tax Recovery
·Officer.
But by the clearest implication of the statute: the: assessee
alone may be deemed to be in default for non-payment of tax,
and liability to arrest imd detention on failure to pay the tax due
is also incurred by the assessee alone.
The manager by virtue of
his status is competent to represent the Hindu undivided family,
but on that account he cannot for the purpose of s. 222 of the
Act of 1961 be deemed to be the assessee when the assessment is
made against the Hindu undivided family and certificate for recovery is issued against the family.
Couns_el for the Revenue invited our attention to s. 140(b)
and s. 282 ( 2) of the Income-tax Act, 1961, in support of his
contention that when tax is assessed against the Hindu undivided
family there is no distinction between the representative status of
the manager of the family and his personal status.
Section
140(b) authorises the manager in the case of a Hindu undivided
fanilly to sign and verify the return of income, and s. 282(2)
provides for the mode of service of notice or requisition issued
under the Act, amongst others, against a Hindu undivided family.
But because the manager of a Hindu undivided family is authorised
to sign and verify the return of income and a notice under the
Act could be served upon him when it is addressed to a Hindu
undivided family and such service is treated as service upon the
Hindu undivided family for the purpose of the Act, the manager
cannot be deemed to be the assessee where the income assessed is
of the Hindu undivided family.
The expression 'assessee' under
s. 2 ( 7) means a person by whom any tax or any other sum of
money is payable under the Act, and includes-(a) every person
in respect of whom any proceeding under the Act has been taken
for the assessment of his income or of the income of any other
person in respect of which he is assessable, or of the loss sustained
by him or by such other person, or of the amount of refund due
to'him or to such other person; (b) every person who is deemed
696
SUPREME COURT REPORTS
(1969] J S.C.R.
to be an assessec under any provisions of the Act; ( c) every person
who is deemed to be an assesscc in default under apy provisions of
·the Act.
For purposes of cl. (a) the person against whom any
proceeding under the Act has been taken is deemed an assessce :
but that necessarily postulates that the proceeding should be lawfully taken against the person before he could be deemed to be an
assessce for the purpose of s. 222 or r. 2 and r. 73.
There is no
provision in the Act which deems the manager to be the a.ssessec
for the purpose of assessment and recovery of tax, when the
income of the Hindu undivided family of which he is the manager
is assessed to tax.
Nor is there any provision enabling the
Income-tax Officer or the Tax Recovery Officer to treat the manager of the Hindu undivided family a' an a'5essce in default under
the provisions of the Act.
Section 160 provides for treating a
person as a representative assessec
and s. 161
prescribes
the
liability of a representative assessee. Section 179 makes a special
provision for rendering the Directors of private company in liquidation to be jointly and severally liable for the payment of
ta~
which cannot b~ recovered from the asset' of the private company
in liquidation.
The Legislature has made no such provision for
recovery of tax by resort to the personal property of the manager
of the Hindu undivided family, or by his arrest and detention for
default by the family in paying the tax due.
Sections 276, 276A. 277 and 278 on which reliance was
placed by counsel for the Revenue in support of his argument
also do not assist him.
These sections occur in a chapter relating
to penalties, and they seek to penalise failure to carry out specific
provisions mentioned therein. We arc unable to hold
that the
expression "person" in ss. 276, 276A and 277 is used m the
sense in which it is defined ins. 2(31) of the Act.
For each
specific act which is deemed to be an offence under those prov1-
. sions, an individual who without reasonable cause or excuse fails
to do the acts prescribed by statute or acts in a manner contrary
to the statute or makes a declaration on oath which he believed
to be false or does not believe to be true, is made liable to be
punished.
Section 278 penalises the abetment or inducing any
person to make and deliver an account, statement or declaration
relatino to anv income chargeable to tax which is false and which
he eith~r kno~s to be false or does not believe to be true.
In the
context in which the expression "person" occurs in ss. 276. 276A.
277 and 278, there can be no doubt that it seeks to penalise only
those individuals who fail to carry out the duty cast by the specific
provisions of the statute. or are otherwise responsible for the acts
done.
For the default of the Hindu undivided family, therefore.
in payment of tax, the Karta cannot be arrested and detained Jn
prison.
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KAPUR CHAND v. TAX RECOVERY OFFICER (Shah, J.)
697
,
Tue High Court, we think, took a somewhat technical view in
declining to allow the contention raised by the appellant in the
first writ petition presented before the High Court that he was not
liable to be arrested and imprisoned for non-payment of the tax
arrears, since he was not an assessee, and then in treating the
judgment of the High Court in the first writ petition operating
constructively as res judicata in the second petition.
The appeals are allowed and the order of detention passed by
the Tax Recovery Officer against the appellant is declated unauthorized.
No order in Petition No. 103 of 1966. Tue appellant will be eintitled to his costs in Appeal No. 1320 of 1966 in
all the three Courts.
There will be no order as to costs in
Appeal No. 1319 of 1966 and Writ Petition No. 103 of 1966.
Y.P.
Appeals al/pwed .
•