1. The petitioners herein are the legal representatives of one late S. Nelliappan of Nagercoil. The petitioners, as accountable persons, filed a retirn under the E.D. Act on the basis that Nelliappan was the karta of an HUF and as such his share alone in the HUF passed on his death. The Asst, Controller, accepting the assertion of the accountable persons that the deceased was a member of a joint family at the time of his death and, therefor, his 1/6th share alone in the joint family passed on his death, proceeded to determine the principal value of the 1/6th sharee of the deceased in the joint family at Rs. 5,27,069 by his order dated 29th November, 1971. As regards the valuation of some of the tiems of the properties, the accountable persons field an appeal before the controller. The controller partly allowed the appeal. As aganist the order of the controller, both the Revenue as well as accountable persons field appeals before the Tribunal. The Tribunal allowed the appeal field by the accountable persons but dismissed the appeal field by the Revenue.
2. Aggrieved by the order of the Tribunal, the Revenue has sought a reeferance to this court on the question of valuation of some of the items of the properties and the said referance is pending considerat ion before this court.
3. In the meanwhile, the Asst. Controller initiated proceedings u/s. s. 61 of the E.D. Act for rectification of certain alleged mistakes in the original order of assessment and after getting the objections of the accountable persons as contemplated by the proviso to s. 61, he enhanced the principle value of the estate to Rs. 22,01,384 and determined the additional estate duty payable by the accountable persons at Rs, 4,48,403 while the amount payable as estate duty in the original assessment order was only Rs. 37,827. Against the order enhancing the principle value of the estate of the deceased from Rs. 5,27,069 to Rs. 22,01,384, the accountable persons have preferred an appeal to the Controller u/s. 62 of the E.D Act. Pending the said appeal the petitioners herein (accountable persons) field an application for stay of collection of the estate duty before the Asst. CED. The Asst. Controller, by his order dated June 18, 1977, refused to grant stay of the collection of the estate duty on the enhanced principle value practically on two grounds : (1) that since the appeal field by the accountable persons before the Controller appears to be not maintainable, the collection of estate duty cannot be stayed any further; (2) that since the Dy. Controller and the Controller have refused the petitioners ' request for stay of collection of estate duty, the demand for payment of estate duty has to be enforced. It is under those circumstances, the petitioners have come before this court seeking to quash the order of the Asst. Controller, dated June 18, 1977, refusing to grant stay of the collection of the estate duty.
4. The Asst. Controller, who also comes within the definition of the the 'Controller' in s. 2(5), has the power u/s. 70 to postpone the collection of the estate duty for such period or to such extent and on such terms as he may think fit, if he is satisfied that the estate duty leviable in respect of any property cannot, without excessive sacrifice, be raised at once. The Asst. Controller has also the discrption u/s. 73(4) to treat the accountable persons as not being in default, if an appeal has been filed u/s. 62 before the Controller. Thus, the maintainability of an appeal will be relevant only for the exercise of the discretionary power of the Controller u/s. 73(4). The maintainability of an appeal, or the pendency of the same is not relevent for exercising the discretionary power of the Asst. Controller u/s. 70. Therefor, the fact that the Dy. Controller and the Controller have refused to grant stay, is not a ground for the Asst. Controller to refuse to exercise the power u/s. 70. When the Asst. Controller is enjoined by the statute under s. 70 to exercise his discretionary power either to postpone the collection of the estate duty or to allow payment of a portion thereof, if the conditions laid down u/s. 70 are satisfied, he cannot refuse to exercise his power merely on the ground that the Controller has chosen to reject the petition field by the accountable persons for staying the collection of the estate duty. The Asst. Controller has to exercise his discretionary power u/s. 70 independently without referance to the orders passed by the Controller or the Dy. Controller in the matter of grant of stay.
5. A similar question arose in K. M. Rahmath Bibi v. First ITO : 72ITR73(Mad) . That case arose under the I.T. Act 1961. There, s. 220(3) enable the ITO to extend the time or allow payment by instalments subject to such conditions as he may deem fit to impose in the circumstances of the case. Sub-section (6) of S. 220 gave a further discretion to the ITO to treat the assessee as not being in default in respect of the amount disputed in the appeal. In that case the ITO refused to stay the collection of the tax. It is at that stage the assessee came before this court questioning the order of the ITO to stay the collection of the tax. This court pointed out that the power granted to the officer u/s. 220(6) is one coupled with a duty to exercise it and, therefor, he has to exercise his discretion according to law and reason and without acting arbitrarily or caprico usly or without taking into account any irrelevent or extraneous matters not germane to the exercise of his discreation. while s. 220(6) deals with the whole amount in arrear, and that the scope of the under s. 220(3) is wider and could be exercised even if there is no appeal against any portion of the tax arrears.
6. In this case even if an appeal is not maintainable against the order of rectification, the request of the accountable persons for stay has to be considred u/s. 70. While exercising the discretionary power u/s. 70, the Asst. Controller has to exercise the same in accordance with law and reason. He cannot act arbitrarily or capriciously. He cannot take in to account any irrelevant or esxtraneous matters not germane to the occasion in the exercise of his discretion. Since, in this case, the Asst. Controller has merely rejected that petition for stay filed by the accountable person on the ground that the appeal field by them is not maintainabile, which is not relevant for application of s. 70, we have to quash that order as having been passed on irrelevant consideration with a direction to him to pass a fresh order, in exercise of his discretion u/s. 70 taking into account the hardship that will be caused to the accountable persons if the entire amount of estate duty of Rs. 4,48,403 is sought to be collected in a lump sum and other relevant circumstances. In this view, we allow the writ petition and direct the respondent to consider the petitioners' request for stay u/s. 70 and pass orders thereunder in accordance with law and reason after taking into account all the relevant circumstances. There will be no order as to costs.
7. The question whether an appeal lies u/s. 62 against the order of rectification is left open as that question is now pending before the Controller himself.