1. The petitioners are the accountable persons under the E.D. Act, 1953 (hereinafter referred to as 'the Act'), for the estate duty payable on the estate of the late Shri P. R. Morarji, who expired on May 2, 1978. The petitioners furnished to respondent No. 1, Assistant CED, an account of the property of the deceased, in respect of which estate duty was payable as provided under s. 53(2) of the Act and claimed that the estate duty liability of Rs. 16,30,093 be allowed as a deduction in computing the principal value of the estate. The petitioners also claimed that from the estate duty payable, the probate duty payable should be deducted. The petitioners paid an amount of Rs. 6,35,650 as estate duty on the basis of the return. The respondent No. 1 passed a provisional assessment order dated September 21, 1979, under s. 57(1) of the Act without taking into account the deductions claimed by the petitioners. Respondent No. 1 valued the estate of the deceased at Rs. 47,69,584 and determined the estate duty payable at Rs. 30,26,146.40. Respondent No. 1 by notice dated September 21, 1979, raised a demand of Rs. 30,13,660.69.
2. As the petitioners failed to pay the amount demanded by the notice, respondent No. 1 issued notice dated November 7, 1979, under s. 73 of the Act to show cause why penalty of Rs. 6,02,732 should not be imposed. The petitioners by their letter dated December 20, 1979, claimed that the provisional assessment was not proper and that the provisional assessment was not proper and that the demand of Rs. 30,13,660 should be reduced by (1) Rs. 16,30,093 being the estate duty liability, (2) Rs. 6,35,650 being the total of the amounts already paid towards estate duty liability, and (3) expected the liability on account of court-fees of Rs. 4,50,000 for obtaining probate. The petitioners claimed that the estate duty liability, if exemption is granted in respect of these three items, would be reduced to Rs. 5,44,443. Respondent No. 1 did not respond favorably to the claim made by the petitioners and declined to pass orders giving credit in respect of the above-mentioned items, and thereupon the petitioners filed the present petition in this court under art. 226 of the Constitution of India on January 21, 1980.
3. Shri Mehta, learned counsel appearing on behalf of the petitioners, submitted that the under s. 57(1) of the Act, a provisional assessment can be made only on the basis of the accounts delivered by the accountable persons. Section 57(1) of the Act reads as under :
'57. (1) Estate duty shall be due from the date of the death of the deceased and the Controller may, at any time after the receipt of the account delivered, under section 53 or section 56, proceed to make in a summary manner a provisional assessment of the estate duty payable by the person delivering the account on the basis of the account so delivered.'
4. The learned counsel urged that the provisional assessment made under s. 57(1) of the Act is summary in nature and the Assistant CED is not bound to make any inquiry before making such assessment. The object of assessment is to collect tax from certain classes of assesses before the regular assessment. Shri Mehta submits that the provisional assessment being summary in nature and without requiring the controlling authority to hold any inquiry and as there is not right to the assessee to prefer any appeal against the provisional assessment, it must be held that the Controller must pass the order of provisional assessment only on the basis of the accounts delivered by the accountable person. The submission of the learned counsel is correct and deserves acceptance. The reliance in this connection by Shri Mehta on the decision of the Supreme Court in Jaipur Udyog Ltd. v. CIT : 71ITR799(SC) is appropriate. The Supreme Court was considering the ambit of the provisions of s. 141(1) of the I.T. Act, 1961, which reads as under :
'141. (1) The Income-tax Officer may, at any time after the receipt of a return made under section 139, proceed to make, in a summary manner, a provisional assessment of the tax payable by the assessee, on the basis of his return and the accounts and documents, if any, accompanying it.'
5. The language of sub-s. (1) of s. 141 of the I.T. Act and s. 57(1) of the E.D. Act are almost identical. The Supreme Court held that the clearest implication of s. 141 bars an enquiry at the state of making a provisional assessment into disputed questions of law and fact. It was further held that once a dispute is raised by the assessee, the ITO has no discretion and sub-s. (2) of s. 141 does not enlarge his jurisdiction under sub-s. (1). The Supreme Court further observed (p. 805) :
'The scheme of section 141 is to call upon the assessee to pay tax provisionally at the appropriate rate on what he admits in his taxable income, subject to the benefit of the allowances under sub-section (2). The section does not permit an enquiry to be made whether the total income returned by the assessee exceeds the amount admitted by him, nor whether the allowances or deductions claimed are admissible. If there be a discrepancy between the return made and the accounts and documents accompanying the return, the Income-tax Officer may ask the assessee to explain the discrepancy, but he must make a provisional assessment on the basis of the return initially made or clarified and the accounts and the documents filed. He cannot make a provisional assessment by holding that certain claims made by the assessee are in law unjustified.'
6. Shri Mehta submits, and in my judgment correctly, that the petitioners raised disputed questions of law as to whether the petitioners are entitled to claim deductions in respect of (1) estate duty liability, and (2) the amount paid as probate duty and the petitioners sought credit for these liabilities in the return filed before the CED. Shri Mehta submits that as the petitioners raised disputed questions of law, respondent No. 1 was bound to pass the provisional assessment order only on the basis of the return and could not have foisted the liability of Rs. 30,13,660.69, on the petitioners while passing the provisional assessment order by assuming that payment of estate duty and payment of probate duty cannot be taken into consideration.
7. Shri Joshi, learned counsel appearing on behalf of the Revenue, submitted that though once the petitioners raised disputed questions of law or fact, it is not open to the Controller to pass the provisional assessment order by ignoring the claim made by the accountable person, still the order passed in the present case need not be disturbed because the questions raised by the petitioners are concluded by decisions of the Gujarat, Andhra Pradesh and other High Courts. Shri Joshi also submitted that the Full Bench of the Income-tax Tribunal in Bombay had also come to the conclusion that the estate duty paid by the accountable person cannot be taken into consideration while ascertaining the value of the estate liable for payment of duty. Shri Joshi very fairly stated that there is no decision of the Bombay High Court or of the Supreme Court on the questions raised by the petitioners. In my judgment, as there is no decision of this court or of the Supreme Court, the questions raised by the petitioners before the CED cannot be said to be questions concluded by decision and, therefore, not disputed questions of law. In my judgment, the questions raised by the petitioners were disputed questions of law and, therefore, while passing the provisional assessment order, the Controller could not have ignored the claim of the petitioners and passed a provisional assessment order requiring the petitioners to pay duty of Rs. 30,13,660.69. Therefore, the provisional assessment order passed by the respondent No. 1 on September 21, 1979, is set aside and, consequently, also the demand notice issued by respondent No. 1 in pursuance of the said order. It is open to respondent No. 1 to pass a fresh provisional assessment order is accordance with the accounts submitted by the petitioners.
8. Accordingly, the petition succeeds and the rule is made absolute in terms of prayer (a) of the petition, but this will not prevent respondent No. 1 from passing a fresh provisional assessment order.
9. In the circumstances of the case, there will be no order as to costs.