(1.) The Central Board of Direct Taxes, New Delhi acting under sub-section (1) of S.64 of the Estate Duty Act, 1953 has made this reference. The questions referred are
(2.) On the basis that the accountable person had failed to comply with the provisions of S.53 a penalty was imposed on 21-3-1960, even before an assessment to estate duty, by the Assistant Controller of Estate Duty. The penalty imposed was Rs. 25,000/-, and it is clear from the order that the Assistant Controller of Estate Duty was applying that part of S.56, which provides for fixing the quantum of the penalty on the basis of the difference between the duty payable and the duty that has been paid. In appeal, the quantum of the penalty has been reduced from Rs. 25,000/- to Rs. 5,000/-. But here again it is the latter part of the section which emphasise the difference between the estate duty payable and the duty paid that has been pressed into service.
(3.) Counsel on behalf of the assessee has contended before us that S.56 can have application only after the determination of the estate duty payable by an accountable person. Even in cases where that person had failed to comply with the provisions of S.53 or S.55, the machinery provided by S.51 of the Estate Duty Act, 1953 ought to be utilised and the estate duty determined. Without such determination it is pointed out, it is difficult if not impossible to postulate the difference between the estate duty payable and that which has been paid which is a condition precedent to determine the quantum of the penalty at any rate for the purpose of the latter part of S.56. It is also urged that the thousand rupees penalty provided in the first part of the section is an alternative to the provision in the second part which deals with double the difference between the duty payable and the duty paid. It is therefore contended that any question of penalty can be determined by the officer only after the estate duty payable has been determined. We are inclined to accept this contention. In the penalty proceedings it is always necessary to quantify the penalty and that by S.56 has been related to the duty payable though in certain cases a lump sum is provided for. We cannot conceive the quantum being determined by the officer concerned on a date earlier to the date on which the estate duty payable is fixed. In these circumstances the order of penalty imposed in this case cannot be sustained. We hold that the order is unsustainable. We answer question No. 1 referred to us in the negative, that is, in favour of the accountable person and against the department. In view of our answer to question No. 1, question No. 2 calls for no answer. We answer the questions referred to us in the above terms. There will be no order as to costs.