1984 (6) TMI 99 - AT - Income Tax

Summary

Issues:
1. Maintainability of appeals under the Estate Duty Act, 1953 before the Appellate Controller.
2. Reduction of penalties under section 73(5) by the Appellate Controller.
3. Justification for granting instalments and non-payment of estate duty.

Analysis:

Issue 1: Maintainability of appeals under the Estate Duty Act
The appeals under the Estate Duty Act were contested on the grounds of maintainability. The departmental representative raised a preliminary objection that the appeals were not maintainable as per section 62 of the Act, which states that no appeal would lie before the Appellate Controller unless duty was paid. However, the accountable person's counsel argued that section 63 of the Act allows the Tribunal to entertain appeals filed by the accountable person. The Tribunal found that the revenue had not filed any appeal or cross-objection, and hence, rejected the preliminary objection raised by the revenue.

Issue 2: Reduction of penalties by the Appellate Controller
The penalties were levied for non-deposit of tax, even though the accountable person had been granted instalments for payment of total taxes. The Appellate Controller reduced the penalties from Rs. 6,000 and Rs. 15,000 to Rs. 3,000 and Rs. 5,000, respectively. The Tribunal, after considering the submissions, found that the accountable person was prevented from paying the demand due to reasonable cause. The Tribunal held that the Appellate Controller's decision to sustain even a portion of the penalties was unjustified and canceled both penalties, allowing both appeals.

Issue 3: Justification for granting instalments and non-payment of estate duty
The accountable person had requested instalments for payment of estate duty due to financial constraints, despite having made voluntary disclosures of income and wealth. The departmental representative argued that the accountable person, being wealthy, should have been able to pay the duty. However, the Tribunal noted that the revenue itself had granted instalments to the accountable person for the total demand. The Appellate Controller acknowledged the reasonable cause for non-payment and reduced the penalties accordingly, ultimately canceling both penalties in favor of the accountable person.

In conclusion, the Tribunal allowed both appeals, canceling the penalties imposed under section 73(5) of the Estate Duty Act, 1953, based on the reasonable cause for non-payment and the grant of instalments by the revenue authorities.