1996 (9) TMI 90 - HC - Income Tax

Estate Duty, Investment Allowance, New Industrial Undertaking, Profits And Gains, Special Deduction

Summary

Issues:
1. Commencement of proceedings within the statutory period under section 73A of the Estate Duty Act, 1953.
2. Requirement of serving notice to all accountable persons for the commencement of proceedings.
3. Validity of assessment and cancellation of assessment by the Appellate Tribunal.

Analysis:

1. Commencement of Proceedings within Statutory Period:
The case involved a petition under section 64(3) of the Estate Duty Act, 1953, filed by the Controller of Estate Duty, Patiala, seeking a direction for the Income-tax Appellate Tribunal, Chandigarh Bench, to refer three questions. The questions pertained to the initiation of proceedings within the statutory period as provided under section 73A of the Act. The Tribunal had held that the initiation of proceedings was beyond limitation. The High Court noted the importance of determining whether the limitation period starts with the issuance of notice or from its service, as it is a question of law. The Court directed the Tribunal to refer the questions for consideration.

2. Serving Notice to All Accountable Persons:
Another issue raised was the requirement of serving notice to all accountable persons for the commencement of proceedings. The accountable persons contended that under section 59(a) read with section 53 of the Act, notice must be served on all known accountable persons and not just one of them. The Tribunal agreed with this argument, holding that it was mandatory to serve notice on all known accountable persons. As a result, the orders of the authorities below were set aside, and it was held that no estate duty was leviable. The Court found this issue consequential and directed the Tribunal to refer the relevant questions for its opinion.

3. Validity and Cancellation of Assessment:
The Appellate Tribunal had canceled the assessment based on the issues of limitation and non-serving of notice to all accountable persons. The Tribunal's decision to cancel the assessment was based on these grounds. The Revenue filed a petition seeking a reference of the questions of law to the High Court, which was rejected initially. However, considering the importance of the unresolved legal questions, the High Court directed the Tribunal to refer the questions for consideration. The decision on the validity of the assessment and the cancellation of the assessment were crucial aspects of the case.

In conclusion, the judgment addressed significant legal issues concerning the commencement of proceedings within the statutory period, the requirement of serving notice to all accountable persons, and the validity of the assessment. The High Court's direction to refer the questions for consideration highlighted the importance of resolving these legal uncertainties in the context of the Estate Duty Act, 1953.