TMI Blog1967 (9) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000. The Assistant Controller was of the view that the sale was a disposition in favour of relatives within the meaning of section 27 of the Act and was also of the view that the estate has to be re-evaluated taking into consideration the value of the shares as on the date of death of the deceased on the ground that such property should be deemed to have passed on the death of the deceased under section 27 read with section 9 of the Act. In the course of such exercise of jurisdiction apparently under section 62 on the ground that there has been an omission in the valuation of these shares resulting in a mistake apparent from the record as a result of such valuation, the Assistant Controller considered that the fair value of the shares as on the date of sale should be taken to be Rs. 310 per share and as the full consideration in money's worth has not been received by the deceased, the estate has to be re-valued so as to bring in such omission which has not been included in the estate as being exigible to tax. The accountable person thereupon preferred an appeal to the Central Board of Revenue under section 63 of the Act against the order dated July 31, 1951, passed by the Assista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier occasion, it was held that the statement of the case was not sufficient to enable it to dispose of one of the questions referred therein. Therefore, the Board was directed to submit a further statement of the case : "Whether the statement in ground No. 17 in the memorandum of appeal to the Board of Revenue was correct ?" A supplementary statement of the case was submitted by the Central Board of Direct Taxes, New Delhi, and the Board, while reiterating the position stated earlier, has restated the case and observed : "In view of the statement made by the Assistant Controller in the assessment order,..... it may be taken that the account containing the sale of the 1,000 shares had been seen by him before completion of the assessment. ..... The records do not show that the Assistant Controller was informed before making the original assessment on 28th February, 1957, that the sale of 1,000 shares of T.V.S. Iyengar Sons Ltd. by the deceased was effected at less than market value of the shares as at the time of sale on December 6, 1954. The records also do not show that the Assistant Controller had at any time on or before 28th February, 1957, considered the applicabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to a rigorous construction but ought to be liberally viewed. Viewed in this context and to achieve the object of the law to charge an estate with duty in accordance with its charging provisions, it is necessary to consider the various limbs of section 62 of the Act before we apply them to the facts of the case. Section 62 runs as follows: "Rectification of mistakes relating to valuation 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 this 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 application 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 case may be, (b) determine the additional duty payable on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es within its purview. It comprehends errors which, after a judicious probe into the record from which it is supposed to emanate, are discerned. It is difficult to axiomatise and lay down dictas for the discovery of a mistake from official records. The word "mistake" is inherently indefinite in scope, as what may be a mistake to one may not be one for another. It is mostly subjective and the dividing line in border areas is thin and indiscernible. Indeed, it is imponderable due to its inherent indefiniteness. It is something which a duly and judiciously instructed mind can find out from the record. It may be that sometimes an argument, though not a complex study, may be required to find it out. But that by itself is not the test to discountenance it as being not a mistake apparent from record. In the ultimate analysis, the conclusion a well equipped and trained judicial mind will reach after scrutinising the record, will govern and his finding whether it is a mistake or not has to be accepted. The judicial precedents under the analogous provision in the Income-tax Act, namely, section 35, may be usefully referred to. Section 35 enables rectification to be made of any mistake appa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the two provisions do not mean the same thing. This court in Maharana Mills (Private) Ltd. v. Income-tax Officer, Porbandar(4) has laid down the scope of section 35 at page 358 in the following words: 'The power under section 35 is no doubt limited to rectification of mistakes which are apparent from the record. A mistake contemplated by this section is not one which is to be discovered as a result of an argument but it is open to the Income-tax Officer to examine the record including the evidence and if he discovers any mistake he is entitled to rectify the error provided that if the result is enhancement of assessment or reducing the refund then notice has to be given to the assessee and he should be allowed a reasonable opportunity of being heard'." Thus, therefore, it is clear that a complicated argument is neither plausible nor has to be countenanced for the purpose of ascertaining whether the mistake, which may be either of law or of fact, is apparent from the record. To a somewhat similar, but of a wider import, is the following passage appearing in Income-tax Officer v. S.K. Habibullah(5). This passage(1) [1958] 33 I.T.R. 228, 230.(3) [1961] 41 I.T.R. 732. (2) 17 S.T.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ror of law apparent on the face of the record'; but it should be left, as it has always been done, to be decided in each case." On a fair conspectus of the ratio of the various decisions of this court and the Supreme Court, it is now clear that for a rectification of an error which is said to be apparent from the face of the record, the mere complexity of the problem or that genuine argument is necessary to discover the same (1) [1963] 49 I.T.R. 128, 131.(3) A.I.R. 1960 S.C. 137. (2) [1964] 11 S.C.J. 120, 124; A.I.R. 1963 S.C. 1626; [1964] 2 M.L.J. (S.C.) 13, 17 may not by themselves be sufficient to oust the jurisdiction of a tribunal to rectify such a mistake. If, however, it could be discerned with some precision after a fair probe into the assessment records and a reasonable and probable conclusion can be arrived at, that the court's conscience has been shaken, in that there appears an error on record which has to be certainly corrected, then it would appear that the jurisdiction of the tribunal vesting with power to rectify such mistakes arises. As has been repeatedly pointed out, it is very difficult to state where the jurisdiction begins and where it ends. One thing, howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is deemed to pass on death but which is subject to the imposition of estate duty under Part II of the Act and sections 26 and 27 in Part III, thereof dealing with exceptions from charge of estate duty. Therefore, when the Controller (a) mistakes in the adoption of the date when the property has to be valued, (b) commits an error in not including a property which is deemed to pass on death, (c) erroneously fails to bring into the net of taxation a gift, which would normally be includible in the estate, and (d) fails to visualise an element of bounty in a given transaction, which part is made exigible to tax, then all, which are only illustrative and not exhaustive, would be mistakes, which can be rectified. Such rectifica- tion is however subject to the guiding principles already indicated by us. Mr. Swaminathan, learned counsel for the accountable person, contends that if viewed in the light as above, it might mean that a power of revision is rolled up in section 62 of the Act, along with the power to rectify. We do not agree. If an obvious error, a lurking mistake, or an omission leading to a mistake is discovered from the records, it can be and ought to be corrected and rect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by the deceased in favour of his sons and grandsons do come within the net of taxation as it is a sale to a relative with an element of bounty involved in it and that the full consider- ation has not been received by the deceased. Mr. Balasubrahmanyan contends that the word "disposition" includes a sale and the records do not explicitly make out that the first officer applied his mind fully and considered the impact of sections 26, 27 and 9 of the Act on the admitted facts and circumstances of the case. Even the Central Board of Revenue who were specifically directed to furnish an additional statement of the case on this aspect, have not pointedly adverted to certain necessary details. We, with the assistance of counsel, waded through the records. We are not satisfied that there is full warrant for the submission that the first officer did consider the subject in the light of the three stated sections as above. No doubt, in one of the letters dated December 10, 1955, section 27 is referred to by the officer, who had the full particulars about the nature of the transaction. That by itself cannot rule out the possibility of the Assistant Controller making a mistake either in ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trust, settle- ment upon persons in succession, or otherwise, which shall not have been bona fide made two years or more before the death of the deceased shall be deemed to pass on the death : Provided that in the case of gifts made for public charitable purposes the period shall be six months..... " Section 26 also may be usefully quoted: "26. Property passing by reason of a bona fide purchase for full or partial consideration in money. - (1) Subject to the provisions of section 27 and section 46 estate duty shall not be payable in respect of property passing on the death of the deceased by reason only of a bona fide purchase from the person under whose disposition the property passes, nor in respect of the falling into possession of the reversion on any lease for lives, nor in respect of the determination of any annuity for lives, where such purchase was made, or such lease or annuity granted, for full consideration in money or money's worth paid to the vendor or grantor for his own use or benefit, or in the case of a lease for the use or benefit of any person for whom the grantor was a trustee. (2) Where any such purchase was made, or lease or annuity granted, for par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. Before we embark upon the issue whether the money or money's worth, which represented the consideration of the deal, is adequate or otherwise, as a matter of fact, it is necessary to vivify the transaction in the light of the specific provisions of the Act. We have indicated that the object of the Act is to evaluate the estate of the deceased properly after duly aggregating it. If, in the process, the revenue fails to include a property from such a reckoning and under-estimates a property, in both the cases, there is a faulty assessment of the quantum of the estate. Such a quantitative inaccuracy may sometimes lead to an incorrect charge both in rate and in the totality of its value. Section 27 prescribes a rule of evidence. The non-obstante requirement under section 27 has to be literally satisfied to take out a given transaction from its mischief. If the disposition was made on the part of the deceased for full consideration in money or money's worth paid to him for his own use and benefit, then it (1) [1905] A.C. 406, 411.would be outside the purview of section 27. If it is otherwise and if the dis- position is in favour of a relative, the presumption embodied in section 27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration in money or money's worth. If what is stated in the document of disposition is to be unqualifiedly accepted as the consideration, the significance of the expression "full consideration in money" in sec- tion 26(1) and "partial consideration in money" in section 26(2) fades into insignificance. Further, the consideration cited in the document of disposi- tion shall be allowed as a deduction from the value of the property for the purposes of estate duty both under section 26 and under section 27 of the Act. If, therefore, the consideration received in the deed of disposition is the only factor to be considered, as contended, full effect cannot be given to the scope and meaning of the text of sections 26 and 27 amongst others. Such internal legislative construction of the sections being available intrinsically in the sections themselves, they are of the highest value and prevail over other extrinsic aids to interpret them. All a priori considera- tions should be eschewed, if within the four corners of the section, the meaning is clear and discernible. We are, therefore, unable to accept such a reasoning of the learned counsel for the applicant that the consideration cited in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inable and which could readily have been sold for full value in a free market, a transfer at even a high proportion of the full value might well be construed (in the absence of additional collateral consideration) as a partial gift, since it is difficult to conceive that such a transaction could take place without a conscious intention of partial bounty on the part of the transferor and a conscious receipt of bounty on the part of the transferee." But there is a fallacy in the argument. What is contemplated by the legislature, when it used the expression "full consideration in money or money's worth" in sections 26 and 27, is whether the price paid is fair. The Supreme Court, while interpreting a similar expression in the Income- tax Act, in Commissioner of Income-tax v. George Henderson and Co. Ltd.(1) held : "The expression 'full value' means the whole price without any deduction whatsoever and it cannot refer to the adequacy or inadequacy of the price bargained for." In the process of evaluation, if the revenue or the Tribunal or even the court comes to the conclusion that there is abundant evidence that the full price has not been paid for the sale, an irresistible presum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in accordance with accepted judicial practice. Further, the mandate under the Estate Duty Act is to value the estate that passes or is deemed to pass on the date of death of the deceased. In so far as the 1,000 shares are concerned, the first officer did not do so. In fact, the accountable person has agreed that the value of each share of the company is Rs. 258 on the date of death. The Tribunal therefore was right in accept- ing the application of the doctrine adumbrated in sections 9 and 27 of the Act, as was done by the second officer. One observation, however, has to be made before we answer the two queries referred to us. It does not appear from the record that the accountable person did really have an opportunity to prove as to what would be the fair price of the shares on the date of sale. This opportunity is indeed necessary in the interests of justice. Being confident that such a fair opportunity would be given by the revenue, we are not dwelling at length on this aspect and indeed it is not essential to do so to render our answers. We, therefore, answer both the queries in the affirmative and against the assessee. This tax case is therefore dismissed with costs. Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X
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