TMI Blog1996 (4) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... er the Act by order passed under section 58(3) of the Act determining the net principal value of the estate at Rs. 3,68,77,715 and assessing the duty thereon at Rs. 3,03,18,056. The petitioner appealed against the said order of assessment before the Appellate Controller of Estate Duty on February 20, 1973. During the pendency of the appeal the respondent issued notice under section 59 of the Act on the ground that he had reason to believe that the property chargeable to estate duty has escaped assessment. That notice was issued on January 10, 1975. The petitioner made a representation to the Additional Assistant Controller of Estate Duty against the said notice and also demanded reasons for reopening the assessment by further letter dated February 27, 1975. On February 28, 1975, the respondent communicated the reason, namely, to charge the value of the King Koti in the estate duty assessment of the late Nizam. During the appeal proceedings it was brought to the notice of the Appellate Controller of Estate Duty that on examination of the issue under section 10 of the Act, with regard to the grant of exemption to the King Koti Palace, as the palace was being used by the late Nizam fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, however, denied that reassessment proceedings were initiated only with reference to the King Koti Palace and it is asserted that the proceedings were initiated not only on the ground of escapement of assessment but also on the ground of underassessment. It is added that merely because the Assistant Controller of Estate Duty chose to specify that the assessment was reopened to charge the value of the King Koti in his letter dated February 28, 1975, it was not open to the petitioner to conclude that the reassessment proceedings initiated were only confined to the King Koti Palace. As there was no obligation in law on the respondent to disclose the reasons, the said letter is of no consequence, as such the proceedings in appeal and the judgment of the High Court in reference have no relevance to the issue in question. With regard to the application for abandonment of the proceedings it is stated that there was no reason why the petitioner should have drawn such a conclusion. With regard to the notice issued on July 16, 1986, it is submitted that it is not mala fide but as the petitioner has not complied with the statutory notice issued by the respondent a fresh notice was issued o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in February, 1975, was not the sole reason and that once the assessment is reopened it is open to the assessing authority to reassess on grounds available to it in law, therefore, the ground mentioned in the letter of February, 1975, does not bar the respondent from making reassessment on grounds other than the one mentioned in the said letter of February, 1975. Abandonment of proceedings, submits learned standing counsel, has to be a positive act of the respondent and inference of the petitioner with regard to abandonment is without any basis ; the petitioner ought to have filed the return pursuant to the notice and his failure to do so has resulted in delay. The subsequent notice issued in July, 1986, and 1987, are only in continuation of notice issued in 1975 and are not fresh notices under section 59 of the Act, therefore, section 73A of the Act is not attracted. With regard to delay, whether the delay in a case is a reasonable delay is a question which has to be determined by the authority and on that ground the petitioner cannot challenge the notices. On the above submissions of learned counsel, the questions that arise for consideration are : " (1) Whether in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtunity of being heard. The petitioner again made a further representation on February 27, 1975, requesting the respondent to disclose the reasons so as to enable him to file a fresh return after seeking necessary advice. In reply to the said request, the respondent sent the following letter : " GIR No. 701-0 Office of the Income-tax Officer, " A " -Ward, Special Circle-I, Hyderabad, Dated 28th February, 1975. Sri Mohd. Asadullah Khan, G. P. A. to Nawab Mir Barkat Ali Khan, King Koti, Hyderabad. Sir, Sub : Estate duty assessment proceedings of late H.E.H. the Nizam of Hyderabad Nawab Mir Osman Ali Khan Bahadur. Ref : Your letter dated 27-2-1975. The assessment was reopened to bring to charge the value of the King Koti in the estate duty assessment of Nawab Mir Osman Ali Khan Bahadur. 2. Though I am not bound, in law, to disclose the reasons for reopening the assessment, the same are intimated to you, at your request, to facilitate your filing of return and completion of the assessment as early as possible. Yours faithfully, (Sd.) G. Ramdas, Addl. Asst. Controller of Estate Duty, Special Circle-I, Hyderabad." A plain reading of the above lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the estate duty assessment of the late Nizam which was concluded about ten years back on the basis of notice issued in January, 1975, under section 59 of the Act and that the proceedings had merged with the order of the Appellate Controller of Estate Duty as the very basis of issuing the notice under section 59 was not upheld by the Tribunal as also by the High Court in reference. It was alleged that the information furnished by the Department was patently erroneous. While so, a further notice was issued to the petitioner on February 28, 1987, calling upon the petitioner to file a return pursuant to notice dated January 10, 1975, under section 59 of the Act. It was at that stage that the petitioner filed this writ petition. From the above discussion of the facts, it is apparent that the purpose of issuing the said notice under section 59 of the Act of January 10, 1975, read in the light of the clarification letter dated February 28, 1975, was to set right the underassessment by withdrawing the exemption granted in respect of the King Koti Palace under the provisions of the Estate Duty Act. The order of the Appellate Controller of Estate Duty, dated June 2, 1975, discloses that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 30-3-1979 2,00,000 " 6-10-1979 4,95,561 " 8-2-1980 43,035 Rs. Rs. Collected through cheque the compensation towards Koti Asafin 30,19,257 Less : Payment made by Mukharram Jah Trust as per ITO's letter dated 16-3-1979 (filed in recovery file Vol. VI) 3,18,922 " Paid on 28-11-1977 (Challan filed in recovery file Vol. VI-Challan No. 050898 3,10,000 " E.D. paid through Challan No. 70000 70,000 44,56,775 -------------- ---------------------- Balance payable 50,61,224 ---------------------- This should be paid as per the challan enclosed. (Sd.) V. Narasimha Rao, Asst. Controller of Estate Duty, A-Ward, Hyderabad. Copy to the accountable person." From a reading of the above consequential proceedings and the orders that led to its issuance, there is absolutely no hesitation in concluding that the purpose of the notice for reassessment issued by the Assistant Controller of Estate Duty under section 59 of the Act on January 10, 1975, has been achieved and the Revenue-respondent being a party to the abovesaid proceedings is bound by the determination of that question. We, accordingly, find the first point in favour of the petitioner-ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne 2, 1975, the order of the Income-tax Appellate Tribunal dated March 9, 1978, and the order of this court in R. C. No. 148 of 1978, dated August 20, 1984, and the consequent order of the Assistant Controller of Estate Duty dated September 19, 1985, the notice under section 59 of the Act dated January 10, 1975, has worked out itself. Not a single paper has been placed before us to show as to what prompted the Revenue to issue the impugned notices after completing the assessment on June 2, 1975, and after passing the consequential order on September 19, 1985. Indeed, we ourselves wanted to verify from the record the reasons which impelled the respondent to issue the notice under section 59 of the Act on January 10, 1975, as also the impugned notices. The records were not produced in spite of granting several adjournments. However, on February 15, 1996, the respondent filed an affidavit stating that he assumed the charge of the office of the Assistant Controller of Estate Duty, Hyderabad, on June 5, 1995, and that from the letter addressed by the then Assistant Controller of Estate Duty to the then Deputy Controller of Estate Duty, Hyderabad, on February 28, 1989, it appears that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any supporting material. It is true that there is no provision in the Act requiring the completion of reassessment within a specified period. Section 73A applies only to reopening of assessment but it is well-settled that where no period of limitation is prescribed for exercising any statutory power, the authority in whom the power vests should exercise the same within a reasonable time. What is reasonable time would depend on the facts and circumstances of each case and no general principle can be laid down prescribing any time-limit by a judicial pronouncement. The question which then arises is, whether, on the facts and in the circumstances of this case, not completing the reassessment proceedings in 12 1/2 years from the date of issuing section 59 notice on January 10, 1975, till February 20, 1987, is reasonable and whether the respondent can be allowed to pursue the matter by issuing the impugned letters. In State of Gujarat v. Patel Raghav Natha, AIR 1969 SC 1297, the question before the Supreme Court was whether the Commissioner of Land Revenue can exercise the revisional power under section 211 of the Bombay Land Revenue Code, 1879 (for short, " the Code "), aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. It seems to us that section 65 itself indicates the length of the reasonable time within which the Commissioner must act under section 211. Under section 65 of the Code if the Collector does not inform the applicant of his decision on the application within a period of three months the permission applied for shall be deemed to have been granted. This section shows that a period of three months is considered ample for the Collector to make up his mind and beyond that the Legislature thinks that the matter is so urgent that permission shall be deemed to have been granted. Reading sections 211 and 65 together it seems to us that the Commissioner must exercise his revisional powers within a few months of the order of the Collector. This is reasonable time because after the grant of the permission for building purposes the occupant is likely to spend money on starting building operations at least within a few months from the date of the permission. In this case, the Commissioner set aside the order of the Collector on October 12, 1961, i.e., more than a year after the order and it seems to us that this order was passed too late." In CIT v. Harinagar Sugar Mills Ltd. [1989] 176 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that the exercise of the power was reasonable. Applying that principle, one of us (Syed Shah Mohammed Quadri J.) held in B. Pedda Jangaiah v. Joint Collector [1993] 2 APLJ (HC) 82 that the exercise of suo motu power of revision under sub-section (4) of section 50B of the said Act after 13-14 years, was unreasonable and arbitrary. However, reliance is placed by learned standing counsel for the Income-tax Department on the judgment of the Supreme Court in Bharat Steel Tubes Ltd. v. State of Haryana [1988] 70 STC 122 to contend that as in that case the Supreme Court dismissed the writ petition and allowed the best judgment assessment to be completed so also we should permit the respondent to proceed with the reassessment pursuant to notice issued in January, 1975. The short question that fell for examination in that case is : " Whether the order of assessment under sub-section (3) of section 11 of the Punjab General Sales Tax Act, 1948, or section 28(3) of the Haryana General Sales Tax Act, 1973, can now be completed or would it be barred by limitation." It was observed that undoubtedly the assessment proceedings had been very delayed and that the material placed before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this reason may afford a ground for not completing reassessment after the filing of the writ petition but certainly it cannot account for the delay in not completing the reassessment for 12 years from 1975 till 1987. That case, therefore, does not advance the case of the respondent. There remains one more case to be considered, i.e., Government of India v. Citadel Fine Pharmaceuticals [1990] 184 ITR 467 (SC). That case arose under the Medicinal and Toilet Preparations (Excise Duties) Act. No period of limitation was fixed for recovery of excise duty either under that Act or the Rules made thereunder. In that case, the Commercial Tax Officer issued notices to the respondents therein under rule 12 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956, to pay duty on all medicinal preparations manufactured by them after June 1, 1961. Those notices were questioned before the High Court of Madras on the ground that the said rule was ultra vires the Act. The High Court declared the rule ultra vires on the ground that the Act was silent on the question of levy of duty on escaped turnover and that the said rule 12 which authorises recovery of excise duty was outside the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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