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PETITIONER: CONTROLLER OF ESTATE DUTY, GUJARAT I,AHMEDABAD.

       Vs.

RESPONDENT: M.A. MERCHANT ACCOUNTABLE PERSON OFLATE SHRI A.G MERCHANT, M

DATE OF JUDGMENT02/05/1989

BENCH: PATHAK, R.S. (CJ) BENCH: PATHAK, R.S. (CJ) MUKHARJI, SABYASACHI (J)

CITATION:  1989 AIR 1710            1989 SCR  (2) 987  1989 SCC  Supl.  (1) 499 JT 1989 (3)   177  1989 SCALE  (1)1479

ACT:     Estate  Duty Act, 1953: Sections  56-65--Valuations  for estate duty--Rectification of mistake--Reopening of  assess- ment made under section 59--Permissibility of--Effect of the Estate Duty (Amendment) Act, 1958.

HEADNOTE:     The  respondents who were the accountable persons  filed returns  under the Estate Duty Act. 1953, and an  assessment was made by the Deputy Controller of Estate  Duty--Appellant on 26th February. 1960.     The  Estate  Duty  (Amendment) Act,  1958  repealed  the original sections 56 to 65. Section 59 which substituted for the original section 62 made provision for re-assessment. It came into force with effect from 1st July, 1960.     On  21st February, 1962, a notice under the new  section 59  of the Act was issued to the respondents for  re-opening the assessment on the ground that some property had  escaped the  levy of estate duty. The respondents raised  objections but  the same were rejected by the Assistant Controller  who reopened the assessment.     Against the aforesaid order three different appeals were filed  by the respondents before the  Appellate  Controller, who  allowed the appeals. set aside the  reassessment  order holding that section 59 under which action had been taken by the Assistant Controller was not retrospective in operation.     On  appeal by the Revenue, the Tribunal upheld the  view of  the Appellate Controller relying on the decision of  the Bombay  High Court in A.N. Mafatlal v. Deputy Controller  of Estate Duty, [1968] 67 I.T.R. 449. Thereafter. at the instance of the Revenue 3 references were made 988 to  the High Court raising the indentical  question  whether section  59 was retrospective in operation and reopening  of the  assessment  under section 59 was bad.  The  High  Court analysed  the provisions of the new section 59 and  the  old section  62. came to the conclusion that the power of  reas- sessment conferred by the new section 59 Is quite  different from the power conferred by the old section 62. and answered the question in each case in favour of the assessee.

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   The  Revenue  appealed to this Court. On  the  question: whether the newly enacted section 59 of the Estate Duty  Act is retrospective in operation so as to affect the assessment already completed on the accountable persons. Dismissing the appeals, the Court     HELD: 1. Section 59 of the Estate Duty Act is not retro- spective in operation and reopening of the assessment  under section  59  of the Act in the instant case is bad  in  law. [993D]     2.  The  Estate Duty (Amendment) Act.  1958  effected  a substantial change in the parent Act. Sections 56 to 65 were substituted in place of the existing sections 56 to 65.  and the originally enacted section 62 was repealed. The original section  62  provided essentially for the  rectification  of mistakes apparent from the record or in the valuation of any property  or  by  reason of the omission  of  any  property. [992D-E]     3.  The  newly enacted section 59  deals  with  properly escaping  assessment. The provision is analogous to  section 34 of the Indian Income Tax Act. 1922 and section 147 of the Income Tax Act. 1961. The new Section 59 endeavours to cover a substantially different area from that treated by the  old section  62.  The only area which seems common  to  the  two provisions  relates to the "omission of any  property",  but the  incidents  of the power under section 62  relate  to  a situation  materially  different from the incidents  of  the power contemplated under section 59. [992E-F]     4.  There are no specific words which confer  retrospec- tive effect to section 59 as it stands. To spell out  retro- spectivity  in  section 59 there must be  something  in  the intent to section 59 from which retrospective operation  can be necessarily inferred. There is no such intent. [992G-H] 5.  The new section 59 is altogether different from the  old section 989 62 and there is nothing new in the new section 59 from which an intent to give retrospective effect to it can be conclud- ed. [992H; 993A]     6.  There is a well-settled principle against  interfer- ence with vested right by subsequent legislation unless  the legislation  has  been made retrospective  expressly  or  by necessary  implication.  If an assessment has  already  been made and completed, the assessee cannot be subjected to  re- assessment  unless  the  statute permits that  to  be  done. [993B-C]     7.  The  new section 59 came into force from  1st  July, 1960.  Much earlier, on 26th February, 1960. the  assessment on  the accountable persons in the instant case had  already been  completed. So. there can be no question  of  reopening the assessment. [993B]     Controller  of Estate Duty, West Bengal v. Smt. IIa  Das and Others, [198l] 132 I.T.R. 720 relied on.

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 2-4  of 1975.     From the Judgment and Order dated 8th 9th November  1973 of the Gujarat High Court in Estate Duty Reference Nos. 2, 3 and 4 of 1971. Dr.  V. Gauri Shankar and Miss A. Subhashini for the  Appel- lant.     V.S.  Desai,  Mrs.  A.K. Verma and Joel  Peres  for  the Respondents.

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The Judgment of the Court was delivered by     PATHAK,  CJ.  The facts in these appeals  lie  within  a narrow compass. One Abdulhussein Gulamhussein Merchant  died on  8 February, 1959. The accountable persons filed  returns under  the  provisions of the Estate Duty Act, 1953  and  an assessment was made by the Deputy Controller of Estate  Duty on 26 February, 1960. The Estate Duty (Amendment) Act, 1958, repealed  the original sections 56 to 65. Section 59,  which substituted  for  the  original s. 62,  made  provision  for reassessment.  It  came into force with effect from  1  July 1960.  On 21 February, 1962 a notice under the new s. 59  of the  Act was issued to the accountable person concerned  for reopening  the assessment on the ground that  some  property had escaped the levy of estate 990 duty.  The  accountable  persons raised  objections  to  the reopening  of  the  assessment under s.  59.  The  Assistant Controller  rejected  the  contentions  of  the  accountable persons  and reopened the assessment. Against the  order  of reassessment  the accountable persons filed three  different appeals  before  the  Appellate  Controller.  The  Appellate Controller  allowed the appeals and set aside the  reassess- ment  orders holding that s. 59 under which action had  been taken  by the Assistant Controller was not retrospective  in operation. On appeal by the Revenue, the Tribunal upheld the view of the Appellate Controller relying on the decision  of the Bombay High CoUrt in A.N. Mafatlal v. Deputy  Controller of  Estate  Duty,  [1968] 67 I.T.R.  449.  Thereafter  three references  were made to the High Court at the  instance  of the Revenue raising the identical question:               "Whether  Section 59 of the Estate  Duty  Act,               1953 is retrospective in operation and if  so,               in  the facts and circumstances of  the  case,               the reopening of the assessment under s. 59 of               the said Act was bad in law?" Section 62 as originally enacted read as follows:               "Rectification of mistakes relating to  valua-               tion  for  estate  duty:, (1)  If,  after  the               determination  of the estate duty  payable  in               respect  of  any  estate, it  appears  to  the               Controller  that  by  reason  of  any  mistake               apparent from the record or of any mistake  in               the  valuation  of any property  in  any  case               other  than a case in which the valuation  has               been the subject matter of an appeal under the               Act  or of the omission of any  property,  the               estate  duty paid thereon is either in  excess               of  or less than the actual duty  payable,  he               may, either on his own motion or on the appli-               cation  of  the person accountable  and  after               obtaining the previous approval of the  Board,               at  any time within three years from the  date               on   which   the   estate   duty   was   first               determined--                     (a) refund the excess duty paid, or,  as               the ease may be,                     (b)   determined  the  additional   duty               payable on the property;                         Provided   that  where  the   person               accountable  had fraudulently  under-estimated               the  value  of  any property  or  omitted  any               property, the period will be six years:               991                         Provided further that no order shall               be  made  under this  sub-section  unless  the

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             person accountable has been given an  opportu-               nity of being heard.               (2) Nothing contained in sub-section (1) shall               render  any.  person  accountable  to  whom  a               certificate that the estate duty has been paid               is  granted liable for any additional duty  in               excess of the assets of the deceased which are               still  in  his possession, unless  the  person               accountable  had  fraudulently  attempted   to               evade any part of the estate duty in the first               instance."     The provisions of section 59 introduced by the Amendment Act of 1958 are as follows:               "59.  Properly  escaping assessment.’  If  the               Controller, .....                       (a)  has  reason to  believe  that  by               reason of the omission or failure on the  part               of the person accountable to submit an account               of the estate of the deceased under Section 53               or  Section 56 or to disclose fully and  truly               all  material facts necessary for  assessment,               any  property  chargeable to estate  duty  has               escaped assessment by reason of undervaluation               of the property included in the account or  of               omission to include therein any property which               ought  to have been included or of  assessment               at too low a rate or otherwise, or                       (b) has, in consequence of any  infor-               mation  in his possession, reason  to  believe               notwithstanding  that there has not been  such               omission  or  failure  as is  referred  to  in               clause  (a)  that any property  chargeable  to               estate duty has escaped assessment, whether by               reason  of  under-valuation  of  the  property               included  in  the account or  of  omission  to               include  therein any property which  ought  to               have  been included, or of assessment  at  too               low  a rate or otherwise, he may at any  time,               subject  to  the provisions  of  section  73A,               require  the person accountable to  submit  an               account  as required under section 53 and  may               proceed to               992               assess  or  reassess such property as  if  the               provisions of Section 58 applied thereto."     The  High Court considered the question of law  referred to it at great length and after a detailed judgment answered the question in each case in favour of the assessee. The Revenue now appeals.     The  question is whether the newly enacted s. 59 of  the Estate  Duty  Act  is retrospective in operation  so  as  to affect  the assessment already completed on the  accountable persons.  It  is urged that the new s. 59  is  substantially similar  in content as the old s. 62 and therefore  the  new provision must be regarded as retrospective. The  contention may be examined.     The  Estate Duty (Amendment) Act, 1958 effected  a  sub- stantial change in the parent Act. Ss. 56 to 65 were substi- tuted in place of the existing ss. 56 to 65, and the  origi- nally enacted s. 62 was repealed. The original s. 62 provid- ed  essentially for the rectification of  mistakes  apparent from  the record or in the valuation of any property  or  by reason of the omission of any property. The newly enacted s. 59 deals with property escaping assessment. The provision is analogous to s. 34 of the Indian Income Tax Act, 1922 and s.

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147 of the Income Tax Act, 1961. It seems to us that the new s.  59  endeavours to cover a substantially  different  area from that treated by the old section 62. The only area which seems common to the two provisions relates to the  "omission of  any property", but it seems to us that the incidents  of the  power  under  s. 62 relate to  a  situation  materially different from the incidents of the power contemplated under s. 59. The High Court has closely analysed the provisions of the  two  sections and has come to the conclusion  that  the power  of reassessment conferred by the new s. 59  is  quite different from the power conferred by the old s. 62. We  are in  agreement with the High Court. The contention on  behalf of the Revenue based on the identity alleged between the new s.  59 and the old s. 62, and that, therefore, the new  sec- tion should be regarded as retrospective cannot be accepted.     As .it stands, there are no specific words either  which confer  retrospective effect to s. 59. To spell  out  retro- spectivity  in s. 59, then, there must be something  in  the intent  to s. 59 from which retrospective operation  can  be necessarily inferred. We are unable to see such intent.  The new s. 59 is altogether different from the old s. 62 and 993 there  is nothing in the new s. 59 from which an  intent  to give retrospective effect to it can be concluded.     The  new s. 59 came into force from 1 July,  1960.  Much earlier, on 26 February, 1960 the assessment on the account- able  person  had already been completed. There  is  a  well settled principle against interference with vested rights by subsequent legislation unless the legislation has been  made retrospective  expressly or by necessary implication. If  an assessment has already been made and completed, the assessee cannot  be  subjected to re-assessment  unless  the  statute permits that to be done. Reference may be made to Controller of  Estate  Duty, West Bengal v. Smt. IIa  Das  and  others, [1981] 132 I.T.R. 720 where an attempt to reopen the  Estate Duty assessment consequent upon the insertion of the new  s. 59 of the Estate Duty Act was held infructuous.     We hold that s. 59 of the Estate Duty Act is not  retro- spective in operation and that the reopening of the  assess- ment under s. 59. of the Act is bad in law. In the result the appeals fail and are dismissed with costs. N.V.K.                             Appeals dismissed. 994