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PETITIONER: KALYANI SUNDARAM

       Vs.

RESPONDENT: ASSISTANT CONTROLLER OF ESTATEDUTY MADRAS & ANOTHER

DATE OF JUDGMENT12/05/1989

BENCH: PATHAK, R.S. (CJ) BENCH: PATHAK, R.S. (CJ) RAY, B.C. (J)

CITATION:  1989 AIR 1654            1989 SCR  (3) 233  1989 SCC  Supl.  (1) 635 JT 1989  Supl.    223  1989 SCALE  (1)1531

ACT:     Estate  Duty Act/Estate Duty Rules, 1958---Sections  17, 19(1), 30(1)(e), 36, 37 & 61/Rule 15--Assessment of Account- able  persons-Made--Entire  estate  duty  paid   up--Whether rectification of assessment permissible.

HEADNOTE:     Shri  Anantharamakrishnan, a reputed industrialist  died in  Madras  on April 18, 1964 intestate leaving  behind  his widow,  Valli, two sons, Sivasailam and  Krishnamoorthy  and two daughters, Kalyani and Seetha. Some time thereafter, his son  Sivasailam,  being an accountable person  rendered  the Estate Duty account. All other heirs i.e. his mother, broth- er and sisters, who were also accountable persons, being the heirs  of the deceased wrote to the Assistant Controller  of Estate Duty that as accountable persons they agreed to abide by the accounts rendered by Sivasailam and whatever explana- tion is furnished by him would be binding on them.     M/s. Amalgamations Private Ltd. is a company which  held shares in most of the companies including Simpson and Compa- ny  Ltd. in which company the  deceased  Anantharamakrishnan too  held shares. By a letter of April 27,  1965,  Amalgama- tions informed the assessing authority that the deceased had transferred property to it in the form of shares and that at the  time of his death, he had controlling interest  in  the Company.  On  September 13, 1965,  the  Assessing  Authority wrote to Amalgamations that the deceased having  transferred 80,377  shares of Simpson, as such Amalgamations was a  con- trolled  company within the meaning of s. 17 of  the  Estate Duty Act and thus the said company had to be regarded as one of  the accountable persons in respect of the estate of  the deceased. Amalgamations was therefore required to submit  an account  of  the estate. Accordingly Amalgamations  flied  a return  and  no objection thereto was taken by  any  of  the heirs.     Treating  Amalgamations as a controlled company  and  in view  of  the fact that the deceased had  control  over  its affairs,  the assessing authority valued the shares  as  per the provisions of Rule 15 of the Rule framed by 234 the  Board under Section 30(1)(e) of the Act. The  principal

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value of the shares was determined of Rs.2,12,29,998 and the duty was computed at Rs.1,67,74,697.58, out of which  provi- sional duty in the sum of Rs.65,50,542.73 had been paid. The assessment order was addressed both to Amalgamations as also to  Shri  Sivasailam as accountable persons. No  appeal  was preferred  against  the said assessment by  the  accountable persons.     K.S. Sundaram husband of the appellant as her agent  and constituted power of attorney, on June 11, 1974 wrote to the Assistant  Controller  seeking certain  clarifications.  The Assistant Controller referring to the agreement between  the heirs  of  the deceased Anantharamakrishnan that  they  were bound  by  the  accounts rendered or  explanation  given  by Sivasailam,  replied that, since all subsequent  proceedings had  been  completed after discussion  with  Sivasailam  and Amalgamations,  the assessment had become final and that  it was not possible to enter into any further discussion.     On 2nd January, 1975, appellant’s husband as agent filed an application under Sec. 61 of the Estate Duty Act, and  it was contended by him that the assessment order was  vitiated by  several errors inasmuch as Rule 15 only  prescribed  the method  of  valuation of shares and debentures of  the  con- trolled company and the rule was appendage to Sections 36  & 37  of the Act. It was urged that the assessment  order  did not  show  any details and therefore a  rectification  order should  be made indicating the exact amount  included  under Section  17(1)  of the Act as the property  passing  on  the death  of  the  deceased. He stated that  he  required  this information  to know the precise amount which his  principal had  to  pay to Amalgamations, as the assessment  order  did not, in terms, indicate apportionment of the duty, for which reason rectification was required.      On January 25, 1975, the Assistant Controller  declared by  an order that he was unable to find any mistake  in  the assessment  order  which called for  any  rectification  and therefore he declined to act under Sec. 61 of the Act.      Order passed by the Assistant Controller was challenged in the High Court by means of Writ Petitions. The High Court dismissed the Writ Petitions holding that there was no error apparent on the record and therefore there was no reason for invoking  Sec. 61 of the Act. The High Court took  the  view that  proceedings  reflected a private dispute  between  the appellant and other members of the family. Hence this appeal by the appellant. 235 Dismissing the appeal the Court,     HELD:  All  the heirs other than Sivasailam  had  agreed that as accountable persons they would abide by the accounts rendered by Sivasailam and any information furnished by  him with  regard to the estate duty matter would be  binding  on them.  The  appellant  cannot be heard now  to  dispute  the quantum  of liability and the basis on which  the  liability was  computed. Nor is it open to her to contend that  it  is not  Amalgamations which is liable to pay the duty, but  the duty is payable by the heirs of the deceased. The assessment had become final and no appeal against it had been  attempt- ed. [239C-D]     The  appellant acquiesced wholly and completely  in  the assessment  to  estate  duty being  made  on  Amalgamations. [239E]     The  assessment  was completed in 1970  and  the  entire estate  duty  has now been paid up. It was  only  after  the entire  estate  duty was paid that the appellant  filed  the application for rectification on January 2, 1975. [239E-F]     The  question  whether the assessment was  justified  on

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Amalgamations or should it have been taken against the heirs of the deceased stands concluded now and upon all the  facts and circumstances of the case it was not permissible for the appellant to have recourse to Sec. 61 of the Act in order to re-open  the case, as there was no mistake apparent  on  the record. [240D-E]     That this litigation was woven around a private  dispute among the family members. [239G]     Hari  Vishnu  Kamath v. Syed Ahmed Ishaque  and  Others, [1955]  1 SCR 1104, 1123; Hind Trading Company v.  Union  of India & Anr., [1969] 2 SCR 533; M.K. Venkatachalam,  Income- tax  Officer and Another v. Bombay Dyeing and  Manufacturing Co.  Ltd.,  [1958]  34  ITR  143,  149-50;  Commissioner  of Income-tax, Madras v. Mr. P. Firm Muar, [1965] 1 SCR 815,822 and Thungabhadra Industries Ltd. v. The Government of Andhra Pradesh, [1964] 5 SCR 174, 180, referred to.

JUDGMENT:     CIVIL APPELLATE JURISDICTION: Civil Appeal  Nos. 23  19- 2320 of 1981.     From  the  Judgment  and Order dated  14.3.1980  of  the Madras  High  Court in Writ Petition Nos. 4959 and  4960  of 1975. 236      Soli  J, Sorabjee, Harish N. Salve, S. Ganesh,  Mahapa- tra, P.S. Shroff and Mrs. P.S. Shroff for the Appellant.      N.A.  Palkhiwala, Gauri Shanker, S.C.  Manchanda,  J.B. Dadachanji,  Mrs. A.K. Verma, D.N. Mishra, M.S.  Harau,  Ram Chandran,  Mrs. J. Ramachandran Ms. A. Subhashini  and  C.V. Subba Rao for the Respondents. The Judgment of the Court was delivered by      PATHAK, CJ. These appeals by special leave are directed against  the judgment and order of the High Court of  Madras dismissing the writ petitions filed by the appellant against the  refusal of the  first respondent to rectify an  assess- ment order and pass consequential directions. Shri  Anantharamakrishnan, a reputed industrialist in  Tamil Nadu, died in the state in Madras on 18 April, 1964. He left behind his widow, Valli, his two sons, Sivasailam and Krish- namoorthy  and two daughters, Kalyani and Seetha. Some  time after  his death, Sivasailam, as an accountable person  ren- dered the estate duty account. All the heirs, other than Sri Sivasailam,  who were also accountable persons wrote to  the Assistant  Controller  of Estate Duty on 15  December,  1964 that  as  accountable persons they agreed to  abide  by  the accounts  , rendered by Sri Sivasailam and  any  explanation furnished  by him with regard to the Estate Duty case  would be  binding on them.    Messrs. Amalgamations  Private  Ltd. (shortly referred to as ’Amalgamations’) is a company  which holds shares in most of the companies including Simpson  and Company  Ltd.  (shortly  referred to as  ’Simpson’)  of  the group. By letter dated 27 April, 1965 Amalgamations informed the  assessing authority that the deceased  had  transferred property in the form of shares in Simpson to it and that the deceased  had  controlling interest in that company  at  the time  of  his  death. On 13 September,  1965  the  assessing authority  wrote  to  Amalgamations that  the  deceased  had transferred 80,377 shares of Simpson, and therefore  Amalga- mations was a controlled company within the meaning of s. 17 of the Estate Duty Act. By virtue of s. 19(1) of the  Estate Duty Act the controlled company had to be regarded as one of the  persons  accountable for the estate  of  the  deceased. Amalgamations  was  required  to submit an  account  of  the

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estate.  Amalgamations filed a return before  the  Assistant Controller.  No  objection was raised by the  heirs  of  the deceased or by Amalgama- 237 tions to the latter being treated as an accountable person.     After  due  enquiry the assessment of  Estate  Duty  was completed  on 27 January, 1970 and the duty payable  by  the estate was determined at Rs. 1,67,74,697.58, of which provi- sional  duty had been paid in the amount of  Rs.65,50,452.73 leaving a balance of Rs.1,02,24,244.85. The assessment order was addressed to Amalgamations as well as Sri Sivasailam  as accountable persons. The Assistant Controller of Estate Duty proceeded on the basis that Amalgamations was a  "controlled company" and the deceased had control over its affairs,  and therefore  valuation of the shares held by the  deceased  in the  company had to be made in the manner laid down in  Rule 15 framed by the Board under s. 30(1)(e) of the Estate  Duty Act.  The  principal value of the assets was  determined  at Rs.2,12,29,998   and   the   duty  was   computed   at   Rs. 1,67,74,697.58.  There was no appeal against the  assessment by any of the accountable persons.     Kalyani  Sundaram, one of the daughters of the  deceased and the appellant before us, became entitled to the death of Anantharamakrishnan to a fifth share in his estate under the Hindu  Succession  Act. Her husband, K.S. Sundaram,  as  her agent  constituted by power of attorney, wrote on  11  June, 1974 to the Assistant Controller seeking certain  clarifica- tions  regarding  the assessment. The  Assistant  Controller replied on 25 June, 1974 referring to the specific agreement of the accountable persons to abide by the accounts rendered by  Sri Sivasailam and to be bound by any explanation  given by  him. The Assistant Controller referred to the fact  that all subsequent proceedings had been completed after  discus- sion  with Sri Sivasailam and Amalgamations and as  the  as- sessment  had now become final it was not possible to  enter into any discussion concerning it.     On  2  January, 1975 the appellant’s  husband  as  agent filed  an  application under s. 61 of the  Estate  Duty  Act contending that the assessment order was vitiated by several errors  inasmuch  as Rule 15 prescribed only the  method  of valuation  of  the shares and debentures of  the  controlled company and the Rule was an appendage to ss. 36 & 37 of  the Act, that unless property was transferred without considera- tion  by  the  deceased to Amalgamations  and  some  benefit accrued to the deceased from the company s. 17(1) of the Act would not be attracted, that the decision to treat Amalgama- tions  as an accountable person because of the  transfer  of shares  rested  on the transfer of shares made  by  the  de- ceased, that on a number of aspects of the case the  assess- ment order did not show any detail, and therefore a rectifi- cation 238 order  should be made indicating the exact  amount  included under  s.  17(1) of the Act as the property passing  on  the death  of  the deceased. He required  this  information,  he said, to enable him to work out the amount which his princi- pal  had to pay to Amalgamations by way of reimbursement  of the duty. If the apportionment of the duty had been effected by  the  order itself, he said, the need  for  rectification would not have arisen.     Section  61  empowers  the Controller  "to  rectify  any mistake  apparent from the record" at any time  within  five years from the date of the order passed by him. On 25  Janu- ary, 1975 the Assistant Controller passed an Order declaring that he was unable to discover any mistake which called  for

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rectification  in  the  assessment order  and  therefore  he declined  to  act  under s. 61 of the Act.  This  order  was challenged  by the writ petitions out of which  the  present appeals arise.     The High Court dismissed the writ petitions. Sethuraman, J.  held that there was no apparent error, and therefore  no reason for invoking s. 61 of the Act and Balasubramanyan, J. in a concurring judgment, held likewise and also dealt  with other  aspects of the case. BOth learned Judges were of  the view that the proceeding reflected a private dispute between the appellant and other members of the family, and that  the forum  and remedy selected by the appellant were not  appro- priate for that purpose.     The fundamental question in these appeals is whether the appellant is right in invoking s. 61 of the Act.     Learned  counsel  for the appellant  contends  that  the heirs of the deceased on whom the estate devolves are liable to pay estate duty attributable to the property which  falls to their respective shares and that if an accountable person pays any part of the estate duty in respect of any  property not  passing to him he is entitled to reimbursement  by  the person  entitled to such property. This, says learned  coun- sel,  has no application in respect of the duty  payable  by virtue of s. 17 of the Act, which provides that the slice of the  assets of a controlled company shall be deemed to  pass on the death of the deceased for the purposes of estate duty and  the slice will be included in the property  passing  on his  death if the deceased made a transfer of that  property to  the  controlled company and benefit accrued to  the  de- ceased in the three years ending his death. The slice of the assets of the controlled company does not come to any  heir; therefore no heir is called upon to pay the amount of estate duty attributable to the inclusion of that slice 239 in  the chargeable estate. By s. 19 the  controlled  company itself  is liable to pay the corresponding amount of  estate duty.  In the present case, however, learned counsel  urges, no slice of the assets of Amalgamations has been included in the  estate  of the deceased by the assessing  authority  as property  deemed  to pass on the death of the  deceased  and therefore  the demand issued to the controlled company  con- stitutes a mistake apparent from the record. The application of Rule 15 is also contested and this, according to  learned counsel, is a clear mistake committed by the Controller.  It is urged that there is a mistake apparent from the record in the  directions  requiring Amalgamations to pay  the  entire amount of estate duty.     It seems to us that all the heirs other than  Sivasailam had  agreed that as accountable persons they would abide  by the  accounts  rendered by Sivasailam, and  any  information furnished by him with regard to the estate duty matter would be  binding  on them. The appellant cannot be heard  now  to dispute the quantum of liability and the basis on which  the liability  was  computed. Nor is it open to her  to  contend that  it  is not Amalgamations which is liable  to  pay  the duty, but the duty is payable by the heirs of the  deceased. The assessment has become final and no appeal against it has been  attempted.  It was for the benefit of the  heirs  that there  was general agreement to have the assessment made  on Amalgamations  and indeed when the assessment was  completed and finalised, no objection was taken. The appellant  acqui- esced wholly and completely in the assessment to estate duty being made on Amalgamations. No separate assessment was made on the appellant nor on the other heirs. The assessment  was completed  in 1970 and the entire estate duty has  now  been

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paid  up. It was only after the entire estate duty was  paid that  the appellant filed the application for  rectification on 2 January, 1975.     It  was  contended by learned counsel  for  the  private respondents  that the appellant enjoyed no locus  standi  in order  to  maintain the application under s.  61  and  these appeals thereafter, but we do not propose to enter into this question.     Further, it appears that this litigation is woven around a  private dispute among the family members. That is  hardly any justification for invoking s. 61 of the Act.     We have carefully perused the reasons given individually by  the two learned Judges of the High Court and we  are  in complete agreement with them that there is no mistake appar- ent on the record. 240     In  support of the contention that there was  a  mistake apparent  on the record, learned counsel has referred us  to Hari Vishnu Kamath v. Syed Ahmed Ishaque and Others,  [1955] 1 S.C.R. 1104, 1123; Hind Trading Company v. Union of  India &  Anr.,  [1969] 2 SCR 533; M.K.  Venkatachalam,  Income-Tax Officer  and Another v. Bombay Dyeing and Manufacturing  Co. Ltd., [1958] 34 ITR 143, 149-50 and Commissioner of  Income- Tax,  Madras v. Mr. P. Firm, Muar, [1965] 1 S.C.R. 8  15,822 but  having regard to the facts of the case before us we  do not find anything in those cases which can be of  assistance to the appellant.     Learned  counsel  for the appellant states  that  having regard  to the terms of the order granting special leave  to appeal the appellant is justified in requesting the court to consider  the issues on the merits. We are unable  to  spell out  such  intent of the Court from the terms of  the  order granting  special leave to appeal. We do not think that  the observations of the Court in Thungabhadra Industries Ltd. v. The  Government of Andhra Pradesh, [1964] 5 S.C.R. 174,  180 affect the position before us.     The  real question is whether the assessment was  justi- fied  on Amalgamations or should it have been taken  against the  heirs  of the deceased. In our opinion,  that  question stands  concluded  now and upon all the  facts  and  circum- stances  of the case we do not think it permissible for  the appellant  to have recourse to s. 61 of the Act in order  to re-open the case. The appeals are dismissed, there is no order as to costs. Y.L.                                         Appeals    dis- missed. 241