1979 (10) TMI 56 - HC - Income Tax

Summary

Issues:
1. Commencement of estate duty proceedings within the prescribed period under section 73A of the Estate Duty Act, 1953.
2. Legality of the best judgment assessment under section 58(4) of the Estate Duty Act, 1953.

Analysis:

Issue 1: Commencement of Estate Duty Proceedings
The judgment pertains to the estate of Smt. Asarfi Devi, who passed away on September 23, 1959. The accountable person failed to file an account of the estate within the six-month period as required by section 53(3) of the Estate Duty Act. Subsequently, on February 18, 1963, a notice under section 55 of the Act was issued by the Assistant Controller of Estate Duty (CED). The notice was served on the accountable person on March 5, 1963. The accountable person, Smt. Manorama Devi, filed a return in Form ED-5 on April 1, 1963, challenging the validity of the notice and proceedings initiated. The High Court held that the proceedings for levy of estate duty were validly commenced within the prescribed period under section 73A, as the notice under section 55 was served before the expiry of five years after the death, saving it from the limitation bar.

Issue 2: Legality of Best Judgment Assessment
The Tribunal had held that the best judgment assessment made under section 58(4) was invalid, primarily because the return filed was beyond the six-month period and incomplete. However, the High Court disagreed with this view. Section 58(4) allows for a best judgment assessment in cases where no account has been delivered as required by section 53 or 56, or the accountable person fails to comply with the terms of a notice issued under section 58(2). In this case, the High Court determined that the return filed in response to the notice under section 55 was considered an account under section 53(1), despite being filed beyond the six-month period. Therefore, the notice under section 58(2) was valid, and the best judgment assessment under section 58(4) was upheld as legitimate. The High Court clarified that the requirement of filing an account in the prescribed form under section 53(3) applies to accounts filed under that section, not to those treated as filed under section 53(1).

In conclusion, the High Court answered the first question affirmatively and the second question negatively, upholding the validity of the estate duty proceedings and the best judgment assessment. Since no representation was made on behalf of the assessee, no costs were awarded.