1980 (11) TMI 30 - HC - Income Tax

Issues Involved:
1. Validity of the initiation of proceedings under Section 59 of the Estate Duty Act (E.D. Act).
2. Whether the additional compensation awarded by the Improvement Tribunal forms part of the estate of the deceased.
3. The applicability of Section 59 of the E.D. Act, 1953, as amended by the E.D. (Amendment) Act, 1958.
4. The finality of the original assessment in light of the pending appeal.
5. The retrospective application of the amended provisions of the E.D. Act.

Issue-wise Detailed Analysis:

1. Validity of the Initiation of Proceedings under Section 59 of the E.D. Act:
The accountable person challenged the initiation of proceedings under Section 59 of the E.D. Act as invalid, ineffective, and bad in law. The Tribunal noted that the action taken under Section 59 was based on information received after the completion of the original assessment. The Tribunal concluded that the provisions of Section 59(b) of the E.D. Act could be invoked, as the Deputy Controller had received new information subsequent to the original assessment.

2. Whether the Additional Compensation Awarded by the Improvement Tribunal Forms Part of the Estate of the Deceased:
The Deputy Controller included an additional sum of Rs. 1,31,778.17 awarded by the President of the Improvement Tribunal in the estate of the deceased, arguing that the right to receive compensation accrued during the deceased's lifetime. The Tribunal found that the right to receive compensation was part of the estate, as the deceased had initiated proceedings for additional compensation during his lifetime.

3. The Applicability of Section 59 of the E.D. Act, 1953, as Amended by the E.D. (Amendment) Act, 1958:
The Tribunal held that Section 59 of the E.D. Act, 1953, as amended by the E.D. (Amendment) Act, 1958, could not be invoked for reopening the assessment completed on 29th January 1960. The Tribunal reasoned that the amended Section 59, which came into force on 1st July 1960, introduced a new power of reassessment that was not a variant of the old Section 62, which dealt with rectification of mistakes.

4. The Finality of the Original Assessment in Light of the Pending Appeal:
The Tribunal observed that the original assessment had become final, and the pending appeal did not affect this finality. The Tribunal noted that the appeal before the Central Board of Revenue (CBR) was not concerned with the valuation of the properties at Nos. 95 and 96, Ultadanga Main Road. Therefore, the original assessment was considered final for the purposes of reopening under Section 59.

5. The Retrospective Application of the Amended Provisions of the E.D. Act:
The Tribunal concluded that the amended Section 59 of the E.D. Act, 1953, was not intended to have retrospective effect. The Tribunal relied on the principle that a statute should not be construed to impair vested rights or the legality of past transactions unless expressly stated. The Tribunal found that the new Section 59 introduced a different power of reassessment, which could not be applied retrospectively to assessments completed before the amendment came into force.

Conclusion:
The Tribunal held that the reassessment proceedings initiated under Section 59 of the E.D. Act were invalid, as the amended provisions could not be applied retrospectively to the original assessment completed on 29th January 1960. The Tribunal set aside the reassessment and ruled in favor of the accountable person. The High Court affirmed the Tribunal's decision, answering the referred question in the affirmative and in favor of the accountable person.

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