TMI Blog1971 (11) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... drugs project. Compensation awarded for those lands by the Special Deputy Collector was received by Rashid Shapoor Chenai. Later, land in Qutbullapur village belonging to him were also acquired by the Government for H.M.T. Units I and II. Awards in respect of these lands, which were required for H.M.T., were made by the Special Deputy Collector in March, 1965, fixing the compensation for these lands at Rs. 4,29,360.68. Rashid Shapoor Chenai died on November 4, 1963, and the above compensation was received by the legal heirs of Rashid Shapoor Chenai. Estate duty assessment in respect of the properties passing on the death of Rashid Shapoor Chenai was made by the Assistant Controller of Estate Duty on March 29, 1966. The values of these lands for the purpose of computing the estate duty in respect of the properties that passed on the death of Rashid Shapoor Chenai were taken at the respective figures of compensation awarded for them by the Special Deputy Collector, The legal heirs of Rashid Shapoor Chenai did not accept the awards made by the Special Deputy Collector in respect of those lands and objected to the amount of compensation awarded, and, accordingly, required the Special ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Controller and a further appeal before the Income-tax Appellate Tribunal, but on points other than the question of valuation of the above said lands. On the basis of information in his possession regarding the allowance of higher compensation for those lands by the civil courts, the Assistant Controller of Estate Duty issued notice dated November 14, 1969, to the petitioner, under section 59(a) of the Estate Duty Act, to show cause why the estate duty assessment made on December 30, 1966, should not be reopened and revised by including the enhanced compensation awarded by the civil courts in respect of those lands. In this writ petition, the petitioner challenges the validity and the legality of the said notice dated November 14, 1969, issued by the Assistant Controller of Estate Duty under section 59(a) of the Act, for reopening the assessment. The petitioner contends that the said notice is illegal and without jurisdiction. The petitioner, accordingly, prayed for the issue of a writ of prohibition or direction against the respondent restraining him from taking further proceedings in pursuance of the above-said notice. The learned counsel for the petitioner, Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee to disclose fully and truly all material facts necessary for making the assessment, which conferred jurisdiction on the assessing officer to reopen the assessment, by the issue of notice under section 59(a) of the Act, cannot be attributed to the accountable person. The fact that references were filed in the civil courts under section 18 of the Land Acquisition Act, against the awards of the Special Deputy Collector, was disclosed by the accountable person to the assessing officer. That fact, however, is denied by the revenue. In view of the department's denial of that fact, even if it is assumed that the accountable person had not established that he had disclosed the fact of making the references to the civil courts against the awards made by the Special Deputy Collector, still it was submitted that it was only an inferential fact. The Assistant Controller of Estate Duty should have inferred that fact from the facts before him disclosed by the accountable person and it was not for the accountable person to disclose that fact. Nor was that fact a material fact necessary for making the assessment, because by the mere filing of references the accountable person could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arguments, Sri P. Rama Rao, the learned counsel appearing for the revenue, submitted that it is not an universal rule that the owner of a land will always not accept the compensation awarded by the Collector in respect of the land acquired by the Government and that he would always file a reference to the court under section 18 of the Land Acquisition Act. The filing of references to the civil courts against the awards is, therefore, a primary fact and not an inferential fact. The accountable person failed to disclose the fact that he had, under section 18 of the Land Acquisition Act, filed an application requiring the Collector to refer the question of the amount of compensation to a civil court. Hence, there was omission or failure on the part of the accountable person to disclose fully and truly all material facts necessary for making the assessment. That fact was a material fact and it could have put the Assistant Controller of Estate Duty on his guard not to accept the compensation awarded by the Special Deputy Collector as the real and true market value of those lands. in view of the large difference between the compensation awarded for those lands by the Special Deputy Coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y property chargeable to estate duty has escaped assessment by reason of under-valuation of the property included in the account. . . . (b) has, in consequence of any information in his possession, reason to believe notwithstanding that there has not been such omission or failure as is referred to in clause (a) that any property chargeable to estate duty has escaped assessment, whether by reason of under-valuation of the property included in the account.... or otherwise ; he may, at any time, subject to the provisions of section 73A require the person accountable to submit an account as required under section and may proceed to .... or reassess such property as if the provisions of section 58 applied thereto." On a plain reading of the above section, it is evident that in order to confer jurisdiction on the Assistant Controller of Estate Duty to re-open an assessment under section 59(a) of the Act, two conditions have to be satisfied. The first is that the Controller of Estate Duty must have reason to believe that property chargeable to estate duty has escaped assessment by reason of under-valuation of the properties included in the account. The second is that he must also ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed to the Collector to refer the matter of determination of the compensation to the City Civil Court, under section 18 of the Land Acquisition Act. By the time the assessment was made, the City Civil Court, to which references were made, had not passed orders and, therefore, the accountable person could not have disclosed the fact of enhanced compensation allowed by the City Civil Court. But the fact that references were filed to the civil court against the awards of the Special Deputy Collector was in existence on the date when the assessment was made. The accountable person had asserted that she had disclosed that fact to the Assistant Controller of Estate Duty, but the department has denied that such a fact was disclosed to it. We are not going to decide the disputed questions of fact in this writ petition. Hence, we will proceed on the basis that the accountable person failed to establish that she had disclosed to the Assistant Controller of Estate Duty, at the time of making the assessment, that references against the awards of the Special Deputy Collector were filed in the City Civil Court. However, the question is as to whether the fact of filing the references against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be acceptable to the owners. Such cases cannot be ruled out. Therefore, it cannot universally be laid down that references, in every case, will be filed against the awards. It is, therefore, not an inferential fact. We, therefore, hold that it was not an inferential fact. Hence, we have, necessarily, to hold that the accountable person did not disclose the primary fact which was necessary for making the assessment. Then, the next question that arises is whether such non-disclosure resulted in an undervaluation 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 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 for the lands 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 Assistant Controller of Estate Duty for those lands were far below their real and true market value. In Kantamani Venkata Narayana Sons v. First Additional Income-tax Officer, Raja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Commissioner of Income-tax v. Sundaram Company (P.) Ltd. 8, relied upon by the petitioner. In proceedings under article 226 of the Constitution of India, challenging the jurisdiction of the Assistant Controller of Estate Duty to issue a notice under section 59(a) of the Act, the High Court is only concerned to decide whether the conditions which invested the Assistant Controller of Estate Duty with power to reopen an assessment, did exist. It is not within the province of the High Court to record a final decision about the failure to disclose fully and truly all material facts bearing on the assessment and the consequent escapement of income from assessment to tax. We find support for our view in the decision of the Supreme Court in Kantamani Venkata Narayana Sons v. First Additional Income-tax Officer, Rajahmundry. Although it is not necessary for us to record our final finding whether there has been an under-valuation of the properties included in the account or not, it is necessary for us to find out whether there exist circumstances in this case from which the Assistant Controller of Estate Duty could come to a reasonable belief that there was under-valuation of prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer to reopen the assessment for 1955-56, on the ground that the sale of the land took place on June 23, 1954, i.e., in the accounting year 1953-54, relevant to the assessment year 1955-56. The Income-tax Officer, accordingly, reopened the assessment for 1955-56 under section 34 and included the profit in the total income of that year, by taking into consideration the enhanced compensation awarded by the district judge. The assessee once again appealed to the Appellate Assistant Commissioner against the reassessment for 1955-56, on the ground that the additional profit did not accrue in the relevant accounting year. The Appellate Assistant Commissioner agreed with the assessee's contention that the additional compensation accrued to the assessee on July 12, 1956, which was the date of the order of the district judge. On appeal, the Income-tax Appellate Tribunal held that the enhanced compensation accrued to the assessee on June 23, 1954, when the land was taken by the Collector and, accordingly, allowed the department's appeal. The learned Chief justice, speaking for the court, observed that : ". . . . On a consideration of the nature of acquisition proceedings, it appears to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a further right of appeal to the Supreme Court, The assessee also can appeal against the insufficiency of the enhanced compensation. Can it be said that the final determination by the highest court of the compensation would entitle the Income-tax Officer, notwithstanding the period of limitation fixed under the Income-tax Act, to reopen the assessment in which he had. included the initial compensation awarded by the Collector and recompute the entire income on the basis of the final compensation? We do not think there can be any justification for such a proposition. On a proper construction of the terms 'accrue' or 'arise', we are of the view that such an interpretation cannot be placed. The interpretation given by us does not affect the interests of the revenue. At the same time, it safeguards the assessee and prevents harassment. To hold otherwise would be contrary to the provisions of law." The question that was considered by this court in Khan Bahadur Ahmed Alladin's case , was as to which was the date on which profit arose or accrued to the assessee out of the acquisition of the lands by the Government, and in which assessment year these profits were taxable. For bringing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or considered separately from the right to receive the market value of the lands acquired by the Government. The 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" accrued to the heirs of the deceased and that it was owned and possessed by the heirs of the deceased. The lands that were acquired were those of the deceased and not those of the heirs of the deceased. How could there have been an independent right to receive compensation or any part of the compensation by the heirs of the deceased, except as the heirs of the deceased ? Since the deceased, by the time of receipt of the compensation, had died, the compensation was payable to the heirs of the deceased in their capacity as the heirs of the deceased ; that is to say, the compensation that was payable to the deceased for the lands belonging to the deceased which were acquired by the Government was paid to the heirs of the deceased because of the death of the deceased. Similarly, the decision of the Calcutta High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve discussion that the accountable person failed to disclose a primary and a material fact necessary for making the assessment. The Assistant Controller of Estate Duty had, undoubtedly, on the above facts, reason to believe that the property of the deceased chargeable to estate duty had escaped assessment, by reason of the assessee's failure to disclose the material facts. The Assistant Controller of Estate Duty had, therefore, jurisdiction to issue a notice for reopening the assessment under section 59(a) of the Act. As held by the Supreme Court in Kantamani Venkata Narayana Sons v. First Additional Income-tax Officer, Rajahmundry, suffice it to say that the Assistant Controller of Estate Duty had jurisdiction to issue a notice for reopening the assessment under section 59(a) of the Act. It is neither further necessary nor within the province of this court to record a final decision about the failure of the accountable person to disclose fully and truly all material facts bearing on the assessment, and the consequent escapement of property from assessment to tax, The writ petition fails and is, accordingly, dismissed with costs. Advocate's fee Rs. 100. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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