Escaped estate duty assessment can be reopened when an earlier deduction was wrongly allowed and caused underassessment.

Section 59(b) of the Estate Duty Act permits reopening where information in the Controller's possession gives reason to believe that property chargeable to estate duty has escaped assessment, including by undervaluation, omission or other comparable escapement. On that construction, a deduction earlier allowed but later found to be inadmissible did not take the case outside the reopening power, because the resulting short assessment still concerned escapement of duty on the principal value of the estate. The court also held that the matter was not confined to rectification under section 61. The reassessment was therefore within the statutory power to reopen escaped estate duty assessment.

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Issues: (i) Whether reopening of estate duty assessment was valid under section 59(b) where an amount earlier allowed as deduction was later found to be not deductible; (ii) whether the same reopening was sustainable in law on the facts of the case.

Issue (i): Whether reopening of estate duty assessment was valid under section 59(b) where an amount earlier allowed as deduction was later found to be not deductible

Analysis: Section 59(b) applies where, on information in the Controller's possession, there is reason to believe that any property chargeable to estate duty has escaped assessment. The provision is concerned with escapement of assessment relating to property chargeable to duty, including cases of undervaluation, omission, too low a rate, or other comparable circumstances. The definition of 'property' in section 2(15) of the Estate Duty Act, 1953, together with Explanation 1, is inclusive and wide enough to cover a debt or other enforceable right. On that construction, the fact that the deduction earlier granted was later found to be not allowable did not take the case outside section 59(b). Analogous provisions in other fiscal statutes did not alter the plain language of the section.

Conclusion: The reopening was valid under section 59(b) and the answer is against the accountable person.

Issue (ii): Whether the same reopening was sustainable in law on the facts of the case

Analysis: Once the original deduction was found to have been wrongly allowed, the subsequent reassessment represented correction of an escapement in the principal value of the estate chargeable to duty. The court held that the plain language of section 59(b) justified the initiation of proceedings, and there was no need to treat the matter as one confined to rectification under section 61.

Conclusion: The reopening was sustainable in law and the answer is against the accountable person.

Final Conclusion: The reference was answered in favour of the Revenue on both questions, and the reassessment action was upheld as falling within the statutory power to reopen for escaped estate duty assessment.

Ratio Decidendi: Where an information-based belief exists that property chargeable to estate duty has escaped assessment, section 59(b) authorises reopening even if the escapement results from an earlier deduction later found to be wrongly allowed, provided the matter falls within the statutory concept of escapement of assessment.

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