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Controller of Estate Duty Vs. Smt. Manorama Devi - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberEstate Duty Reference No. 1169 of 1976
Judge
Reported in[1980]123ITR322(All)
ActsEstate Duty Act, 1953 - Sections 53(1), 53(3), 55, 56, 58, 58(2) and 73A
AppellantController of Estate Duty
RespondentSmt. Manorama Devi
Appellant AdvocateR.K. Gulati and ;A. Gupta, Advs.
Respondent AdvocateNone
Excerpt:
.....for levy of estate duty were commenced, within the period prescribed under section 73a of the estate duty act, 1953 ? 2. whether, on the facts and in the circumstances of the case, the tribunal was legally correct in holding that the best judgment assessment under section 58(4) of the estate duty act, 1953, was invalid ? '2. the dispute concerns the estate of smt. controller made a best judgment assessment under section 58(4) of the act. controller failed. the tribunal has allowed the appeal, and held that the best judgment assessment madeunder section 58(4) was invalid. it has taken the view that an account can be filed only within a period of six months from the date of the death, and inasmuch as in the present the account had been filed beypnd the aforesaid period the return was..........for levy of estate duty were commenced, within the period prescribed under section 73a of the estate duty act, 1953 ?2. whether, on the facts and in the circumstances of the case, the tribunal was legally correct in holding that the best judgment assessment under section 58(4) of the estate duty act, 1953, was invalid '2. the dispute concerns the estate of smt. asarfi devi, who died on the 23rd september, 1959. the accountable person did not file an account of the estate within the six months period granted under section 53(3) of the act. on the 18th of february, 1963, the asst. ced issued a notice under section 55 of the act, which was served on the accountable person on the 5th of march, 1963, calling upon him to deliver the account of the estate of late smt. asarfi devi. in.....
Judgment:

C.S.P. Singh, J.

1. The Income-tax Appellate Tribunal, Allahabad Bench C, has referred the following two questions for opinion of this court:

' 1. Whether, on the facts and in the circumstances of the case, the proceedings for levy of estate duty were commenced, within the period prescribed under Section 73A of the Estate Duty Act, 1953 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the best judgment assessment under Section 58(4) of the Estate Duty Act, 1953, was invalid '

2. The dispute concerns the estate of Smt. Asarfi Devi, who died on the 23rd September, 1959. The accountable person did not file an account of the estate within the six months period granted under Section 53(3) of the Act. On the 18th of February, 1963, the Asst. CED issued a notice under Section 55 of the Act, which was served on the accountable person on the 5th of March, 1963, calling upon him to deliver the account of the estate of late Smt. Asarfi Devi. In response to this notice, Smt; Manorama Devi filed a return in Form ED-5 on April 1, 1963, and also took up the stand that the notice and the proceedings were invalid. It appears that after the return was filed in Form ED-5, a notice under Section 58(2) was issued, and served on the accountable person on April 1, 1963, As the accountable person did not comply with the terms of the notice the Asst. Controller made a best judgment assessment under Section 58(4) of the act. The appeal filed against this order before the Asst. Controller failed. The matter was then taken up before the Tribunal, by the accountable person. The Tribunal has allowed the appeal, and held that the best judgment assessment madeunder Section 58(4) was invalid. The reasons for the Tribunal's holding to this effect may be indicated. It has taken the view that an account can be filed only within a period of six months from the date of the death, and inasmuch as in the present the account had been filed beypnd the aforesaid period the return was invalid, and as such a best judgment assessment under Section 58(4) could not be made. It has also held that as the account delivered was in Form ED-5, and was not complete in all respects, the return filed was non est and as such no notice under Section 58(2) could be issued, and as a consequence no best judgment assessment could be made under Section 58(4). It indicated that the proper course to adopt was to take proceedings under Section 59. We propose to consider the second question first. In order to answer this question, it is necessary to extract relevant portions of Sections 53 and 58 of the Act.

' 53. (1) Where any property passes on the death of the deceased,--

(a) every legal representative to whom such property so passes for any beneficial interest in possession or in whom any interest in the property so passing is at any time vested,

(b) every trustee, guardian, committee or other person to whom any interest in the property so passing or the management thereof is at any time vested, and

(c) every person in whom any interest in the property so passing is vested in possession by alienation or other derivative title,

shall be accountable for the whole of the estate duty on the property passing on the death but shall not be liable for any duty, in excess of the assets of the deceased which he actually received or which, but for his own neglect or default, he might have received :

Provided that nothing in this section shall render a person accountable for duty who acts merely as agent or bailiff for another person in the management of property......

(3) Every person accountable for estate duty under this section shall, within six months of the death of the deceased, deliver to the Controller an account in the prescribed form and verified in the prescribed manner of all the properties in respect of which estate duty is payable :

Provided that the Controller may extend the period of six months aforesaid on such terms which may include payment of interest as may be prescribed......'

' 58. (1) If the Controller is satisfied without requiring the presence of the person accountable that an account delivered under Section 53 or Section 56 is correct and complete, he shall assess the principal value of the estate of the deceased, and shall determine the amount payable as estate duty.

(2) If the Controller is not so satisfied, he shall serve a notice on the person accountable, either to attend in person at his office on a date to be specified in the notice, or to produce, or cause to be produced on that date, any evidence on which the person accountable may rely in support of his account.

(3) The Controller, after hearing such evidence as the person accountable may produce and such other evidence as he may require on any specified points, shall, by order in writing, assess the principal value of the estate of the deceased and determine the amount payable as estate duty.

(4) In any case where no account has been delivered as required by Section 53 or Section 56, or the person accountable fails to comply with the terms of the notice served under Sub-section (2), the Controller shall make the assessment to the best of his judgment and determine the amount payable as estate duty. '

3. Section 53(3) requires every person accountable for estate duty to file an account in the prescribed form, and verified in the prescribed manner within six months of the death of the deceased. The proviso gives power to the Controller to extend the period of six months fixed for filing the accounts. In the present case, the accountable persons had not filed the return within the period of six months, but the return was filed in response to a notice under Section 55, Further the return was in Form ED-5 and not in Form ED-1 or ED-4. The question is as to whether on account of the account not having been 'filed within a period of six months, and complete in all particulars as required by Section 53, the order made under Section 58(4) is invalid.

4. We do not think it is so. We have already extracted Section 58(4). Section 58(4) permits a best judgment assessment in two situations. One, where no account had been delivered as required by Section 53 or 56, and the other, where the accountable person fails to comply with the terms of a notice issued under Section 58(2). Now a notice under Section 58(2) can be issued only in case an account had been delivered under Section 53 or Section 56. In the present case, the Asst. Controller had issued a notice under Section 58(2), but the Tribunal took the view that inasmuch as the return did not comply with the requirement of Section 53 both as respect to time and particulars there was no return under Section 53 at all, and as such the notice under Section 58(2) was invalid. It has been already noticed that the accounts were filed in response to a notice under Section 55, they were not filed voluntarily within the time prescribed under Section 53(3). The question is as to whether an account filed in response to a notice under Section 55, and beyond the period prescribed under Section 53(3) can be treated to be an account filed under Section 53. When one examines the Act one finds that Sections 53 and 56 are the only provisions under which the account of the deceased are filed. Sofar as Section 55 is concerned that is only an empowering provision, as all that it does is to authorise the Controller to call upon the persons mentioned in that provision to deliver a statement of particulars as mentioned in that provision and where the accountable person has received notice under Section 55, and in compliance thereof he files a return, the return would be one which would be under Section 53(1), for, Section 56 applies only to cases where letters for representation are sought by the executors of the deceased. The fact that such an account is filed six months after the death of the deceased does not mean that it is _not an account of the estate of the deceased as contemplated by Section 53(1). In our view all that Section 53(3) does is to impose a duty on every person accountable to file the accounts within six months of the death, but from this it does not follow that accounts filed by the accountable person either voluntarily after six months or in response to a notice under Section 55 would not be an account under s. 53(1) so as to attract the assessment procedure set out under Section 58. Section 53(1) when it uses in its substantive clause, the words 'shall be accountable for the whole estate duty......' in respect of the persons specified in Section 53(1), Clauses (a),(b) and (c) impliedly cast a duty on such persons to file the accounts of the estate of the deceased. In case, one were to take the view that an account filed in response to a notice under Section 55 is an account filed under that provision the Asst, Controller would, in such cases, have no power to proceed any further, for that provision does not thereafter make any provision as to how the accounts and the particulars, etc., filed in response to a notice under Section 55 are to be processed. The assessment procedure, where accounts are filed, is contained in Section 58 alone in such cases. Thus, in order to give efficacy to Section 55, and to render the power conferred on the Controller meaningful, the accounts filed in response to a notice under Section 55 must be taken to be one which is filed under Section 53(1). In the present case, subsequent to the filing of the accounts a notice under Section 58(2) was actually issued to the accountable persons, and they did not comply with the terms thereof. This being so, a best judgment assessment could be made under Section 58(4). This view obviates the necessity of considering the decision of the Supreme Court in the cases of CIT v. Ranchhoddas Karsondas : [1959]36ITR569(SC) and the State of Assam v. D.C. Choudhuri : [1970]76ITR706(SC) . For, once it is held that the return filed by the accountable persons was a return under Section 53(1), the case would not be one where no account had been delivered so as to make it necessary to examine the provisions of the first part of Section 58(4) and Section 59. It may be mentioned that in Choudhuri's case : [1970]76ITR706(SC) , the Supreme Court struck down the proceedings on the ground that no notice'under Section 19(2) of the Assam Agrl. I.T. Act, 1939, had been issued before making a best judgment assessment under Section 20(5), which is in pari materia with Section 58(4). Section 19(2) of the Assam Agrl. I.T. Act,is in pari materia with Section 58(2) of the E.D. Act. But here, since we have held that the return filed by the accountable person was a return under Section 53(1) and a notice under Section 58(2) had been issued to the accountable person, and he had failed to comply with its terms, the case clearly fell under Section 58(4),

5. Before disposing of the reference, in which unfortunately we did not have any assistance on behalf of the assessee as none has appeared on her behalf, it is necessary to consider one other contention raised on behalf of the accountable person before the Tribunal. The contention was that an account filed in Form ED-5 was not an account fulfilling the requirements of Section 53, and as such could not be treated as an account filed under Section 53. The requirement of filing an account in the prescribed form, which is either ED-1 and ED-5, goes with an account filed under Section 53(3), and not with an account which is treated to be one under Section 53(1). In the present case, as we have held that the account filed in response to a notice under Section 55 is one which is under Section 53(1), the requirement of Section 53(3) need not be strictly complied with.

6. So far as the first question is concerned the deceased died on the 23rd of September, 1959, and a notice on the accountable person was served on the 5th of March, 1963. In E.D.R. No. 11 of 1977, Padampat Singhania v. CED decided on 26-9-1979 : [1980]122ITR162(All) ) we have held that a notice under Section 55 starts proceedings under the Act, and if it has been done before the expiry of five years after the death, the bar of limitation created by Section 73A is saved. As the notice under Section 55 was given and served before the expiry of the period of five years, which in the present case was the 22nd September, 1964, the proceedings for levy of estate duty were validly commenced within limitation.

7. We, accordingly, answer the first question in the affirmative, and the second question in the negative. As none has appeared on behalf of the assessee, there shall be no order as to costs.


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