1969 (12) TMI 39 - HC - Income Tax

Estate Duty Act - Petitioner prays for cancellation of an order imposing penalty by the Assistant Controller - Whether assessee can approach the High Court under Art. 227 against levy of penalty for non-compliance of notice under section 73 of Estate Duty Act

Summary

Issues:
Prayer for cancellation of penalty under Estate Duty Act for non-payment, validity of penalty imposition, failure to appeal to Appellate Controller, interpretation of "accountable persons" under Estate Duty Act, liability of lessee to pay assessed estate duty.

Analysis:

The petitioner sought cancellation of a penalty imposed for non-payment of estate duty under the Estate Duty Act. The Assistant Controller had imposed a penalty of Rs. 3,000 for non-payment of Rs. 35,000 as estate duty. The petitioner, a lessee of the property in question, argued that the penalty was unjust as payments were made to the landlords, not the Assistant Controller, despite receiving a notice under section 46(5A). The High Court noted that under section 62(1)(a)(iv) of the Estate Duty Act, the petitioner had the option to appeal to the Appellate Controller against the penalty. Since the petitioner did not exercise this remedy, the court was reluctant to interfere under article 227 of the Constitution.

On the merits, the petitioner contended that the landlords were not considered "accountable persons" under the Estate Duty Act, thus relieving the petitioner of the obligation to pay the assessed estate duty. However, the court interpreted the term "accountable persons" to include those accountable for estate duty, regardless of whether a formal assessment had been conducted. As the petitioner's lessors were involved in the estate of the deceased and the petitioner had an interest in the matter, the court held that the petitioner was liable to comply with the provisions of section 46(5A) of the Income-tax Act. Consequently, the penalty imposed by the Assistant Controller was deemed appropriate.

Additionally, the court noted that there was a pending appeal in another court regarding the same issues raised in the present case. This fact further weakened the petitioner's position, leading the court to dismiss the petition and direct the petitioner to pay costs. The judgment was a unanimous decision by both judges, with Justice Laik concurring with Justice Sinha's analysis and conclusion.