1983 (12) TMI 16 - HC - Income Tax

Court sets aside provisional assessment order, directs fresh assessment considering deductions claimed. No costs awarded.

The court ruled in favor of the petitioners, setting aside the provisional assessment order and the demand notice. The Controller was directed to conduct ... Provisional assessment - summary assessment - assessment on the basis of accounts delivered - disputed questions of law or fact raised by the accountable person - bar on enquiry into disputes at provisional stage - obligation to make provisional assessment on return/ accountsProvisional assessment - assessment on the basis of accounts delivered - obligation to make provisional assessment on return/ accounts - Whether a provisional assessment under the Estate Duty Act must be made on the basis of the accounts delivered by the accountable person and whether the Controller could ignore deductions claimed in those accounts when making a provisional assessment. - HELD THAT: - The Court held that a provisional assessment under the Act is summary in nature and must be based on the accounts delivered by the accountable person. By analogy to the established principle governing provisional assessments under the Income-tax provisions, the statutory scheme bars inquiry into disputed questions of law and fact at the provisional stage. Where the accountable person raises disputed questions as to the admissibility of deductions claimed in the accounts (here, claims for deduction of estate duty liability and probate duty), the Controller is not entitled to ignore those claims and make a provisional assessment contrary to the accounts furnished. Because no binding decision of this Court or the Supreme Court concluded the questions raised by the petitioners, those questions were rightly treated as disputed and required that the provisional assessment be made on the basis of the accounts delivered or clarified by the accountable persons. The provisional assessment order that assumed the claimed deductions were inadmissible and fixed liability inconsistent with the accounts was therefore improper.The provisional assessment must be set aside because the Controller could not ignore the deductions claimed in the accounts; a fresh provisional assessment may be made in accordance with the accounts submitted by the petitioners.Final Conclusion: The provisional assessment order dated September 21, 1979, and the consequent demand notice are set aside; respondent may pass a fresh provisional assessment in accordance with the accounts delivered by the accountable persons. No order as to costs. Issues:Provisional assessment under the E.D. Act, 1953 - Claimed deductions for estate duty liability and probate duty - Disputed questions of law - Validity of the provisional assessment order - Whether the Controller can ignore the claims made by the accountable person.Analysis:The petitioners, as accountable persons under the E.D. Act, 1953, filed an account of the deceased's property for estate duty assessment. They claimed deductions for estate duty liability and probate duty. The Controller issued a provisional assessment order without considering these deductions, demanding a higher amount. The petitioners contended that the provisional assessment should be based solely on the accounts provided by them, citing Section 57(1) of the Act. The court agreed, emphasizing that a provisional assessment is summary in nature and must rely on the accountable person's accounts, as per the decision in Jaipur Udyog Ltd. v. CIT [1969] 71 ITR 799.The Controller's failure to consider the claimed deductions raised disputed questions of law. The Revenue argued that previous decisions from other High Courts and the Income-tax Tribunal supported disregarding estate duty paid by the accountable person in calculating the estate's value. However, since there was no specific ruling from the Bombay High Court or the Supreme Court on this matter, the court held that the disputed questions of law raised by the petitioners could not be considered settled. As a result, the provisional assessment order and the demand notice were set aside, allowing for a fresh assessment based on the petitioners' claims.In conclusion, the court ruled in favor of the petitioners, setting aside the provisional assessment order and the demand notice. The Controller was directed to conduct a fresh provisional assessment considering the deductions claimed by the accountable persons. No costs were awarded in this case.