1975 (2) TMI 17 - HC - Income Tax

High Court Upholds Reassessment Jurisdiction under Estate Duty Act

Smt. Sarla Devi Versus Controller Of Estate-Duty, UP.

The High Court held that the Assistant Controller had jurisdiction to reassess under section 59(b) of the Estate Duty Act, 1953. The court determined that ... Coparcenary Property, Estate Duty Act, Original Assessment Issues Involved:1. Validity and jurisdiction of reassessment proceedings under section 59(b) of the Estate Duty Act, 1953.Issue-Wise Detailed Analysis:1. Validity and Jurisdiction of Reassessment Proceedings under Section 59(b) of the Estate Duty Act, 1953:The Tribunal submitted a statement of the case for the opinion of the court on whether the reassessment proceedings under section 59(b) of the Estate Duty Act, 1953, were invalid and without jurisdiction. The accountable person (widow of the deceased) initially filed a return claiming her husband had a one-fourth share in the coparcenary properties. The Assistant Controller of Estate Duty initially accepted this but later reassessed, believing the deceased's share was actually one-half, based on a correct view of Hindu law. This led to the issuance of a notice under section 59(b) for reopening the proceedings.The accountable person objected, asserting that there was no new information justifying the reopening. The Assistant Controller, however, held that the correct legal position, which was realized after the original assessment, constituted new information leading to the belief that property had escaped assessment.The Zonal Appellate Controller found no new information post the original assessment and declared the reassessment notice invalid. On appeal, the Income-tax Appellate Tribunal held that the Assistant Controller had obtained new information through subsequent legal research, thus justifying the reassessment under section 59(b).The High Court examined whether the material on which the Assistant Controller proceeded was 'information in his possession' within the meaning of section 59(b). It was noted that during the original assessment, the Assistant Controller accepted the accountable person's claim that the deceased was not the sole surviving coparcener due to the joint status of the immovable properties. However, in the reassessment, it was found that the correct legal position (that the wife does not get a share in the absence of a son) was not considered initially.The court referred to several Supreme Court decisions, including:- Assistant Controller of Estate Duty v. Nawab Sir Mir Osman Ali Khan Bahadur, which held that section 59 is in pari materia with section 34 of the Indian Income-tax Act, 1922, and section 147 of the Income-tax Act, 1961.- Commissioner of Income-tax v. A. Raman and Co., which defined 'information' as knowledge from an external source concerning facts or law.- Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, which included information about the true state of law as 'information.'- Anandji Haridas and Co. (P.) Ltd. v. S. P. Kushare, Sales Tax Officer, which held that realisation of a different legal aspect applicable to the facts of a case constitutes information.The court concluded that the Assistant Controller's acquisition of knowledge about the correct legal position through subsequent research constituted 'information' within the meaning of section 59(b). This knowledge led to the belief that property had escaped assessment, thus justifying the reassessment.The High Court held that the Assistant Controller had jurisdiction to reassess under section 59(b) and answered the question in the negative, in favor of the department and against the assessee. The court, however, expressed no opinion on the merits of the question, which was to be decided by the Zonal Appellate Controller as per the Tribunal's decision. The Controller of Estate Duty was entitled to costs assessed at Rs. 200.