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Issues:
1. Inclusion of deceased's share of undisclosed profits in the estate valuation. 2. Burden of proof regarding possession of undisclosed profits by the deceased at the time of death. Analysis: Issue 1: Inclusion of deceased's share of undisclosed profits in the estate valuation The deceased, a partner in South India Steel Rolling Mills, had a share of undisclosed profits amounting to Rs. 3,09,933 for the assessment years 1962-63 to 1967-68. The Assistant Controller of Estate Duty included this amount in the estate valuation, despite objections from the accountable person (deceased's wife). The Appellate Controller upheld the inclusion, but the Appellate Tribunal ruled in favor of the accountable person. The Tribunal held that there was no evidence to prove that the undisclosed profits were with the deceased at the time of his death. The accountable person argued that the undisclosed profits were spread over six years and might not have been available to the deceased at the time of death. The court agreed with the Tribunal, emphasizing the lack of evidence supporting the Department's claim that the profits were in the deceased's possession, leading to the exclusion of Rs. 3,09,933 from the estate valuation. Issue 2: Burden of proof regarding possession of undisclosed profits by the deceased at the time of death The Department contended that the undisclosed profits must have remained with the deceased, either as cash or investments not disclosed to them. They argued that the accountable person had agreed to the inclusion of the amount in the estate valuation before, shifting the burden of proof. However, the accountable person maintained that the undisclosed profits found in the firm's assessment did not necessarily mean they were in the deceased's possession at the time of death. The court referenced previous decisions emphasizing the need for the Department to establish the existence of assets at the time of death. The court agreed with the accountable person, highlighting the lack of evidence showing the profits were available to the deceased at the time of his death. The court upheld the Tribunal's decision to exclude the amount from the estate valuation, as there was no material supporting the Department's claim. In conclusion, the court ruled in favor of the accountable person, affirming the Tribunal's decision to exclude the deceased's share of undisclosed profits from the estate valuation. The court emphasized the lack of evidence proving the profits were in the deceased's possession at the time of his death, shifting the burden of proof back to the Department.
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