Rectification of valuation error upheld where enhanced acquisition compensation was part of the record and taxable estate property.

A rectification power under estate duty law may be exercised by the original assessing authority where the relevant valuation did not merge in appellate orders, and an assessment can be corrected within time when later court enhancement forms part of the record. The Court held that enhanced compensation arising from compulsory acquisition was not a separate right but part of the deceased's composite compensation entitlement, so it constituted property passing on death and was chargeable to estate duty. It further held that the valuation error was apparent from the record because the original assessment had been based on the acquisition award and the subsequent enhancement altered that basis without requiring a debatable fresh inquiry.

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Issues: (i) Whether the Assistant Controller of Estate Duty had jurisdiction under section 61 to rectify the assessment and include enhanced compensation awarded after the deceased's death; (ii) whether the enhanced compensation formed part of the property passing on death and was liable to estate duty under section 5; (iii) whether the alleged error in valuation was a mistake apparent from the record.

Issue (i): Whether the Assistant Controller of Estate Duty had jurisdiction under section 61 to rectify the assessment and include enhanced compensation awarded after the deceased's death.

Analysis: The power of rectification under section 61 is exercisable by the authority that made the order, and not by a higher authority, where the relevant part of the assessment did not merge in appellate orders. The valuation of the lands was accepted by the assessing authority and was not the subject of appeal before the appellate authorities. The later enhancement by the civil court, based on references under the Land Acquisition Act, formed part of the material relevant to the original valuation. The rectification notice was issued within the prescribed period.

Conclusion: The Assistant Controller had jurisdiction to initiate rectification under section 61.

Issue (ii): Whether the enhanced compensation formed part of the property passing on death and was liable to estate duty under section 5.

Analysis: The right arising from acquisition is a single composite right to receive compensation at market value, and the later enhancement does not create a separate and independent right. The compensation right belonged to the deceased's estate and was received by the legal heir in that capacity. On that footing, the right to compensation constituted property passing on death.

Conclusion: The enhanced compensation was taxable as property passing on death and was within section 5.

Issue (iii): Whether the alleged error in valuation was a mistake apparent from the record.

Analysis: A mistake apparent from the record must be obvious and patent, and not one requiring long-drawn reasoning or debate. Here, the original valuation was taken directly from the award of the Special Deputy Collector, and the subsequent civil court enhancement materially altered the basis on which the property had been valued. That modification was part of the record for rectification purposes, and no fresh valuation exercise or debatable legal inquiry was required.

Conclusion: The error was a mistake apparent from the record and was amenable to rectification.

Final Conclusion: The challenge to the rectification notice failed, and the assessment authority's action to include the enhanced compensation was upheld.

Ratio Decidendi: Under a rectification provision permitting correction of a mistake apparent from the record, the assessing authority may correct an obvious valuation error based on material forming part of the record, including a later court modification of the basis on which the original assessment was made; a right to enhanced compensation arising from compulsory acquisition is part of the property passing on death.

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