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TMI Blog1973 (11) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... s made by the Deputy Controller of Estate Duty, Eastern Zone, on February 26, 1960. On February 21, 1962, a notice under section 59 of the Act was issued to the accountable person concerned for reopening of the assessment on the ground that some property had escaped levy of estate duty. The accountable persons raised objections to the reopening of the assessment under section 59. The Assistant Controller, by his order dated February 10, 1968, rejected the contentions of the accountable persons and reopened the assessment. Against the order of reassessment, the accountable persons filed three different appeals before the Appellate Controller. That officer by his common order dated January 31, 1968, allowed the appeals and set aside the reassessment orders which had been passed under section 59. The Appellate Controller came to the conclusion that section 59 under which action was taken by the Assistant Controller was not retrospective in operation and hence had no application in respect of the assessment which had been completed prior to the coming into force of section 59. It may be pointed out that when the Estate Duty Act was passed in 1953, there was no provision for reassessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess of or less than the actual duty payable, he may, either on his own motion or on the application of the person accountable and after obtaining the previous approval of the Board, at any time within three years from the date on which the estate duty was first determined-- (a) refund the excess duty paid, or, as the case may be, (b) determine the additional duty payable on the property : Provided that where the person accountable had fraudulently under estimated the value of any property or omitted any property, the period shall be six years : Provided further that no order shall be made under this sub-section unless the person accountable has been given an opportunity of being heard. (2) Nothing contained in sub-section (1) shall render any person accountable to whom a certificate that the estate duty has been paid is granted liable for any additional duty in excess of the assets of the deceased which are still in his possession, unless the person accountable had fraudulently attempted to evade any part of the estate duty in the first instance. After the Amendment Act which came into force on July 1, 1960, the power of reassessment in cases similar to those u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned, our attention has been drawn only to one decision, namely, the decision of the Bombay High Court in Arvind N. Mafatlal v. Deputy Controller of Estate Duty, and no decision of any other High Court has been cited before us on this point of retrospective operation of section 59, that is, applicability of section 59 to assessments which have been completed by appropriate order in that behalf before July 1, 1960. Before we proceed to deal with the arguments and the authorities cited before us, we would like to point out that an analysis of the provisions of section 62 as it stood before the amendment and section 59 which was introduced by the Amendment Act discloses the following factors : Under old section 62, power was vested in the Controller, if, after the determination of the estate duty payable in respect of any estate, it appeared to him that, by reason (1) of mistake apparent from the record, or (2) of any mistake in the valuation of any property in any case other than a case in which the valuation has been the subject matter of an appeal under the Act, or (3) of the omission of any property, the estate duty paid thereon is either in excess of or less than the actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en omitted on the earlier determination of the estate duty being included in the estate of the deceased person. For the time being, we will not take into consideration the period of limitation either of three years or of six years, as the case might be, which was provided by section 62, sub-section (1). However, under section 59, the Controller has become entitled to call upon the accountable person to submit an account as required under section 53 and proceed to assess or reassess such property as is referred to in section 59 as if the provisions of section 58 apply to such assessment or reassessment proceedings. The circumstances under which the power of reassessment under section 59 can be exercised are : (a) When the Controller has reason to believe that by reason of the omission or failure on the part of the accountable person to submit an account of the estate of the deceased under section 53 or section 56 or to disclose fully and truly all material facts necessary for assessment, any property chargeable to estate duty has escaped assessment by reason of under valuation of the property included in the account or of omission to include therein any property which ought to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irds share of the income. Dealing with this contention, the Supreme Court observed : " This argument is not of much avail to the appellant because once proceedings under section 34 are taken to be validly initiated with regard to two-thirds share of the income, the jurisdiction of the Income-tax Officer cannot be confined only to that portion of the income. Section 34 in terms states that once the Income-tax Officer decides to reopen the assessment he could do so within the period prescribed by serving on the person liable to pay tax a notice containing all or any of the requirements which may be included in a notice under section 22(2) and may proceed to assess or reassess such income, profits or gains. It is, therefore, manifest that once assessment is reopened by issuing a notice under sub-section (2) of section 22 the previous under-assessment is set aside and the whole assessment proceedings start afresh. When once valid proceedings are started under section 34(1)(b) the Income-tax Officer had not only the jurisdiction but it was his duty to levy tax on the entire income that had escaped assessment during that year." Thus, the scope of reassessment proceedings in these d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59 as it stands amended by the Amendment Act of 1958 is quite different from the power which the Controller had under section 62 before the amendment which came into force on July 1, 1960. It was not open to the Controller under the old section 62 to proceed against all properties which had escaped assessment at the time of earlier determination of estate duty but he can bring to tax all properties under the present section 59 which in the course of reassessment proceedings he finds to have escaped assessment or to have been omitted from determination of estate duty on the earlier occasion. Under old section 62, however, he could have proceeded only against the specific property which was mentioned in the notice to the accountable person and, secondly, he could only determine in the proceedings under old section 62 the amount of additional duty that the accountable person had to pay in respect of the property which had been omitted on the earlier occasion or the additional duty in respect of which a mistake had been discovered by him. Coming to the decision of the Bombay High Court in Arvind N. Mafatlal v. Deputy Controller of Estate Duty the facts of that case have to be set o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 62 and the new remedy provided by section 59 of the Estate Duty Act. Under the old section 62 all that could be done was to determine the additional duty payable on the property or refund the excess duty paid, whereas under section 59 the power is to assess or reassess the property as if the provisions of section 58 applies, that is to say, a completely new assessment had to be made. The Bombay High Court in these circumstances held that section 59 could not be treated as virtually a continuation of the remedy prescribed by the old section 62 so as to make section 59 applicable to the case before them. At page 458, Kotval C.J., delivering the judgment of the Division Bench, which dealt with the matter, observed (and we respectfully agree with that observation) that a completely new power was conferred on the Controller by section 59 and it is comparable to the power conferred by section 34 of the Indian Income-tax Act, 1922, which shows that there is a vast distinction between the remedies provided by the old section 62 and the new remedy provided by section 59(b). Under the old section 62 all that could be done was to determine the additional duty payable on the property or r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the cumulative effect of reading the provisions of section 58 along with the provisions of section 59 is that if the conditions of section 59 are fulfilled, the Controller can call upon the person accountable to render a fresh account and assess him as if he were assessing him for the first time under section 59, None of these powers or remedies, if we may say so, are conferred upon the department under the old section 62. These, in our opinion, are the fundamental differences between the rights or remedies under the old section 62 and the new section 59. Whatever similarity there was between the rights or remedies under the old section 62, and the new section 59 was in regard to the question of mistake which, in the amended Act, has been relegated to section 61, but section 61 has not been invoked by the department. So far as section 59 is concerned, in our opinion, it is not in any sense merely a variant of the old section 62." We respectfully agree with these observations and in our view from what the Supreme Court has said in V. Jaganmohan Rao v. Commissioner of Income-tax and what the Madras High Court has said in AL. VR. ST. Veerappa Chettiar v. Commissioner of Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld prejudicially affect vested rights or the legality of past transactions, or would impair contracts, or would impose new duties or attach new disabilities in respect of past transactions." At page 216 it has been observed by Maxwell : " Before the presumption against retrospectivity is applied, a court must be satisfied that the statute is in fact retrospective. In the words of Craies on Statute Law, a statute is retrospective ' which takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect to transactions or considerations already past '." In Craies on Statute Law, seventh edition, at page 387, it has been said : " A statute is to be deemed to be retrospective which takes away or impairs any vested right acquired under existing laws, or creates a new obligation, or imposes a new duty, or attaches a new disability in respect to transactions or considerations already past. But a statute is not properly called a retrospective statute because a part of the requisite for its action is drawn from a time antecedent to its passing '." It has been pointed out in foot-no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciples. The cardinal principle is that statutes must always be interpreted prospectively, unless the language of the statutes makes them retrospective, either expressly or by necessary implication." In paragraph 10, at page 310, Hidayatullah J. has set out the following passage from the decision of Chakravartti C.J. in Ganesan v. A.K. Joscelyne : " I may state, however, that in spite of the ordinary and I might almost say cardinal rule of construction that statutes, particularly statutes creating liabilities, ought not to be so construed as to give them a retrospective operation unless there is a clear provision to that effect or a necessary intendment implied in the provisions, there is another principle on which courts have sometimes acted. It has been held that where the object of an Act is not to inflict punishment on anyone but to protect the public from undesirable persons, bearing the stigma of a conviction or misconduct on their character, the ordinary rule of construction need not be strictly applied '." In Sajjan Singh v. State of Punjab, what is meant by retrospective operation has been pointed out. The question before the Supreme Court in that case was wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eassessment of the income, profits or gains of the firm. Under these circumstances all that T. S. Devinatha Nadar's case laid down is that it furnishes an illustration of retrospective effect being given by necessary implication though there was no express provision for giving retrospective effect to the provisions regarding the partner's accounts. But it cannot be said in the light of this decision in T.S. Devinatha Nadar's case that even though the assessment had been completed earlier in each and every case, the assessment could be reopened or rectification could be done by the Income-tax Officer concerned. In our opinion, there is no justification for reading into this decision of the Supreme Court any legal principle other than the principle that retrospective effect can be given even by necessary implication. There are no words clearly giving retrospective effect to section 59 and the principle is well-settled that an assessee is entitled not to be subjected to reassessment once the original assessment is finalised and unless the statute permits reassessment to be carried out, assessment once reached must be treated as final and complete. It is also clear under these circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The words " omission of any property " are the only things which are common but the context in which they appear and the power to which this circumstance " omission of any property " gives rise being altogether different, it is obvious that the provisions of section 62 cannot be read as having been continued with a slight variation in the provisions of new section 59. It is, therefore, clear that what the revenue seeks to do in the instant case is not to exercise substantially the same power as under the old section 62 prior to the amendment ; what the legislature seeks to do if this argument were to be upheld would be to exercise a new power altogether with a new content built into that power against the assessee though the occasion which would give rise to the exercise of either of these two powers would be more or less similar. Hence reliance which Mr. Kaji sought to place on certain observations of Chakravartti C.J. in Income-tax Officer v. Calcutta Discount Co. Ltd. cannot help the revenue in the instant case because Chakravartti C.J., in the case before him, held the power under the amended section to be a variant of the old power and, that being the case, the observations o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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