KAPADIA M T Vs. S V NAIK

JUDGEMENT

(1.) THE petitioners are the accountable persons under the ED Act, 1953 (hereinafter referred to as "the Act"), for the estate duty payable on the estate of the late Shri P.R. Morarji, who expired on 2nd May, 1978. The petitioners furnished to respondent No. 1, Asstt. CED, an account of the property of the deceased, in respect of which estate duty was payable as provided under S. 53(2) of the Act and claimed that the estate duty liability of Rs. 16,30,093 be allowed as a deduction in computing the principal value of the estate. The petitioners also claimed that from the estate duty payable, the probate duty payable should be deducted. The petitioners paid an amount of Rs. 6,35,650 as estate duty on the basis of the return. The respondent No. 1 passed a provisional assessment order dt. 21st Sept., 1979, under S. 57(1) of the Act without taking into account the deductions claimed by the petitioners. Respondent No.1 valued the estate of the deceased at Rs. 47,69,584 and determined the estate duty payable at Rs. 30,26,146.40. Respondent No. 1 by notice dt. 21st Sept., 1979, raised a demand of Rs. 30,13,660.69.

(2.) AS the petitioners failed to pay the amount demanded by the notice, respondent No. 1 issued notice dt. 7th Nov., 1979, under S. 73 of the Act to show cause why penalty of Rs. 6,02,732 should not be imposed. The petitioners by their letter dt. 20th Dec., 1979, claimed that the provisional assessment was not proper and that the demand of Rs. 30,13,660 should be reduced by (1) Rs. 16,30,093 being the estate duty liability, (2) Rs. 6,35,650 being the total of the amounts already paid towards estate duty liability, and (3) expected liability on account of Court fees of Rs. 4,50,000 for obtaining probate. The petitioners claimed that the estate duty liability, if exemption is granted in respect of these three items, would be reduced to Rs. 5,44,443. Respondent No. 1 did not respond favourably to the claim made by the petitioners and declined to pass orders giving credit in respect of the above mentioned items, and thereupon the petitioners filed the present petition in this Court under Art. 226 of the Constitution of India on 21st Jan., 1980. Shri Mehta, learned counsel appearing on behalf of the petitioners, submitted that under S. 57(1) of the Act, a provisional assessment can be made only on the basis of the accounts delivered by the accountable persons. Sec. 57(1) of the Act reads as under :

(3.) THE language of Sub S. (1) of S. 141 of the IT Act and S. 57(1) of the ED Act are almost identical. The Supreme Court held that the clearest implication of S. 141 bars an enquiry at the stage of making a provisional assessment into disputed questions of law and fact. It was further held that once a dispute is raised by the assessee, the ITO has no discretion and Sub S. (2) of S. 141 does not enlarge his jurisdiction under Sub S. (1). The Supreme Court further observed (p. 805) :