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Issues: Whether an addition made in income-tax settlement proceedings under section 271(4A) of the Income-tax Act, 1961, could, other material, be treated as assets of the deceased existing on the date of death and included in the principal value of the estate for estate duty.
Analysis: The basis for estate duty inclusion must be the actual existence of property or assets on the date of death. A settlement in income-tax proceedings, by itself, does not establish that the amount assessed as undisclosed income continued to remain in the form of cash or investment at the time of death. The Revenue must first show that the asset existed on the relevant date; only then does any burden arise on the accountable persons to explain its disposal. On the facts, there was no material to prove that the amount settled in the income-tax proceedings subsisted as an asset when the deceased died more than a year later.
Conclusion: The addition could not be sustained and the question was answered in the affirmative, in favour of the assessee and against the Revenue.
Ratio Decidendi: For estate duty purposes, an amount assessed as undisclosed income in income-tax proceedings cannot be included in the principal value of the estate unless the Revenue proves that it actually existed as an asset on the date of death.
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