1971 (11) TMI 43 - HC - Income Tax

Estate Duty Act, 1953 - accountable person failed to disclose a primary and a material fact necessary for making the assessment. The Assistant Controller of Estate Duty had reason to believe that the property of the deceased chargeable to estate duty had escaped assessment, by reason of the assessee s failure to disclose the material facts. The Assistant Controller of Estate Duty had, therefore, jurisdiction to issue a notice for reopening the assessment under section 59(a) - It is neither further necessary nor within the province of this court to record a final decision about the failure of the accountable person to disclose fully and truly all material facts bearing on the assessment, and the consequent escapement of property from assessment to tax

Issues Involved:
1. Legality and validity of the notice issued under section 61 of the Estate Duty Act.
2. Legality and validity of the notice issued under section 59(a) of the Estate Duty Act.
3. Whether property chargeable to estate duty has escaped assessment.
4. Whether the accountable person failed to disclose fully and truly all material facts necessary for making the assessment.

Detailed Analysis:

1. Legality and Validity of the Notice Issued under Section 61 of the Estate Duty Act:
The Assistant Controller of Estate Duty issued a notice to the legal representatives of Rashid Shapoor Chenai under section 61 of the Estate Duty Act to rectify the mistake apparent from the record by including the enhanced compensation awarded by the civil courts in the net value of the dutiable estate. The legal representative challenged the legality and validity of this notice in Writ Petition No. 4059/1969.

2. Legality and Validity of the Notice Issued under Section 59(a) of the Estate Duty Act:
The Assistant Controller of Estate Duty issued another notice dated November 14, 1969, under section 59(a) of the Estate Duty Act to the petitioner, to show cause why the estate duty assessment made on December 30, 1966, should not be reopened and revised by including the enhanced compensation awarded by the civil courts. The petitioner challenged the validity and legality of this notice, contending that it was illegal and without jurisdiction.

3. Whether Property Chargeable to Estate Duty has Escaped Assessment:
The petitioner argued that no property chargeable to estate duty had escaped assessment. The learned counsel for the petitioner contended that the duty of the accountable person was only to disclose the primary facts necessary for making the assessment, and not the inferential facts. The Assistant Controller of Estate Duty had adopted the values of the lands as per the compensation awarded by the Special Deputy Collector, which was disclosed by the accountable person. The fact that the civil courts had not passed orders enhancing the compensation at the time of the assessment was made was not in existence and, therefore, could not have been disclosed. Thus, there was no omission or failure on the part of the accountable person to disclose all material facts necessary for making the assessment.

4. Whether the Accountable Person Failed to Disclose Fully and Truly All Material Facts Necessary for Making the Assessment:
The court held that the fact that references were made to the civil court objecting to the amount of compensation awarded by the Special Deputy Collector for those lands was a primary fact and a material fact necessary for making the estate duty assessment. Its non-disclosure was a non-disclosure of a material fact and not merely of an inferential fact. The court concluded that the accountable person did not disclose the primary fact necessary for making the assessment, which resulted in an undervaluation of the properties included in the account and consequently led to the escapement of property chargeable to the estate duty from assessment.

Conclusion:
The court held that the Assistant Controller of Estate Duty had jurisdiction to issue a notice under section 59(a) of the Estate Duty Act because the accountable person had failed or omitted to disclose fully and truly all the material facts necessary for making the assessment. The writ petition was dismissed with costs.

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