Controller
of Estate Duty, Gujarat I, Ahmedabad. Vs. M.A. Merchant
[1989] INSC 167 (2 May
1989)
Pathak,
R.S. (Cj) Pathak, R.S. (Cj) Mukharji, Sabyasachi (J)
CITATION:
1989 AIR 1710 1989 SCR (2) 987 1989 SCC Supl. (1) 499 JT 1989 (3) 177 1989
SCALE (1)1479
ACT:
Estate
Duty Act, 1953: Sections 56-65--Valuations for estate duty--Rectification of
mistake--Reopening of assessment made under section 59--Permissibility
of--Effect of the Estate Duty (Amendment) Act, 1958.
HEAD NOTE:
The
respondents who were the accountable persons filed returns under the Estate
Duty Act. 1953, and an assessment was made by the Deputy Controller of Estate
Duty--Appellant on 26th February. 1960.
The
Estate Duty (Amendment) Act, 1958 repealed the original sections 56 to 65. Section
59 which substituted for the original section 62 made provision for
re-assessment. It came into force with effect from 1st July, 1960.
On 21st February, 1962, a notice under the new section 59
of the Act was issued to the respondents for re-opening the assessment on the
ground that some property had escaped the levy of estate duty. The respondents
raised objections but the same were rejected by the Assistant Controller who
reopened the assessment.
Against
the aforesaid order three different appeals were filed by the respondents
before the Appellate Controller, who allowed the appeals. set aside the
reassessment order holding that section 59 under which action had been taken by
the Assistant Controller was not retrospective in operation.
On
appeal by the Revenue, the Tribunal upheld the view of the Appellate Controller
relying on the decision of the Bombay High Court in A.N. Mafatlal v. Deputy
Controller of Estate Duty, [1968] 67 I.T.R. 449.
Thereafter.
at the instance of the Revenue 3 references were made 988 to the High Court
raising the indentical question whether section 59 was retrospective in
operation and reopening of the assessment under section 59 was bad. The High
Court analysed the provisions of the new section 59 and the old section 62. came
to the conclusion that the power of reassessment conferred by the new section
59 Is quite different from the power conferred by the old section 62. and
answered the question in each case in favour of the assessee.
The
Revenue appealed to this Court. On the question:
whether
the newly enacted section 59 of the Estate Duty Act is retrospective in
operation so as to affect the assessment already completed on the accountable
persons.
Dismissing
the appeals, the Court
HELD:
1. Section 59 of the Estate Duty Act is not retrospective in operation and
reopening of the assessment under section 59 of the Act in the instant case is
bad in law.
[993D]
2. The
Estate Duty (Amendment) Act. 1958 effected a substantial change in the parent
Act. Sections 56 to 65 were substituted in place of the existing sections 56 to
65. and the originally enacted section 62 was repealed. The original section 62
provided essentially for the rectification of mistakes apparent from the record
or in the valuation of any property or by reason of the omission of any
property.
[992D-E]
3. The
newly enacted section 59 deals with properly escaping assessment. The provision
is analogous to section 34 of the Indian Income Tax Act. 1922 and section 147
of the Income Tax Act. 1961. The new Section 59 endeavours to cover a
substantially different area from that treated by the old section 62. The only
area which seems common to the two provisions relates to the "omission of
any property", but the incidents of the power under section 62 relate to a
situation materially different from the incidents of the power contemplated
under section 59. [992E-F]
4.
There are no specific words which confer retrospective effect to section 59 as
it stands. To spell out retrospectivity in section 59 there must be something
in the intent to section 59 from which retrospective operation can be
necessarily inferred. There is no such intent. [992G-H]
5. The
new section 59 is altogether different from the old section 989 62 and there is
nothing new in the new section 59 from which an intent to give retrospective
effect to it can be concluded. [992H; 993A]
6.
There is a well-settled principle against interference with vested right by
subsequent legislation unless the legislation has been made retrospective
expressly or by necessary implication. If an assessment has already been made
and completed, the assessee cannot be subjected to reassessment unless the
statute permits that to be done.
[993B-C]
7. The
new section 59 came into force from 1st July, 1960. Much earlier, on 26th February, 1960. the assessment on the accountable
persons in the instant case had already been completed. So. there can be no
question of reopening the assessment. [993B] Controller of Estate Duty, West Bengal v. Smt. IIa Das and Others, [198l]
132 I.T.R. 720 relied on.
CIVIL
APPELLATE JURISDICTION: Civil Appeals Nos. 2-4 of 1975.
From
the Judgment and Order dated 8th 9th November 1973 of the Gujarat High Court in Estate Duty Reference Nos. 2,
3 and 4 of 1971.
Dr. V.
Gauri Shankar and Miss A. Subhashini for the Appellant.
V.S.
Desai, Mrs. A.K. Verma and Joel Peres for the Respondents.
The
Judgment of the Court was delivered by PATHAK, CJ. The facts in these appeals
lie within a narrow compass. One Abdulhussein Gulamhussein Merchant died on 8 February, 1959. The accountable persons filed
returns under the provisions of the Estate Duty Act, 1953 and an assessment was
made by the Deputy Controller of Estate Duty on 26 February, 1960. The Estate Duty (Amendment) Act, 1958, repealed the
original sections 56 to 65. Section 59, which substituted for the original s.
62, made provision for reassessment. It came into force with effect from 1 July 1960. On 21 February, 1962
a notice under the new s. 59 of the Act was issued to the accountable person
concerned for reopening the assessment on the ground that some property had
escaped the levy of estate 990 duty. The accountable persons raised objections
to the reopening of the assessment under s. 59. The Assistant Controller
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. The Appellate
Controller allowed the appeals and set aside the reassessment orders holding that
s. 59 under which action had been taken by the Assistant Controller was not
retrospective in operation. On appeal by the Revenue, the Tribunal upheld the
view of the Appellate Controller relying on the decision of the Bombay High CoUrt
in A.N. Mafatlal v. Deputy Controller of Estate Duty, [1968] 67 I.T.R. 449.
Thereafter three references were made to the High Court at the instance of the
Revenue raising the identical question:
"Whether
Section 59 of the Estate Duty Act, 1953 is retrospective in operation and if
so, in the facts and circumstances of the case, the reopening of the assessment
under s. 59 of the said Act was bad in law?" Section 62 as originally
enacted read as follows:
"Rectification
of mistakes relating to valuation for estate duty:, (1) If, after the
determination of the estate duty payable in respect of any estate, it appears
to the Controller that by reason of any mistake apparent from the record or 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
of the omission of any property, the estate duty paid thereon is either in
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 ease may be, (b) determined 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 will be six years:
991
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." The provisions of
section 59 introduced by the Amendment Act of 1958 are as follows:
"59.
Properly escaping assessment.' If the Controller, .....
(a)
has reason to believe that by reason of the omission or failure on the part of
the person accountable 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 undervaluation of the property included in the account
or of omission to include therein any property which ought to have been
included or of assessment at too low a rate or otherwise, or (b) has, in
consequence of any information in his possession, reason to believe
notwithstanding that there has not been such omission or failure as is referred
to in clause (a) that any property chargeable to estate duty has escaped
assessment, whether by reason of under-valuation of the property included in
the account or of omission to include therein any property which ought to have
been included, or of assessment at too low a rate or otherwise, he may at any
time, subject to the provisions of section 73A, require the person accountable
to submit an account as required under section 53 and may proceed to 992 assess
or reassess such property as if the provisions of Section 58 applied
thereto." The High Court considered the question of law referred to it at
great length and after a detailed judgment answered the question in each case
in favour of the assessee.
The
Revenue now appeals.
The
question is whether the newly enacted s. 59 of the Estate Duty Act is
retrospective in operation so as to affect the assessment already completed on
the accountable persons. It is urged that the new s. 59 is substantially
similar in content as the old s. 62 and therefore the new provision must be
regarded as retrospective. The contention may be examined.
The
Estate Duty (Amendment) Act, 1958 effected a substantial change in the parent
Act. Ss. 56 to 65 were substituted in place of the existing ss. 56 to 65, and
the originally enacted s. 62 was repealed. The original s. 62 provided
essentially for the rectification of mistakes apparent from the record or in
the valuation of any property or by reason of the omission of any property. The
newly enacted s. 59 deals with property escaping assessment. The provision is
analogous to s. 34 of the Indian Income Tax Act, 1922 and s. 147 of the Income
Tax Act, 1961. It seems to us that the new s. 59 endeavours to cover a
substantially different area from that treated by the old section 62. The only
area which seems common to the two provisions relates to the "omission of
any property", but it seems to us that the incidents of the power under s.
62 relate to a situation materially different from the incidents of the power
contemplated under s. 59. The High Court has closely analysed the provisions of
the two sections and has come to the conclusion that the power of reassessment
conferred by the new s. 59 is quite different from the power conferred by the
old s. 62. We are in agreement with the High Court. The contention on behalf of
the Revenue based on the identity alleged between the new s. 59 and the old s.
62, and that, therefore, the new section should be regarded as retrospective
cannot be accepted.
As .it
stands, there are no specific words either which confer retrospective effect to
s. 59. To spell out retrospectivity in s. 59, then, there must be something in
the intent to s. 59 from which retrospective operation can be necessarily
inferred. We are unable to see such intent. The new s. 59 is altogether
different from the old s. 62 and 993 there is nothing in the new s. 59 from
which an intent to give retrospective effect to it can be concluded.
The
new s. 59 came into force from 1 July, 1960.
Much earlier, on 26
February, 1960 the assessment
on the accountable person had already been completed. There is a well settled
principle against interference with vested rights by subsequent legislation
unless the legislation has been made retrospective expressly or by necessary
implication. If an assessment has already been made and completed, the assessee
cannot be subjected to re-assessment unless the statute permits that to be
done. Reference may be made to Controller of Estate Duty, West Bengal v. Smt. IIa
Das and others, [1981] 132 I.T.R. 720 where an attempt to reopen the Estate
Duty assessment consequent upon the insertion of the new s. 59 of the Estate
Duty Act was held infructuous.
We
hold that s. 59 of the Estate Duty Act is not retrospective in operation and
that the reopening of the assessment under s. 59. of the Act is bad in law.
In the
result the appeals fail and are dismissed with costs.
N.V.K.
Appeals dismissed.
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