PETITIONER:
CONTROLLER OF ESTATE DUTY, GUJARAT I,AHMEDABAD.
Vs.
RESPONDENT:
M.A. MERCHANT ACCOUNTABLE PERSON OFLATE SHRI A.G MERCHANT, M
DATE OF JUDGMENT02/05/1989
BENCH:
PATHAK, R.S. (CJ)
BENCH:
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 assess-
ment made under section 59--Permissibility of--Effect of the
Estate Duty (Amendment) Act, 1958.
HEADNOTE:
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The Estate Duty (Amendment) Act, 1958 repealed the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 reas-
sessment 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 retro-
spective 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 retrospec-
tive effect to section 59 as it stands. To spell out retro-
spectivity 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 conclud-
ed. [992H; 993A]
6. There is a well-settled principle against interfer-
ence 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 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 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.
JUDGMENT:
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 Appel-
lant.
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 reassess-
ment 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:
991
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
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 sub-
stantial change in the parent Act. Ss. 56 to 65 were substi-
tuted in place of the existing ss. 56 to 65, and the origi-
nally enacted s. 62 was repealed. The original s. 62 provid-
ed 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 sec-
tion 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 retro-
spectivity 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 account-
able 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 retro-
spective in operation and that the reopening of the assess-
ment 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.
994