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- Imposition of penalty for default in complying with the notice of demand - Validity of the order of penalty in law Analysis: The writ petition was filed against the order of the Estate Duty Officer imposing a penalty of Rs. 10,000 for default in complying with the notice of demand. The deceased passed away on July 13, 1959, and the petitioner, his son and accountable person, filed a statement of account showing properties valued at Rs. 4.02 lakhs, including cash in hand of Rs. 60,000. The assessment completed by the Assistant Controller valued the property at Rs. 9,05,111, with an enhanced cash in hand value of Rs. 4,40,509. A demand notice of Rs. 1,32,272 was issued, and the Assistant Controller froze the deceased's assets. Despite the petitioner's efforts to comply by instructing the bank to sell shares and pay the duty, a penalty was imposed as the money was not received by the deadline of March 27, 1961. The petitioner appealed to the Appellate Controller, but the appeal was deemed incompetent as the tax demanded had not been paid before filing the appeal. Subsequently, the Assistant Controller canceled the original demand notice, which was not in the proper form as required by the Act. The key issue in the petition was the validity of the penalty order, considering the cancellation of the demand notice. The Court emphasized that for a penalty to be imposed, the notice of demand must be valid in all respects. The challenge was not against the second notice issued but against the penalty based on the earlier demand notice, which was subsequently canceled by the Estate Duty Officer. In the judgment, the Court directed the issuance of a writ quashing the penalty order of Rs. 10,000 imposed by the Assistant Controller on March 27, 1961. The interim stay order was discharged, and the writ petition was allowed, with each party bearing their own costs. The decision highlighted the importance of a valid notice of demand for imposing penalties and emphasized that if a demand notice is canceled, there can be no default in complying with it.
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