Controller of Estate Duty, Gujarat I v. M.A. Merchant

CONTROLLER OF ESTATE DUTY, GUJARAT I, AHMED ABAD. _v._ M.A. MERCHANT ACCOUNTABLE PERSON OF LATE SHRI A.G MERCHANT, MAJIRAJWADI ROAD, BHA VNAGAR, ETC. MAY 2, 1989 [R.S. PATHAK, CJ AND SABYASACHI MUKHARJI, J.] _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._ A B ###### c 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. D The Estate Duty (Amendment) Act, 1958 repealed the original sections 56 to 65.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 !st .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 tiled 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._ _Majat!al_ v. _Deputy Controller of Estate Duty,_ [1968] 67 I.T.R. ~~9. E F G **Thereafter. at the instance of the** **Revenue** **3 references were made** **H** 987 A B c D 988 SUPREME COURT REPORTS [1989] 2 S.C.R. 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 _J_ 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: l. 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. {9930] 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 E property or by reason of the omission of any property. [9920-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 .. F ~::t ~:ec::~~ ~~ ~~~:~~ ~::t ~:ec::~~ ~~ ~~~:~~0s::~i~: c:;.e~=:~~:;a::!:'~h~~:e;;;~:::::,~0o~ ·~ **to the two provisions relates to the "omission** **of any property",** **but** the incidents of the power under section 62 relate to a situation mate- _.rially different from the incidents of the power contemplated under section 59. l992E-F] 0s::~i~: c:;.e~=:~~:;a::!:'~h~~:e;;;~:::::,~ G 4. There are no specific words which confer retrospective effect _"..r_ to section 59 as it stands. To spell out retrospectivity in section 59 there must be soniething in the intent to section 59 from which retrospective operation can be necessarily inferred. There is no such intent. [992G-H] H 5. The new section 59 is altogether different from the old section CONTR. OFESTATEDlITY, GUJARAT v.M.A.MERCHANT [PATHAK. CJ.] 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] A 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 necessa1·y implication. If an assess ~ ment has already been made and completed, the assessee cannot B )·be subjected to re-assessment 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 accountbie 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. Ila Das and_ _Others,_ [1981 i 132 I. T.R. 720 relied on. ###### c CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2-4 D 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. E F G H ##### '· 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 originals. 62, made provision for reassessment. It came into force with effect from l 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 SUPREME COURT REPORTS [1989] 2 S.C.R. A 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 B c D E F G H Controller allowed the appeals anc' set aside the reassessment orders holdi1tg 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 _J_ 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 case 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: .( _.A_ , CONTR. OF ESTATE DUTY, GUJARAT ... M.A. MERCHANT [PATHAK, CJ.] 991 Provided further that no order shall be made under this sub-section unless the person accountable has been **A** given an opportunity of being heard. (2) Nothing contained in sub-section (!) shall render any. person accountable to whom a certificate that the estate duty has been paid is granted liable for any additional duty **B** in excess of the assets of the deceased which are still in his possession, unless the person accountable had frauduler,tJy 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. _Property escaping assessment:_ If the Controller, (a) has reason to believe that by re~son of the omis**sion or failure** **on the part of the person account-** able 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 assess**ment at too low a rate or othen.vise, or** c **D** E (b) has, in consequence of any information in his p **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 omis- G sion 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** ai:-·~ount **as** reg uired under section 53 and may proceed to **H** 992 SUPREME COURT REPORTS [19891 2 S.C.R. assess or reassess such property as if the provi- [~ ] **A** sions 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 favourofthe assessee. \.._ **B** ~ The Revenue now app&.ils. #### ; t 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 # ###### c [s. ] new provision must be regarded [59 ][is ][substantially similar in content ] as retrospective. The contention [as ][the olds. ][62 ][and therefore the ] may .( be examined. The Estate Duty (Amendment) Act, 1958 effected a substantial change in the parent Act. Ss. 56 to 65 were substituted in pla~e of\he **D** existing ss. 56 to 6?, and the originally enacted s. 62 was repealed. The original s. ~2 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 ands. 147 of the Income Tax Act, E 1961. It seems to us that the news. 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 **i:** **F** analysed the provisions of the two sections and has come to the conclu### sion that the power of reassessment conferred by the news. 59 is quite i different from the power conferred by the old s. 62. We are in agree##### / ment with the High Court. The contention on behalf of the Revenue based on the identity alleged between the news. 59 and the olds. 62, and that, therefore, the new section should be regarded as retrospec G tive cannot be accepted. ·~ As it stands, there are no specific words either which confer retrospective effect to s. 59. To spell out retrospectivity ins. 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 **H** intent. The new s .. 59 is altogether different from the old s. 62 and -L-• CONTR. OF ESTATE DUTY, GUJARAT v.M.A. MERCHANT IPAIBAK, CJ.I 993 there is nothing in the news. . 59 from which an intent to give retrospec- A ## "' tive 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 B J interference with vested rights by subsequent legislation unless the (egislation has been made retrospective expressly or by necessary ilnplication. 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 Benga/v. Smt._ _Ila_ _Das and others,_ [1981) 132 I.T.R. 720 where an attempt to reopen the Estate Duty assessment conse- C quent upon the insertion of the news. 59 of the Estate Duty Act was held infructuous. ..{ We hold thats. 59 of the Estate Duty Act is not retrospective in operation and that the reopening of the assessment under s. 5\1.of thi: D Act is bad in law. In the result the appeals fail and are dismissed with costs . N.V.K. Appeals dismissed.