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 The Estate Duty (Amendment) Act, 1958, repealed the original sections 56 to 65.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 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 Section 62 as originally enacted read as follows: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 valua-
tion 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 appli-
cation 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:
Provided further that no order shall
be made under this sub-section unless the
person accountable has been given an opportu-
nity 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 infor-
mation 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
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 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.