Binding judicial declaration can justify rectification where an assessment rests on an erroneous assumption that a trust was valid.

A subsequent binding judicial declaration that the adoption was valid and the trust was void could be relied on in rectification proceedings under the Estate Duty Act. Because the Supreme Court decision destroyed the legal foundation on which the property had been treated as trust property, the error was treated as a mistake of law apparent from the record rather than a mere change of opinion or escaped assessment. The Tribunal was therefore not justified in refusing rectification, and the earlier assessment could be corrected on the basis that the trust was void from inception.

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Issues: (i) Whether the Supreme Court judgment in the adoption litigation contained a finding affecting the validity of the trust so as to justify rectification of the estate duty assessment. (ii) Whether the Tribunal was justified in rejecting rectification of its earlier order under the rectification provision of the Estate Duty Act.

Issue (i): Whether the Supreme Court judgment in the adoption litigation contained a finding affecting the validity of the trust so as to justify rectification of the estate duty assessment.

Analysis: The validity of the adoption and the consequent validity of the trust were directly in issue in the civil litigation. The Supreme Court's decision confirmed the trial court's decree holding the adoption valid and the trust void. That declaration altered the legal basis on which part of the estate had been excluded from duty in the assessment proceedings.

Conclusion: Yes. The judgment contained a finding that the trust could not validly be created on the relevant date, and this supported rectification.

Issue (ii): Whether the Tribunal was justified in rejecting rectification of its earlier order under the rectification provision of the Estate Duty Act.

Analysis: The subsequent Supreme Court decision knocked out the basis of the original assessment to the extent the property had been treated as trust property. The Court held that this was not a mere change of opinion or a case of escaped assessment, but a mistake of law apparent from the record capable of correction in rectification proceedings. The later decision could therefore be relied upon to revise the assessment on the basis that the trust was void from inception.

Conclusion: No. The Tribunal was not justified in rejecting rectification; the rectification application ought to have been allowed.

Final Conclusion: The reference was answered against the accountable person and in favour of the Revenue, and the Tribunal's refusal to rectify was held unsustainable.

Ratio Decidendi: A subsequent binding judicial declaration that destroys the legal foundation of an assessment can constitute a mistake apparent from the record and be corrected in rectification proceedings where the original order proceeded on an erroneous assumption of law.

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