Estate duty rectification upheld where deduction mis-stated actual tax liability and notice to authorised representatives was sufficient.

Rectification of an estate duty assessment was upheld where the earlier deduction for the deceased's income-tax and excess profits tax liability no longer matched the actual liability subsisting at death. After the tax dues were settled for a reduced amount and the recovery certificate withdrawn, the prior deduction was treated as an ascertainable error in the factual basis of the assessment and capable of correction under the rectification power. The accountable person also failed to establish denial of hearing, because notice was served on authorised representatives who had appeared earlier and sought time to reply. The revised assessment was therefore sustained.

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Issues: (i) whether the revision of the estate duty assessment under section 61 was justified on the ground that the deduction earlier allowed towards the deceased's income-tax and excess profits tax liability was based on a mistake apparent from the record; (ii) whether the accountable person was denied a reasonable opportunity of being heard before rectification.

Issue (i): Whether the revision of the estate duty assessment under section 61 was justified on the ground that the deduction earlier allowed towards the deceased's income-tax and excess profits tax liability was based on a mistake apparent from the record.

Analysis: The liability deductible in computing the principal value of the estate was the actual tax liability subsisting at the date of death. After the original assessment, the tax department accepted Rs. 30,000 in full settlement of the deceased's income-tax and excess profits tax dues and withdrew the recovery certificate. On that basis, the earlier deduction of Rs. 1,46,506 in the estate duty assessment no longer reflected the correct liability. The correction did not depend on a debatable legal issue but on the ascertainment of the true amount payable by the deceased, which was capable of rectification under the statutory power.

Conclusion: The rectification under section 61 was valid and was not open to challenge on the ground that no mistake apparent from the record existed.

Issue (ii): Whether the accountable person was denied a reasonable opportunity of being heard before rectification.

Analysis: Notice of the proposed rectification was served on the accountable person's authorised representatives, who had acted for him in earlier proceedings and sought time to reply. The authority to represent the accountable person was treated as continuing for proceedings under the Estate Duty Act, and the short interval for hearing was explained by the need to complete rectification within the statutory limitation period. In the circumstances, service on the representatives and the time afforded were held to be sufficient.

Conclusion: There was no denial of reasonable opportunity of hearing.

Final Conclusion: The challenge to the rectification failed, and the estate duty assessment as revised under section 61 was sustained.

Ratio Decidendi: A rectification provision may be invoked where the original assessment contains an ascertainable error in the factual basis of deduction or liability, and service of notice on duly authorised representatives affords a valid opportunity of hearing if the surrounding circumstances show fair notice.

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