1983 (2) TMI 24 - HC - Income Tax

Summary

Issues Involved
1. Competence of the Assistant Controller to commence reassessment proceedings under Section 59 of the amended Estate Duty Act.
2. Validity of reassessment orders for assessments that had become final before the enactment of Section 59.
3. Limitation period for initiating reassessment proceedings.
4. Applicability of Section 62 of the unamended Act for reassessment.

Detailed Analysis

1. Competence of the Assistant Controller to Commence Reassessment Proceedings under Section 59 of the Amended Estate Duty Act
The court examined whether the Assistant Controller had the authority to initiate reassessment proceedings under Section 59 of the amended Estate Duty Act. The accountable person argued that the original assessment had become final under the unamended Act and thus could not be reopened. The court found that the question of competence had not been conclusively decided in earlier writ proceedings, as those proceedings were limited to the issues of material availability for reassessment and the period of limitation. Therefore, the Tribunal was correct in re-examining this issue.

2. Validity of Reassessment Orders for Assessments that had Become Final Before the Enactment of Section 59
The court addressed whether Section 59, which was introduced on July 1, 1960, could be applied retrospectively to reopen assessments that had become final before this date. The court held that the jurisdiction to assess property that had escaped assessment is substantive and could only be exercised after the enactment of Section 59. Since there was no express provision or necessary implication in the amended Act to apply Section 59 retrospectively, the court concluded that assessments finalized before July 1, 1960, could not be reopened under this provision.

3. Limitation Period for Initiating Reassessment Proceedings
The court examined the limitation period prescribed under Section 73A of the amended Act, which allows reassessment proceedings to be initiated within three years from the date of the original assessment. The court found that the notice issued on February 15, 1963, was within the three-year period from the original assessment date of February 29, 1960. Therefore, the reassessment proceedings were not time-barred.

4. Applicability of Section 62 of the Unamended Act for Reassessment
The court considered whether Section 62 of the unamended Act, which allowed rectification of mistakes within three years, could be invoked for reassessment. The court noted that Section 62 was a limited provision that ceased to be available after its deletion by the Amending Act of 1958. Consequently, the reassessment order made on November 26, 1971, could not be sustained under the deleted Section 62.

Conclusion
The court concluded that the reassessment order pursuant to Section 59 read with Section 62 of the unamended Estate Duty Act was not valid. The court held that the jurisdiction to make reassessment was conferred only from July 1, 1960, and could not be applied retrospectively to assessments that had become final before this date. The answer to the question referred was in the negative, against the Controller and in favor of the accountable person. The matter was remitted back to the Tribunal for appropriate orders, and the accountable person was awarded costs of Rs. 250.