Pre-assessment penalty under estate duty law fails where the duty liability has not yet been determined.

Penalty under section 56 of the Estate Duty Act, 1953 could not be imposed before completion of the estate duty assessment because the statutory measure of penalty depended on the duty payable and the amount remaining unpaid. Until the assessment machinery first determined the estate duty liability, the difference between duty payable and duty paid could not be ascertained, and the penalty could not be quantified on the basis required by the provision. The impugned penalty order was therefore unsustainable.

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Issues: Whether a penalty under section 56 of the Estate Duty Act, 1953 could be imposed before completion of the estate duty assessment.

Analysis: The reference concerned penalty under section 56 as it stood before the 1958 amendment. The provision linked the quantum of penalty to the estate duty payable, either as a lump sum of one thousand rupees or as a sum equal to double the amount of estate duty remaining unpaid. The Court held that, for effective exercise of the power, the estate duty payable must first be determined under the assessment machinery. Without such determination, the difference between duty payable and duty paid could not be ascertained, and the penalty could not be quantified on the statutory basis contemplated by the provision.

Conclusion: Penalty under section 56 could not be levied before completion of the estate duty assessment, and the impugned penalty order was unsustainable.

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