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PETITIONER: KHORSHED SHAPOOR CHENAI ETC.

       Vs.

RESPONDENT: ASSISTANT CONTROLLER OF ESTATE DUTY

DATE OF JUDGMENT04/12/1979

BENCH: TULZAPURKAR, V.D. BENCH: TULZAPURKAR, V.D. BHAGWATI, P.N. PATHAK, R.S.

CITATION:  1980 AIR  775            1980 SCR  (2) 315  1980 SCC  (2)   1  CITATOR INFO :  RF         1991 SC2023  (6)

ACT:      Estate Duty  Act, 1953-Notices under sections 59(a) and 61 for  reopening the assessments, consequent to enhancement of the compensation under section 18 of the Land Acquisition Act, made  after the E.D. Assessments were over-realisty of- Right to  receive compensation  at market value on the dates of the  relevant notifications,  to  whom  accrues-Right  to receive   compensation    and   Right   to   receive   extra compensation.

HEADNOTE:      The  Andhra   Pradesh  Government  acquired  the  lands belonging to  one  Rashid  Shapoor  Chenai  and  situate  at Moosapet  Village   Hyderabad  and  Qutbillapur  in  Medchal district. The  special Deputy  Collector of Land Acquisition awarded a  total compensation of Rs. 20,000 and Rs. 4,29,360 respectively. The compensation of Rs. 20,000 was paid during the life time of Rashid and the compensation of Rs. 4,29,360 was paid after Rashid’s death to his widow Mrs. Freny Chenai and son  Shapoor Rashid  Chenai on whom the estate of Rashid devolved in equal shares.      On the  death of Rashid on November 4, 1963, Mrs. Freny Chenai  (appellant   in  CA   2206/72)  as   his  widow  and ’accountable person’ filed before the Respondent on December 26, 1963  an account  of the properties passing on the death of her  husband under  section 53(3)  of the Act. The estate duty assessment was completed by the respondent on March 29, 1966. With  regard to  the lands  acquired both  during  the lifetime of Rashid as well as after, their values were taken at the  respective figures  of compensation  (Rs. 20,000 and Rs.  4,29,360)  awarded  for  them  by  the  special  Deputy Collector.      Shapoor Rashid  Chenai, who  had one  half share in the undivided estate  of his  late father Rashid died on May, 7, 1965. As  required by  section 53  of the  Act Mrs. Khorshed Chenai (appellant  in CA  2205/72)  as  his  widow  and  the ’accountable  person’s   filed  before   the  respondent  on November 6, 1965 an account of the properties passing on the death of her husband and the respondent completed the estate

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duty  assessment  on  December  30,  1966.  Even  here.  the respondent adopted  the values  of the lands acquired by the Government  at   figures  awarded   by  the  special  Deputy Collector.      The legal  heirs of  late Rashid  did  not  accept  the awards by  the special  Deputy Collector  in respect  of the lands acquired  by Government  and a  reference was  made to Civil Court  under S.  18 of  the Land  Acquisition Act. The Civil Court, by its orders dated March 6, 1967/Oct. 30, 1967 enhanced the  compensation awarded  by  the  special  Deputy Collector by  Rs. 1,90,000  in respect of Moosapet lands and by Rs.  20,45,000  in  respect  of  Qutbillapur  Lands.  The Government did  not accept  the decisions of the Civil Court and  filed   appeals  to  the  High  Court  challenging  the enhancement, which  appeals are  still pending  in the  High Court. 316      On receipt  of information  that enhanced  compensation was awarded by the Civil Court in respect of the above lands the respondent  issued two  notices both  dated November 14, 1969, one  addressed to Mrs. Khorshed Shapoor Chenai and the other to  Mrs. Freny  Rashid Chenai.  The former  notice was issued under  section 59(a)  of the  Act calling  upon  Mrs. Khorshed to  show cause  why the Estate Duty assessment made on December  30, 1966  should not be reopened and revised in view of  the extra  compensations awarded by the Civil Court in respect  of the  lands acquired  by the Government, while the latter  notice was  issued under  section 61  of the Act requiring Mrs.  Freny Chenai  to show  cause why the mistake apparent from  the record  should not  be rectified  and the enhanced compensation included in the principal value of the estate. These  notices were  challenged by the recipients by filing writ  petitions in  the High  Court. The  High  Court negatived the  contentions raised in both the writ petitions upheld  the   impugned  notices   and  dismissed   the  writ petitions. Hence the two appeals by certificates.      Allowing the appeals, the Court, ^      HELD: 1.  So far  as  the  estate  duty  assessment  in respect of  the properties  passing on  the death of Shapoor was concerned,  the lands  which were  the subject matter of acquisition proceedings  could not  be regarded  as  forming part of  the estate of the deceased on the relevant date and could not  pass on  his death  in as much as these lands had vested in  the Government  long prior  to his  death but the right to  receive compensation  at market value on the dates of the  relevant notifications unquestionably accrued to the deceased which  was property  and it  would be such property that would  pass on  the death  of the  deceased.  In  other words, since  the lands  were lost  to  the  estate  of  the deceased before  the relevant  date,  namely,  the  date  of death, it  would be  the right to receive compensation under the Land  Acquisition Act  that will  have to  be  evaluated under the Estates Duty Act. [324 G-H, 325 A, C]      Pandit Lakshmi  Kant Jha v. Commissioner of Wealth Tax, Bihar and Orissa, 90 I.T.R. 97 (S.C.), applied.      2. There  are no  two separate  rights-one a  right  to receive compensation  and other  a right to receive extra or further compensation.  Upon acquisition  of his  lands under the Land  Acquisition Act  the claimant  has only  one right which is  to receive  compensation for  the lands  at  their market value  on the  date of the relevant notifications and it is  this right which is quantified by the Collector under s. 11  and by  the Civil  Court under  s.  26  of  the  Land Acquisition Act.  It is  true that under s. 11 the Collector

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after holding  the necessary  inquiry determines the quantum of compensation  by fixing  the market value of the land and in doing  so is guided by the provisions contained in ss. 23 and 24 of the Act-the very provisions by references to which the Civil  Court fixes  the valuation.  It is also true that the Collector’s  award is,  under s.  12,  declared  to  be, except as  otherwise provided, final and conclusive evidence as between  him and  the persons  interested. Even so, it is well settled  that in  law the Collector’s award under s. 11 is nothing  more than  an offer  of compensation made by the Government to  the claimant  whose property  is acquired. If that be  the true  nature of the award made by the Collector then the  question whether the right to receive compensation survives the award must depend upon whether 317 the claimant  acquiesces therein  fully or not. If the offer is  acquiesced   in  by   total  acceptance   the  right  to compensation will  not survive  but  if  the  offer  is  not accepted or  is accepted  under protest and a land reference is sought  by the claimant under s. 18, the right to receive compensation must  be regarded  as having  survived and kept alive which the claimant prosecutes in Civil Court.                                                    [326 B-G]      Ezra v.  Secretary of  State for India ILR 32 Cal. 605; Raja Harish  Chandra v. Dy. Land Requisition Officer, [1962] 2 SCR 676 and Dr. G. H. Grant v. State of Bihar [1965] 3 SCR 576, followed.      3. It  is not  correct that no sooner the Collector has made his  award under  s. 11  the right  to compensation  is destroyed or  ceases to  exist or is merged in the award, or what is  left with  the claimant is a mere right to litigate the correctness  of the award. The claimant can litigate the correctness of  the award  because his right to compensation is not  fully redeemed but remains alive which he prosecutes in Civil  Court. That  is why  when a  claimant  dies  in  a pending reference  his heirs  are brought  on record and are permitted to  prosecute the  reference. This,  however, does not mean  that the  Civil Court’s  evaluation of  this right done subsequently  would be its valuation as at the relevant date either under the Estate Duty Act or the Wealth Tax Act. It will  be the duty cf the assessing authority under either of the  enactments  to  evaluate  this  property  (right  to receive compensation at market value on the date of relevant notification) as  on the  relevant date  (being the  date of death under  the Estate  Duty and  Valuation date  under the Wealth Tax  Act). Under  s. 36  of the  Estate Duty  Act the assessing authority  has  to  estimate  the  value  of  this property at  the price  which it  would fetch if sold in the open market at the time of the deceased’s death. In the case of the  right to  receive compensation,  which is  property, where the  Collector’s award  has been made but has not been accepted or  has been accepted under protest and a reference is sought  or is  pending in  Civil Court at the date of the deceased’s death  the estimated value can never be below the figure quantified by the Collector because under s. 25(11 of the Land  Acquisition Act.  Civil  Court  cannot  award  any amount below  that awarded  by the  Collector; the estimated value may  be equal to the Collector’s award of more but can never be equal to the tall claim made by the claimant in the Reference nor  equal to  the claim  actually awarded  by the Civil Court  inasmuch as  the risk  or hazard  of litigation would be  detracting factor  while arriving  at a reasonable and proper  value of  this property  as on  the  date    the deceased’s death.  The  assessing  authority  will  have  to estimate the  value having  regard to the peculiar nature of

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the  property,   its  marketability   and  the   surrounding circumstances including  the risk  or hazard  of  litigation looming large at the relevant date. [326 H, 327 A-F]      4. The  very issuance of the notice under section 59(a) was on  a wrong  basis; It  was issued  with the  object  to include the  enhanced amounts  received by  the appellant in the principal  value of the property passing on the death of Shapoor and  bringing the  same to duty; such notice and the subsequent reassessment  made in  pursuance thereof would be clearly illegal  and unsustainable  inasmuch  as  the  extra compensation awarded  by the  Civil  Court  taken  with  the original compensation  as on  the date  of the  death of the deceased. Proposed as well as actual inclusion of such extra compensation awarded  by the  Civil Court  in the  principal value of  the estate  passing on  the death  of the deceased would be  manifestly wrong  for more than one reason. In the first  place   the  said   property.  namely,  the  enhanced compensation was not in existence at the 318 date of  the death  of the  deceased. Secondly,  such  extra compensation awarded  by the  City Civil Court was liable to variation in  the appeals  that were  pending  in  the  High Court. Thirdly,  such extra  compensation together  with the compensation awarded  by the  Special Deputy Collector could not be  regarded is  the proper  valuation of  the right  to compensation as  on the  relevant  date  (the  date  of  the deceased’s death). [330 A-D]      5. The  notice under  section 61  of the  Act  and  the rectification order  passed in  pursuance thereof if illegal and unsustainable. [333 E]      (i) The rectification is being undertaken on the ground that  the  initial  valuation  adopted  in  respect  of  the acquired  lands  was  based  at  rates  fixed  by  the  Land Acquisition officer, that such valuation was obviously wrong in view  of the  enhanced compensation  awarded by the Civil Court and,  therefore, the  enhanced compensation was sought to be  included in  the principal  value of  the  estate  by undertaking the  rectification proceedings.  In substance it cannot be  said to be a case of rectification of any mistake apparent from  the  record  but  the  respondent  is  really seeking to  change his  opinion about  the valuation  of the acquired lands  because some  other authority,  namely,  the Civil Court has valued the same differently. [331 C-E]      (ii) For  the purpose  of enhancing  the value  of  the acquired lands  on the basis of their value as determined by the Civil  Court the respondent must resort to provisions of s. 59 and proceed to make reassessment but such reassessment has to be done within the period of three year from the date of the  original assessment  under s. 73A of the Act. In the instant case  the respondent  resorted to  s. 61 because the rectification of  any mistake apparent from the record could be done  at any  time within five years from the date of the original assessment. [331 E.F]      (iii) When  the original assessment was made it was the duty of the respondent, after scrutinising the account filed and examining  the materials  produced before  him, to value the estate  of the  deceased properly under s. 36 of the Act and when  he accepted the! compensation fixed by the special Deputy Collector  as the  proper valuation he must be deemed to have adopted that valuation as his own estimated value of the lands  which he  wanted to  enhance by  relying upon the valuation made  by the  another authority,  namely, the City Civil Court.  To such  a case s. 59 is clearly attracted but obviously with  a view  to  avoid  the  bar  of  s.  73A  he purported to  issue the impugned notice under s. 61. [332 F-

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H]      Ethel Rodriques v. Assistant Controller of Estate Duly, Estate Duty-cum  Income Tax  Circle,  Mangalore,  [1963]  49 I.T.R. (E.D.) 128, applied.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal Nos. 2005- 2006 of 1972.      From the  Judgment and   order   dated  17-11-1971  and 16-11-71 of the Andhra Pradesh High Court in W.P. Nos. 54 of 1970 and 4059/ 69.      N. A. Palkhivala, Y. V. Anjaneyulu, A. Subba Rao, J. B. Dadachanji, Mrs. A. K. Verma, T. Ansari and A. H. Haskar for the Appellant. 319      V. S. Desai, B. B. Ahuja and Miss A. Subhashini for the Respondent.      S. P.  Mehta, J.  B. Dadachanji,  R. Narain, Mrs. A. K. Verma, T. Ansari and A. H. Haskar for the Intervener.      The Judgment of the Court was delivered by      TULZAPURKAR,  J.-These   two  appeals  by  certificates granted by  the High  Court  of  Andhra  Pradesh  raise  the question of  legality and  or validity of two notices issued by the  Assistant Controller  of Estate Duty, Hyderabad, one under s.  59(a) and the other under s. 61 of the Estate Duty Act. 1953 (hereinafter called ’the Act’).      Two parcels  of agricultural land (admeasuring 22 Acres 24 Guntas  and 8  Acres  23  Guntas)  situated  in  Moosapet village, belonging  to one Rashid Shapoor Chenai were during his lifetime,  acquired  for  the  Synthetic  Drugs  Project Factory of  the Indian  Drugs and Pharmaceutical Ltd. by the Andhra Pradesh  Government by  Notifications issued  on June 19, 1961  and January  18, 1962  under the  Land Acquisition Act. D Possession of the lands was taken in January 1963 and by two  separate awards  both made  on January  31, 1963 the Special Deputy Collector of Land Acquisition awarded a total compensation of  Rs. 20,000.  This compensation was received by Rashid  himself  during  his  lifetime.  Later  two  more parcels of  agricultural  land  (admeasuring  131  Acres  10 Guntas and  224 Acres  22 Guntas) situated at Qutbillapur in Medchal  Taluk   belonging  to  Rashid  where  acquired  for Hindustan Machine  Tools, Units  I  and  II  by  the  Andhra Pradesh Government  by Notifications  issued on  November 1, 1963 and  February l,  1964 under  the Land Acquisition Act. Though  the   former  notification  was  issued  during  his lifetime and  the latter after death, possession of both the lands was  taken  after  his  death  by  the  Government  on December 4,  1963 and  March 15,  1964 and  by two  separate awards made  on March  12, 1965  and  March  19,  1965,  the Special Deputy Collector awarded a total compensation of Rs. 4,29,360. This  compensation was  received in  April ]965 by the heirs of Rashid, namely, his widow Mrs. Freny Chenai and son Shapoor  Rashid Chenai  on whom  the  estate  of  Rashid devolved in equal shares.      On the  death of Rashid on November 4, 1963, Mrs. Freny Chenai (the appellant in C.A. No. 2206 of 1972) as his widow and the  ’accountable person’ filed before the respondent on December 26,  1963 on  account of  the properties passing on the death  of her  husband under  s. 53(3)  of the  Act. The estate duty  assessment was  completed by  the respondent on March 29,  1966. With  regard to  the  lands  acquired  both during the lifetime of Rashid as well as after their values 320

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were taken  at the  respective figures  of compensation (Rs. 20,000 and  Rs. 4,29,360)  awarded for  them by  the Special Deputy Collector.      Unfortunately, within  two years of his father’s death, Shapoor Rashid  Chenai (the  son) died  on May  7, 1965.  As stated earlier he had one half share in the undivided estate of his  late father  Rashid. As required by s.53 of the Act, (Mrs. Khorshed Chebai) (the appellant in C.A. No. 2205/1972) as his  widow and  the ’accountable person’ filed before the respondent on  November 6, 1965 on account of the properties passing on  the death  of her  husband  and  the  Respondent completed the  estate duty  assessment on December 30, 1966. In making this assessment also the respondent as in the case of estate  duty assessment  in  respect  of  the  properties passing on  the death  of Rashid,  adopted the values of the lands acquired  by the  Government at figures awarded by the Special Deputy Collector for those lands.      It appears  that the  legal heirs  of  Rashid  did  not accept the  awards made  by the  Special Deputy Collector in respect of  the aforesaid  lands and  requested the  Special Deputy Collector  to refer  the question  of compensation to Civil  Court   under  s.18  of  the  Land  Acquisition  Act. References were,  accordingly, made  and the  Civil Court by its order  dated March  6, 1967  enhanced  the  compensation awarded by  the  Special  Deputy  Collector  in  respect  of Moosapet land by Rs. 1,90,000 and by its order dated October 30, 1967 enhanced the compensation in respect of Qutbillapur lands by  Rs. 20,45,000.  The Government  did not accept the decisions of  the Civil  Court and filed appeals to the High Court challenging  the enhancement,  which appeals are still pending in  the High  Court. On  receipt of information that enhanced compensation  was awarded  by the  Civil  Court  in respect of the above lands the respondent issued two notices both dated November 14, 1969, one addressed to Mrs. Khorshed Shapoor Chenai  and the  other to  Mrs. Freny Rashid Chenai. The former  notice was  issued under  s. 59(a)  of  the  Act calling upon  Mrs. Khorshed  Chenai to  show cause  why  the estate duty  assessment made on December 30, ]966 should not be reopened  and revised  in view of the extra compensations awarded by  the Civil Court in respect of the lands acquired by the  Government, while the latter notice was issued under s. 61  of the  Act requiring Mrs. Freny Chenai to show cause why the  mistake apparent  from the  record  should  not  be rectified and  the enhanced  compensation  included  in  the principal value of the estate. These notices were challenged by the  recepients by  filing writ  petitions  in  the  High Court.      The notice  under s.  59(a) of  the Act  issued for the reopening of  the assessment  completed on December 30, 1966 was challenged in 321 writ petition  No. 54 of 1970 on two grounds: (a) that after compensation  had   been  awarded   by  the  Special  Deputy Collector under  s. 11 of the Land Acquisition Act the heirs of the  deceased Rashid  had merely exercised a right to sue for further compensation which was merely a hope or a chance that the  compensation might  be enhanced, that such hope or chance could  not be  elevated to the status of an assets or property and  as such  not asset  or property  chargeable to estate  duty  had  escaped  assessment  and  (b)  that  even assuming that  any asset  or property  chargeable to  estate duty had  escaped assessment  the  notice  was  illegal  and without jurisdiction  because such escapement was not due to any omission  or failure  on the  part of  the.- accountable person to  disclose fully and truly material facts necessary

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for making  the assessment. As regards the first ground, the High  Court   took  the  view  that  the  right  to  receive compensation equivalent  to market value of the lands on the dates  of  notifications  which  sprang  directly  from  the acquisition was  "property", that  no fresh  or  independent right "to  receive extra  compensation" accrued to the heirs of the  deceased and  that  since  compensation  awarded  by Special Deputy  Collector had  been enhanced by Rs. 1,90,000 for the  lands acquired  for the Synthetic Drugs Project and by Rs.  20,45,000 for  the lands  acquired for the Hindustan Machine Tools  by the  Civil Court,  these facts, which came into existence  subsequent to  the making  of  the  original assessment, easily  led to  the conclusion  that the  values adopted by  the respondent  for these  lands were  far below their real  and true  market  value  and  as  such  property (meaning lands) chargeable to estate duty having been under- valued had  escaped assessment  of the  duty. On  the second aspect  the   High  Court  held  that  the  fact  that  land References were  filed against  the awards  of  the  Special Deputy Collector under s. 18 of the land Acquisition Act and were pending  in the  Civil Court  was not  disclosed by the account. able  person, that  the said fact was a primary and material fact  and not  an inferential  fact  and  its  non- disclosure amounted  to omission or failure which could lead the assessing authority to a reasonable belief that property chargeable to estate duty had escaped assessment and as such the respondent had jurisdiction to issue the notice. In this view of  the matter, the High Court upheld the notice issued under s.  59(a) of  the Act and dismissed the writ petition. This decision  of the  High Court is being challenged before us in Civil Appeal No. 2205 of 1972.      The issuance  of the  notice under s. 61 of the Act was challenged in  Writ Petition No. 4059 of 1969 principally on three grounds:  (i) that  the accountable  person had only a claim lo  get an  extra compensation  which was  an inchoate right which  could not be called ’property’ and whether that claim amounted  to a  right to  property capable  of sale in open market  was a  highly debatable  question and a mistake which had 322 to be  discovered after  lengthy discussion and debate could not be  said’ to  be a  mistake apparent on the record, (ii) that land  acquisition proceedings  and land  References  in Civil Court  not being  part  of  the  assessment  record  a mistake discovered by reference to such other record was not a mistake  apparent from  the record  of the  case and (iii) that the  extra compensation  received by the legal heirs of Rashid belonged to them and not to the deceased and hence it was not  property that  passed on  the death of the deceased and, therefore,  no property  escaped assessment.  In  other words,  under  the  guise  of  rectification,  the  enhanced compensation could not be taken into account and, therefore, the impugned  notice was  illegal and  without jurisdiction. The High  Court negatived  the contentions  and  upheld  the impugned notice. This decision is challenged in Civil Appeal No. 2206 of 1972.      Dealing first  with C.A.  No. 2205 of 1972, wherein the notice issued  under s.59(a) of the Act has been challenged, counsel for  the appellant  raised three contentions against the view  taken by  the High  Court. At  the out set counsel pointed out  that so  far as  the estate  duty assessment in respect of  the properties  passing on  the death of Shapoor was concerned,  the respondent as well as the High Court had proceeded on  the wrong  assumption that  the acquired lands formed part  of the estate of the deceased and passed on his

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death, for,  it was  on such  basis that the High Court held that having  regard to  the enhanced compensation granted by the Civil  Court for the lands such property (meaning lands) had been  undervalued in the original assessment and as such it had  escaped assessment  to duty.  According to  him  the lands no longer formed part of the estate of the deceased at the date  of his  death, namely, on May 7, 1965, inasmuch as long prior  thereto they  had vested in the Government, and, therefore, it  was merely the right to receive compensation, which, if  at all,  could constitute property passing on the death of  the deceased.,  but he  contended that  during the lifetime of  the deceased  the lands  in  question  had  not merely been acquired but even the compensation as determined under the  awards made  by the  Special Deputy Collector was paid to  and received  by the deceased and hence at the time of the  death the  initial right to receive compensation had already merged  in those awards and the only right which the deceased  had   was  the   right  to   agitate  against  the correctness of the awards and nothing more and this right to claim further  compensation was  a precarious  right,  being merely a  right to  litigate-a chancy and dicey right, which could not be elevated to the status of any asset or property and as  such there  was no  question of  any property having escaped the  assessment to  duty. It  was urged  that such a right to  further compensation  would become  property  only when the claim would be accepted’ 323 finally by  the Court  and till  the  enhanced  compensation became payable  by reason of final adjudication of the Court no property  could be  said tc  have come into existence and certainly it  was not  in existence at the date of death. It was pointed  out that against the decrees passed by the City Civil Court  appeals had been preferred by the Government to the High  Court and  even the High Court’s decision might be carried in further appeal to this Court and, therefore, till the claim  was finally  accepted by  the  highest  Court  no property (enhanced  compensation) could be said to have come into existence.  Counsel urged  that it would run counter to all principles  of direct  taxation  to  regard  the  amount decreed subsequently  by the  final Court as property having come into  existence retrospectively  on the  relevant  date (being date  of death  under Estate  Duty Act  and valuation date under  the Wealth  Tax Act) though, in fact, it did not exist on  that date,  and in this behalf reliance was placed upon the  decision of  the Andhra Pradesh High Court in Khan Bahadur Ahmed Alladin & Sons. v. Commissioner of Income-tax, two  decisions   of  the   Calcutta  High   Court,   namely, Commissioner of Wealth Tax, West Bengal (II) v. U.C. Mahatab and Commissioner  of Income-Tax, West Bengal-II v. Hindustan Housing and Land Development trust Ltd. two decisions of the Gujarat  High   Court,   namely,   Topandas   Kundanmal   v. Commissioner of Income-tax and Addl. Commissioner of Income- Tax, Gujarat  v. New  Jehangir Vakil  Mills Co. Ltd. and one decision  of   the  Kerala   High  Court  in  M.  Jairam  v. Commissioner  of   Income-Tax,  Kerala.   Secondly,  counsel contended  that   assigning  that   the  right   to  receive compensation survived  and it was that right which was being prosecuted by  the heirs  of  Rashid  in  Civil  Court,  the impugned notice  had not been issued on the ground that such right to  compensation had  been undervalued  on the earlier occasion and  required to  be properly valued as at the date of the  death but  the basis  on which  it  was  issued  was clearly unsustainable  in law  P inasmuch  as the respondent had  issued  it  on  the  assumption  that  there  had  been escapement of  assessment to  duty because  the lands in the

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original assessment  had been  undervalued in  view  of  the glaring enhanced  compensation awarded  by the  Civil Court, and the High Court’s decision upholding the issuance of such notice on  the wrong  basis was  liable  to  be  set  aside. Thirdly, counsel contended that seeking References under the Land Acquisition Act and their pendency in Civil 324 Court could  not be said to be primary facts, non-disclosure of which  could amount to an omission or failure on the part of  the   accountable  person  resulting  in  escapement  of assessment to duty.      On the  other hand  counsel for the Revenue pressed for our acceptance  the view  taken by the High Court. He fairly conceded that the lands in question could not be regarded as forming part  of the  estate of the deceased on the relevant date inasmuch as the lands had vested in the Government long prior to  the death  of the  deceased, but he contended that upon  such  acquisition  of  lands,  the  right  to  receive compensation at  market value  on the  dates of the relevant notifications accrued  to the  deceased and  such right  was unquestionably property which would pass on the death of the deceased.  He   disputed  that   this   right   to   receive compensation got  merged in  the awards  made by the Special Deputy Collector  or that  thereafter such  right ceased  to exist. According  to him  if the  awards made by the Special Deputy Collector had been acquiesced in and accepted without any protest  by the  deceased or his heirs, such right would have merged  in the  said awards,  but where, as in the case here, the awards made by the Special Deputy Collector, which in law  are nothing but offers made by the Government to the claimant, are not accepted or are accepted under protest and the claimant  seeks land  References in  Civil  Courts,  the right to compensation must be regarded as having survived or kept alive  by the  claimants and it is that property (right to compensation)  which will  have to  be evaluated  by  the assessing authority  as; on  the date of death. According to him obviously  this asset or property had not been correctly valued in  the original  assessment proceedings  inasmuch as glaring enhancement  had been granted by the Civil Courts in the land  References and, therefore, there was escapement of assessment to  duty, and  hence the notice under s. 59(a) of the Act  should be  regarded as having been issued properly. Counsel further  contended that  the High  Court had rightly taken the  view  that  seeking  References  under  the  Land Acquisition Act  and their  pendency  in  Civil  Court  were primary  facts   which  had   not  been   disclosed  by  the accountable person  during the  original assessment and such non-disclosure led  to the  reasonable belief that there was escapement  of  assessment  to  duty.  The  impugned  notice according to him, therefore, was relied and justified.      As stated  above, so  far as the estate duty assessment in respect of the properties passing on the death of Shapoor was concerned,  counsel for the Revenue fairly conceded that the lands  which  were  the  subject-matter  of  acquisition proceedings could  not be  regarded as  forming part  of the estate of  the deceased  on the  relevant date and could not pass on  his death inasmuch as those lands had vested in the Government 325 long  prior   to  his   death  but   the  right  to  receive compensation at  market value  on the  dates of the relevant notifications unquestionably  accrued to  the deceased which was property  and it  would be such property that would pass on the death of the deceased. That such right is property is well-settled and  if necessary  reference may  be made  to a

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decision of  this  Court  in  Pandit  Lakshmi  Kant  Jha  v. Commissioner of  Wealth-Tax, Bihar  and Orissa, a case under the Wealth-Tax Act, 1957 where it has been clearly held that the  right   to  receive  compensation  in  respect  of  the Zamindari estate  which was  acquired by  the Government h , under the Bihar Land Reforms Act, 1950, even though the date of payment  was deferred,  was property  and constituted  an asset for  the purpose  of that  taxing  statute.  In  other words, since  the lands  were lost  to  the  estate  of  the deceased before  the relevant  date,  namely,  the  date  of death, it  would be  the right to receive compensation under the Land  Acquisition Act  that will  have to  be  evaluated under the Estate Duty Act. Counsel for the appellant did not dispute this  position but  he contended  that no sooner the Collector (the  Special Deputy  Collector here  in) made his awards determining  the amounts  of compensation  payable to the claimants under sec. 11 of the Land Acquisition Act, the right to  receive compensation  must be  regarded as  having merged in  the awards, the determination having been made by a statutory  public official and what the claimants would be left with  thereafter was  merely a  right  to  agitate  the correctness of  such determination  and this  right to claim further compensation being merely a right to litigate was no asset or  property and  further that such right would become asset  or  property  only  after  the  Civil  Court  finally adjudicated  upon   such  claim.   The  High   Court,  while negativing this  contention, has  held that  the  "right  to receive extra  compensation" was not a separate or different right independent of "the right to receive compensation". It has observed thus:           "The right  to receive  compensation for the lands      acquired by  the Government,  at their  market value at      the date  of the  acquisition is  one  and  indivisible      right. There  is no right to ’receive compensation’ and      a separate  right to  receive ’extra compensation’. The      only right is to receive the compensation for the lands      acquired by  the Government,  which is  the fair market      value on the date of acquisition.           The argument  of learned counsel that the right to      receive extra compensation accrued when the Civil Court      passed  the   order  and  not  before  does  not  merit      acceptance. The 326      so called right to receive extra compensation cannot be      torn from  or considered  separately from  the right to      receive the  market value  of the lands acquired by the      Government. That  right accrues  to the  owner  of  the      lands  as  soon  as  the  lands  are  acquired  by  the      Government. It  is, therefore,  difficult to accept the      argument of  the learned  counsel  for  the  petitioner      that a fresh and an independent right to ’receive extra      compensation’ accrue  to the  heirs of the deceased and      that it  was owned  and possessed  by the  heirs of the      deceased."      In our opinion the High Court was right in holding that there are  no two  separate rights-one  a right  to  receive compensation and  other a  right to receive extra or further compensation. Upon  acquisition of  his lands under the Land Acquisition Act  the claimant has only one right which is to receive compensation  for the lands at their market value on the date  of the  relevant notification and it is this right which is  quantified by  the Collector under s.11 and by the Civil Court  under s.26  of the  Land Acquisition Act. It is true  that  under  s.11  the  Collector  after  holding  the necessary inquiry  determines the quantum of compensation by

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fixing the  market value  of the  land and  in doing  so  is guided by  the provisions contained in ss. 23 and 24 of Act- the very  provisions by  reference to  which the Civil Court fixes the  valuation. It  is also  true that the Collector’s award is,  under s.12,  declared to  be, except as otherwise provided, final  and conclusive  evidence as between him and the persons  interested. Even so, it is well settled that in law the Collector’s award under s.11 is nothing more than an offer  of   compensation  made  by  the  Government  to  the claimants whose  property is  acquired (vide  Privy  Council decisions in  Ezra v.  Secretary of State for India and this Court’s  decision   in  Raja  Harish  Chandra  v.  Dy.  Land Requisition Officer  and Dr.  G. H. Grant v. State of Bihar. If that  be the  true  nature  of  the  award  made  by  the Collector then  the question  whether the  right to  receive compensation survives the award must depend upon whether the claimant acquiesces  therein fully  or not.  If the offer is acquiesced in  by total acceptance the right to compensation will not  survive but  if the  offer is  not accepted  or is accepted under protest and a land reference is sought by the claimant under  s.18, the right to receive compensation must be regarded  as having  survived and  kept alive  which  the claimant prosecutes  in Civil  Court. It  is  impossible  to accept the  contention that no sooner the Collector has made his award  under s.11 the right to compensation is destroyed or ceases  to exist  or is  merged in  the award, or what is left 327 with  the   claimant  is   a  mere  right  to  litigate  the correctness of  the award.  The claimant  can  litigate  the correctness of  the award  because his right to compensation is not  fully redeemed but remains alive which he prosecutes in Civil  Court. That  is why  when a  claimant  dies  in  a pending reference  his heirs  are brought  on record and are permitted to  prosecute the  reference. This,  however, does not mean  that the  Civil Court’s  evaluation of  this right done subsequently  would be its valuation as at the relevant date either under the Estate Duty Act or the Wealth Tax Act. It will  be the duty of the assessing authority under either of the  enactments  to  evaluate  this  property  (right  to receive compensation at market value on the date of relevant notification) as  oh the  relevant date  (being the  date of death under  the Estate  Duty and  valuation date  under the Wealth Tax  Act). Under  s.36 of  the Estate  Duty  Act  the assessing authority  has  to  estimate  the  value  of  this property at  the price  which it  would fetch if sold in the open market at the time of the deceased’s death. In the case of the  right to  receive compensation,  which is  property, where the  Collector’s award  has been made but has not been accepted or  has been accepted under protest and a reference is sought  or is  pending in  Civil Court at the date of the deceased’s death, the estimated value can never be below the figure quantified by the Collector because under s. 25(1) or the Land  Acquisition Act,  Civil  Court  cannot  award  any amount below  that awarded  by the  Collector; the estimated value may  be equal to the Collector’s award or more but can never be equal to the tall claim made by the claimant in the Reference nor  equal to  the claim  actually awarded  by the Civil Court  inasmuch as  the risk  or hazard  of litigation would be  a detracting factor while arriving at a reasonable and proper  value of  this property  as on  the date  of the deceased’s death.  The  assessing  authority  will  have  to estimate the  value having  regard to the peculiar nature of the  property,   its  marketability   and  the   surrounding circumstances including  the link  or hazard  of  litigation

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looming large  at the relevant date. The first contention of counsel for the appellant, therefore, fails.      The second  contention urged  by the  counsel  for  the appellant, however, appears to us to be well-founded and the impugned notice issued under s.59(a) of the Act will have to be quashed  on that ground. As we have said, above, since in the instant  case the  wards  made  by  the  Special  Deputy Collector were not accepted by the heirs of the deceased and Land References  were sought  by  them  and  the  same  were pending in  Civil Court at the relevant date (being the date of Shapoor’s death) the notice under s.59(a) would have been valid if  the same  had been  issued on  the basis that such right to  compensation had  been undervalued  on the earlier occasion and required to be properly valued as on 328 the date  of the  death, but  what we  find is that the said notice was  issued by the respondent on the wrong assumption that the  acquired lands  still formed part of the estate of the deceased  and that having regard to the glaring enhanced compensation granted  by the  Civil Court for the lands, the said lands  had been  undervalued in the original assessment and as  such the same had escaped assessment to duty. In the notice issued  to the  appellant under  s.59(a) of the Act a bald statement was made by the respondent to the effect that he had  reason to believe that property chargeable to estate duty (a)  had escaped  assessment and  (b)  had  been  under assessed, and,  therefore, the  appellant was called upon to deliver a  further statement  of Account.  By her  Chartered Accountant’s letter  dated December  15, 1969 the respondent was called  upon to give the basis for his aforesaid belief, to which the respondent re plied on January 1, 1970 thus:           "The extra  compensations received by you in O. P.      No. 325/65,  O.P. No.  364/65, O.P.  No. 29/64 and O.P.      No.  30/64   relating  to  the  land  acquired  by  the      Government escaped  assessment. In view of your failure      to disclose  full particulars  to Department  regarding      the land  acquisition proceedings  in the Account filed      by you,  reassessment proceeding  have  been  initiated      under s.59(a) of the Estate Duty Act." The aforesaid  communication clearly  brings out the fact in the respondent’s  view the  extra compensation  (meaning the enhanced amounts)  received by the appellant under the Civil Court decrees  in Land  References had escaped assessment in the earlier assessment proceedings and since such escapement was  due   to  the  appellant’s  failure  to  disclose  full particulars regarding  the land acquisition proceedings, the reassessment proceedings  were  being  initiated.  In  other words, the  assessment was being reopened for the purpose of including the  enhanced amounts received by the appellant is the principal value of the property passing on the death and assessing the  same to  duty and  not  for  the  purpose  of evaluating  the   right  to   compensation  which  had  been undervalued on the earlier occasion.      Further, as  regards the  basis on  which the  impugned notice had  been issued  the High  Court took  the following view while upholding the issuance of the notice:           "Then, the  next question  that arises  is whether      such non  disclosure resulted  in an under-valuation of      the   properties   included   in   the   account,   and      consequently there  was an  escapement of  the property      chargeable to  the estate  duty from  assessment ?  The      compensation awarded by the Special Deputy 329      Collector has  been enhanced  by Rs.  20,45,000 in  the      case of  lands acquired  for H.M.T. and by Rs. 1,90,000

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    for the  land acquired for the Synthetic Drugs Project.      Those facts which came into existence subsequent to the      making of  the assessment,  lead to the conclusion that      the values  adopted by  the Asst.  Controller of Estate      Duty for those lands were far below their real and true      market value."      x     x    x    x    x    x    x    x    x      x     x    x    x    x    x    x    x    x           "In the  instant case, the enhancement by the City      Civil Court  of the compensation awarded by the Special      Deputy Collector was so large that no reasonable person      could  say   that  the  values  adopted  by  the  Asst.      Controller of  Estate Duty of those lands on the basis,      of the  awards made  by the Special . Deputy Collector,      represented their  true and  correct market  values. No      attempt has ever been made by the Accountable person to      show that  the values  adopted by  the Asst. Controller      Estate Duty  represented their  true and correct market      values.   In   those   circumstances,   an   inevitable      conclusion flows  that there was under-valuation of the      properties which were included in the account." The aforesaid  observations of the High Court as well as the contents of  the communication sent by the respondent to the appellants  representative   on  January  9,  1970,  clearly suggest that  the impugned  notice had  been issued  on  the basis that the acquired lands still formed part of the state of  the  deceased  which  passed  on  his  death,  that  the valuation for  those lands  adopted on  the earlier occasion which was  on the  basis  of  compensation  awarded  by  the Special Deputy  Collector did  not represent  their  correct market value  which was  clear  from  the  glaring  enhanced compensation that  was awarded  by the Civil Court under its decrees in Land References and, therefore, such property had escaped assessment to duty. In other words, the reassessment was intended  to be  undertaken with  a view  to include the enhanced amounts  received by the appellant in the principal value of the property passing on death and bringing the same to duty.  We were  informed at  the Bar  by counsel  for the appellant that  in the  reassessment which was made pursuant to the  impugned notice,  the quantum  of extra compensation decreed by  the Civil  Court was  included in the assessment and brought  to duty.  obviously, the  impugned notice which was issued on a wrong basis and with the aforesaid objective and the  subsequent reassessment  made in  pursuance thereof would be clearly illegal and unsustainable inasmuch 330 as the  extra compensation  awarded by the Civil Court taken with the,  original  compensation  awarded  by  the  Special Deputy Collector  cannot be regarded as proper evaluation of the right  to receive  compensation as  on the  date of  the death of  the deceased. Proposed as well as actual inclusion of such extra compensation awarded by the Civil Court in the principal value  of the  estate passing  on the death of the deceased would be manifestly wrong for more than one reason. In the  first place  the said property, namely, the enhanced compensation was  not in  existence 1.  at the  date of  the death of  the deceased.  Secondly, such  extra  compensation awarded by  the City  Civil Court was liable to variation in the appeals  that were  pending in the High Court. Thirdly), as discussed  above, such  extra compensation  together with the compensation  awarded by  the Special  Deputy  Collector could not  be regarded  as the proper valuation of the right to compensation  as on  the relevant  date (the  date of the deceased’s death). In our view, therefore, the very issuance of the  notice under  s.59(a) which  was  done  on  a  basis

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clearly unsustainable in law is liable to be quashed on this ground. Consequently,  reassessment which  has been  made by the Respondent, is also liable to be quashed.      In view  of the aforesaid conclusion, it is unnecessary for us to deal with the last contention urged by the counsel for the  appellant that seeking of land References and their pendency  in   Civil  Court   were  not  primary  facts  but inferential  facts  and  non-disclosure  thereof  would  not amount to failure or omission on the part of the accountable person to disclose full particulars leading to escapement of assessment to duty.      In the  result the  appeal is  allowed and the impugned notice  issued   under  s.59(a)  of  the  Act  as  also  the subsequent reassessment  made are  quashed. The Revenue will pay the costs of the appeal to the appellant       Turning  to Civil Appeal No. 2206 of 1972, counsel for the appellant  challenged the  impugned notice  issued under s.61 of the Act on two grounds: (a) it was case of change of opinion as regards the valuation of lands acquired and not a case of  mistake apparent  from the  record and  as such the impugned notice  was issued  under s.61  with a  view to get over  the   bar  of  limitation  under  s.73A,  which  would otherwise be applicable to a notice under s.59(a) of the Act and (b)  that for  purposes of  s. 61  the land  acquisition proceedings and Land References in the Civil Court could not be regarded  as part  of the  assessment record  and he  so- called mistake  discovered by reference to such other record was not  a mistake  apparent from the record of the case and as such the 331 impugned notice  was liable  to be quashed. In our view, the first ground is sufficient to dispose of the appeal.      The impugned  notice dated  November 14,  1969 in terms recites that  the assessment  in this  case was completed on March 29,  1966 on  a net  principal value  of Rs. 23,53,064 (which included  the value  of the  acquired lands  at rates fixed by  the Land  Acquisition officer)  with a duty worked out at  Rs. 5,07,919.20,  that it  was then  learnt that  in respect of  the acquired  lands the Civil Court had enhanced the compensation  fixed by  the Land Acquisition officer and had ordered payment thereof with interest at 4% (particulars whereof were  specified) and that, therefore, the respondent proposed "to  rectify the  assessment under s. 61 as mistake apparent from  the  record  and  adopt  the  above  enhanced compensation awarded  by the  Court". It  is thus clear that the rectification is being undertaken on the ground that the initial valuation  adopted in  respect of the acquired lands was based  at rates fixed by the ’Land Acquisition. Officer, that such  valuation was  obviously wrong  in  view  of  the enhanced compensation  awarded by  the ,  Civil  Court  and, therefore,  the  enhanced  compensation  was  sought  to  be included in the principal value of the estate by undertaking the rectification  proceedings. In  substance it  cannot  be said to  be a  case of rectification of any-mistake apparent from the  record but  the respondent  is really  seeking  to change his opinion about the valuation of the acquired lands because some  other authority,  namely the  Civil Court  has valued  the  same  differently.  Now,  for  the  purpose  of enhancing the  value of  the acquired lands on the. basis of their  value.-   as  determined   by  the  Civil  Court  the respondent must resort to provisions of s. 59 and proceed to make reassessment  but such  reassessment  has  to  be  done within the  period of  three years  from  the  date  of  the original assessment under s. 73 A of the Act. It seems to us that in  the instant  case the  respondent resorted  to s.61

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because the  rectification of  any mistake apparent from the record could  be done at any time within five years from the date of the original assessment.      In Ethel  Rodrigues v.  Assistant Controller  of Estate Duty,  Estate   Duty,  Estate   Duty-cum-Income-tax  Circle, Mangalore, on similar facts when the Assistant Controller of Estate Duty, Bangalore had issued a notice purporting to act under s.61 of the Act on the ground that the estate had been valued at  an enhanced figure in the probate proceedings and had  in  proceedings  undertaken  pursuant  to  such  notice enhanced the  valuation of the estate in accordance with its valuation placed  on the  estate in  the probate proceedings and  consequently  enhanced  the  estate  duty,  this  Court quashed the order of rectification. The principle enun- 332 ciated by  this Court  in  that  case  has  been  succinctly summarised in the head-note thus:           "Where the  Controller has  made his own valuation      of the   estate of a deceased person under s. 36 of the      Estate Duty  Act,  1953,  he  has  no  jurisdiction  to      rectify the  assessment under  s. 61 on the ground that      the estate  has been  taken at an enhanced value in the      probate proceedings.   taking  the enhanced  value  put      upon the estate in the probate proceedings he cannot be      said to rectify any mistake apparent from the record of      the estate duty assessment but he would be changing his      opinion about  the valuation  of the valuation of cause      some other authority has valued the estate differently.      For the  purpose of  s. 61,  the only  record that  the      assessing  authority   can  look  into  is  the  record      relating to  the assessment  of estate duty and not any      other record  such as  the  be  cord  in  the  probate,      proceedings which is not relevant.           For the  purpose of  enhancing the value an estate      on  the  basis  of  the  value  taken  in  the  probate      proceedings  the   Controller  has   to.   invoke   the      Provisions of  s. 59  and proceed  to reassess  and for      such a  reassessment the  bar provided  in s. 73 A will      operate."      In our view, the facts of the instant case clearly come within the  ratio of  the aforesaid decision. The High Court has attempted  to distinguish  the above decision by stating that in  the instant  case the  res  respondent  had  merely accepted the  value of  the acquired  lands as determined by the  Special   Deputy  Collector   in  his   award  and  the accountable person  had no  objection to  this  course  and, therefore, the  respondent  himself  did  not  estimate  the market value of the lands on the date of death of Rashid and as such  it was  not a case of change of opinion on his part as regards  the  correct  valuation  of  the  lands.  It  is difficult to  accept this  view. It  cannot be disputed that when the original assessment was made it was the duty of the respondent,  after   scrutinising  the   Account  filed  and examining the  materials produced  before him,  to value the estate of  the deceased  properly under  s.36 of the Act and when he  accepted the  compensation  fixed  by  the  Special Deputy Collector  as the  proper valuation he must be deemed to have  adopted that  evaluation as his own estimated value of the  lands which he wanted to enhance by relying upon the valuation made  by the  another authority,  namely, the City Civil Court.  To such  a case  s.59 is clearly attracted but obviously with  a view  to avoid  the  bar  of  s.  73-A  he purported to.  issue the  impugned  notice  under  s.61  and therefore the  same is  liable to  be quashed. The aforesaid decision seems to lend support to the

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333 second  ground  urged  by  counsel  for  the  appellant  for quashing the  impugned notice  but we would like to base our decision on  the first  ground discussed above. In this case also we  are told  that the  rectification proceedings  have been completed  pursuant to  the impugned notice, which also must be quashed.      In the result, the notice under s.61 of the Act and the rectification-  order   passed  in   pursuance  thereof  are quashed. The Revenue will pay the costs of the appeal-to the appellant. V.D.K.                                      Appeals allowed. 334