CONTROLLER OF ESTATE DUTY, GUJARAT I, AHMEDABAD. versus M.A. MERCHANT ACCOUNTABLE PERSON OF LATE SHRI A.G MERCHANT, MAJIRAJWADI ROAD, BHAVNAGAR, ETC.

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 The Estate Duty (Amendment) Act, 1958, repealed the original sections 56 to 65.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 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 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 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:

pp. 989–990, margin F

"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

p. 990, margin C

s. 59 of the said Act was bad in law?" Section 62 as originally enacted read as follows:

p. 990, margin C

"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;

p. 990, margin D

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:

p. 990, margin G

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 (!) 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 frauduler,tJy attempted to evade any part of the estate duty in the first instance."

p. 991

provisions of section 59 introduced by the Amendment Act are as follows:

p. 991, margin C

"59. Property escaping assessment: If the Controller, (a) has reason to believe that by re~son 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 assess-

p. 991, margin C

ment at too low a rate or othen.vise, 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 ai:-·~ount as reg uired under section 53 and may proceed to assess or reassess such property as if the provi-

pp. 991–992, margin E

sions of Section 58 applied thereto."

p. 992, margin A

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.

p. 992, margin A

The Revenue now app&.ils.

p. 992, margin B

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 olds. 62 and therefore the new provision must be regarded as retrospective. The contention may be examined.

p. 992, margin B

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 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, 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 analysed the provisions of the two sections and has come to the conclusion that the power of reassessment conferred by the news. 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 news. 59 and the olds. 62, and that, therefore, the new section should be regarded as retrospective cannot be accepted.

p. 992, margin C

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 intent. The new s .. 59 is altogether different from the old s. 62 and there is nothing in the news. 59 from which an intent to give retrospective effect to it can be concluded.

pp. 992–993, margin G

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 (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 consequent upon the insertion of the news. 59 of the Estate Duty Act was held infructuous.

p. 993, margin A

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: Act is bad in law.

p. 993, margin C

In the result the appeals fail and are dismissed with costs . N.V.K. Appeals dismissed.

p. 993, margin D