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Controller of Estate Duty Vs. Estate of Late M. Kuppuswami Naicker - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberTax Case No. 6 of 1972 (Reference No. 6 of 1972)
Judge
Reported in[1977]110ITR127(Mad)
ActsEstate Duty Act, 1953 - Sections 62(1)
AppellantController of Estate Duty
RespondentEstate of Late M. Kuppuswami Naicker
Appellant AdvocateJ. Jayaraman and ;Nalini Chidambaram, Advs.
Respondent AdvocateNone
Cases ReferredVenkatagiri v. Commissioner of Income
Excerpt:
.....on march 6, 1969. it is thereafter by an order dated march 31, 1969, the appellate controller of estate duty dismissed both the appeals on the ground that the requirement of the proviso to section 62(1) of the act had not been satisfied. commissioner of income-tax [1955] 28 itr 189 construing the scope of section 30(1) of the indian income-tax act, 1922, held that the appeals were competent and that the dismissal of those appeals on the ground that the proviso to section 62(1) of the act had not been satisfied was not correct and therefore directed the appeals to be restored to the file of the appellate controller for consideration on the merits of the case and disposal of the same according to law. we are of the opinion that, on the factsof this case, the requirement of the said.....ismail, j.1. the income-tax appellate tribunal, madras bench, under section 64(2) of the estate duty act, 1953, hereinafter referred to as 'the act', has referred the following question of law for the opinion of this court:' whether, on the facts and in the circumstances of the case, the appellate tribunal was right in law in holding that the appeals filed by the accountable person on january 29, 1968, and february 21, 1969, before the appellate controller against the levy of penalty were competent in view of the proviso to section 62(1) of the estate duty act and in restoring the appeals back to the appellate cantroller for disposal according to law '2. the estate duty payable on the estate of late sri kuppuswami naicker, madras, by the accountable person was determined at rs. 68,833.29......
Judgment:

Ismail, J.

1. The Income-tax Appellate Tribunal, Madras Bench, under Section 64(2) of the Estate Duty Act, 1953, hereinafter referred to as 'the Act', has referred the following question of law for the opinion of this court:

' Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that the appeals filed by the accountable person on January 29, 1968, and February 21, 1969, before the Appellate Controller against the levy of penalty were competent in view of the proviso to Section 62(1) of the Estate Duty Act and in restoring the appeals back to the Appellate Cantroller for disposal according to law '

2. The estate duty payable on the estate of late Sri Kuppuswami Naicker, Madras, by the accountable person was determined at Rs. 68,833.29. The amount was due on or before June 10, 1968, and the same was not paid. After issuing a notice, the Assistant Controller of Estate Duty by his order dated September 20, 1968, imposed a penalty of Rs. 5,000 under Section 46(1) of the Indian Income-tax Act, 1922, as applied to Section 73(5) of the Act, directing that the same should be paid on or before October 20, 1968. On November 29, 1968, the accountable person preferred an appeal before the Appellate Controller of Estate Duty against this order. Meanwhile, the Assistant Controller of Estate Duty passed another order on January 21, 1969, levying a further penalty of Rs. 10,000 directing it to be paid together with the penalty of Rs. 5,000 levied on September 20, 1968, on or before February 20, 1969. Against this order also, the accountable person preferred an appeal on February 21, 1969. But, on January 30, 1969. during the pendency of the first appeal, the Assistant Controller of Estate Duty passed another order. It is desirable to extract the entire order.

' I have considered your request for payment of the duty in instalments. Since the sum of Rs. 1,04,500 represents interest for the period after the death of the deceased, it cannot be an allowable deduction under the provisions of the Estate Duty Act. As such I am not able to withhold proportionate duty on that sum. However, your request to exclude the sum of Rs. 1,35,914 from the principal value for the purpose of calculating the duty due (the sum of Rs. 1,35,914 being disputed in appeal) will be admitted. If this is excluded, then the net duty payable works out to Rs. 41,650.49, This should be paid in monthly instalments of Rs. 3,000 each on or before 20th of every month commencing from February, 1969. You are, however, informed that if there should be any default in payment of any instalment the concession now granted is likely to be withdrawn and you will be required to pay the arrears then due in one lump sum. Necessary interest as provided for in Section 70 will be charged. The duty due on Rs. 1,35,914 is kept in abeyance till the disposal of the appeal by the Appellate Controller.'

3. After this order, the accountable person gave a cheque for the first instalment on February 20, 1969, which was admittedly realised on March 6, 1969. It is thereafter by an order dated March 31, 1969, the Appellate Controller of Estate Duty dismissed both the appeals on the ground that the requirement of the proviso to Section 62(1) of the Act had not been satisfied.

4. Against this order of the Appellate Controller, the accountable person preferred two appeals to the Income-tax Appellate Tribunal, Madras, and the Tribunal by its order dated 28th May, 1971, following the decision of the Andhra Pradesh High Court in Raja, of Venkatagiri v. Commissioner of Income-tax [1955] 28 ITR 189 construing the scope of Section 30(1) of the Indian Income-tax Act, 1922, held that the appeals were competent and that the dismissal of those appeals on the ground that the proviso to Section 62(1) of the Act had not been satisfied was not correct and therefore directed the appeals to be restored to the file of the Appellate Controller for consideration on the merits of the case and disposal of the same according to law. It is the correctness of this conclusion of the Tribunal that is challenged in the form of the question referred to this court extracted already.

5. The proviso to Section 62(1) of the Act dealing with appeal against orders of the Controller states : . - - .

' Provided that no appeal shall lie under Sub-clause (iv) of Clause (a) unless the duty has been paid before the appeal is filed.'

6. The order contemplated by Sub-clause (iv) of Clause (a) of Section 62(1) is anorder imposing penalty for non-payment of duty. Consequently, the question for consideration, is, whether the requirement of this sub-section issatisfied in the present-case or not. We are of the opinion that, on the factsof this case, the requirement of the said sub-section is satisfied.

7. It is true that the duty originally demanded was Rs. 68,833.29 and it is on the basis of the default in payment of that amount of duty, two amounts of penalty of Rs. 5,000 and Rs. 10,000, respectively, were levied by the Assistant Controller of Estate Duty. But the order of the Assistant Controller himself dated January 30, 1969, which we have extracted in full clearly showed that the notice of demand for payment of duty of Rs. 68,833.29 was itself modified by reducing the duty itself to Rs. 41,650.49. As a matter of fact, that order further stated that since an appeal was pending with regard to assessment to duty on the sum of Rs. 1,35,914 which he was admitting, the duty referable thereto was kept in abeyance. The result is that the amount of duty itself had been modified by the very Assistant Controller who originally fixed the amount and, therefore, it could not be said that there was default in the payment of duty as originally demanded, namely, Rs. 68,833.29, with the consequence of the penalty levied on that basis also being affected. However, the learned counsel for the revenue contended that the order dated January 30, 1969, of the Assistant Controller did not have that effect, because an appeal was pending before the Appellate Controller in respect of assessment to the duty itself. We are able to appreciate the position that the Assistant Controller himself could not have made any final determination in this behalf, in view of the pendency of the appeal, and he had to observe the propriety of the appellate authority having seized of the matter and having to pass formal and final orders on the appeal. In view of this only, while working out the duty that would really be payable as Rs. 41,650.49 as against the duty of Rs. 68,833.29 originally fixed by him, he made it expressly clear that the duty referable to the sum of Rs. 1,35,914, the claim with reference to which he was admitting, would be kept in abeyance till the disposal of the appeal by the Appellate Controller. However, this position does not in any way affect the conclusion we have reached, namely, that the duty referable to Rs. 1,35,914 was not due at that stage since the Assistant Controller himself has kept the same in abeyance and the duty then due was only Rs. 41,650.49 and not Rs. 68,833'29 and the proceedings for levy of penalty proceeded only on the basis that the entire amount of Rs. 68,833.29 was due. Consequently, even this contention of the learned counsel for the revenue does not affect the inference we have drawn already.

8. Therefore, even though on the date when the accountable person preferred the first appeal on November 29, 1968, what was in force was the original order demanding duty at Rs. 68,833.29, by the time the appeal came to be disposed of, that demand itself had been modified by the Assistant Controller himself. Having regard to the fact that under Section 62(2) of the Act, the Appellate Controller had the power to excuse the delay in the filing of an appeal, if on March 31, 1969, the Appellate Controller had entertained the appeal after excusing the delay, certainly he would not have dismissed the appeal on the ground that the proviso to Section 62(1) of the Act had not been satisfied, because the demand for the payment of the duty had itself been modified.

9. Similarly, with regard to the subsequent appeal filed on February 21, 1969, admittedly by that time the order dated January 30, 1969, had been passed and not only the demand had been modified but also the manner of payment of that altered amount also had been modified, and in terms of that modification the accountable person had also presented a cheque on February 20, 1969. As the cheque had been encashed subsequently before the appellate authority had disposed of the appeal it must be held that the first instalment of the duty due as per the order dated January 30, 1969, had been paid on February 20, 1969, and that, therefore, the appeal presented on February 21, 1969, was perfectly competent.

10. Having regard to these circumstances, we are of the opinion that the conclusion of the Tribunal is correct on the facts of this case. In the result, the question referred to this court is answered in the affirmative and in favour of the accountable person. Since the accountable person is not represented before the court, there will be no order as to costs.


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