Bombay High Court
The Controller Of Estate Duty, Nagpur vs Shri Manohar Lokhande,Nagpur on 5 March, 2018
Author: B.P. Dharmadhikari
Bench: B.P. Dharmadhikari
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH
ESTATE DUTY REFERENCE NO. 1 OF 2002
The Collector of Estate Duty,
Nagpur. ... APPLICANT
Versus
1. Shri Manohar Lokhande, Nagpur.
2. Smt. Pushpa Lokhande, Nagpur.
3. Smt. Anusayabai Dambale, Nagpur.
4. Smt. Vatsalabai Dambale, Nagpur.
5. Shri K.D. Satpute, Nagpur. ... RESPONDENTS
Shri S.N. Bhattad, Advocate for the applicant.
.....
CORAM : B.P. DHARMADHIKARI &
ARUN D. UPADHYE, JJ.
MARCH 05, 2018.
ORAL JUDGMENT : (PER B.P. DHARMADHIKARI, J.)
Heard Shri Bhattad, learned counsel for the applicant - department. Nobody for the respondents, though served.
2. The following questions are referred to this Court ::: Uploaded on - 09/03/2018 ::: Downloaded on - 10/03/2018 01:11:11 ::: edr1.02 2 under Section 64(1) of the Estate Duty Act, 1953 (hereinafter referred to as the Act).
"1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the assessments made by the Income-Tax Officer Trust-cum-Estate Duty Circle was per-se illegal ?
2. Whether, the Income-Tax Officer, Trust-cum- Estate Duty Circle appointed by the Government to perform the duties under the Estate Duty Act was competent to frame an assessment under the Estate Duty Act ?
3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in holding that the order passed by the Income-Tax Officer, Trust- cum-Estate Duty Circle was non-est and null and void ?
4. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in permitting the Accountable Person to raise the issue questioning the legality of the assessment made by the Income-Tax Officer, Trust-cum-Estate Duty Circle ?"::: Uploaded on - 09/03/2018 ::: Downloaded on - 10/03/2018 01:11:11 ::: edr1.02 3
3. First three questions are mostly on the competency of the Income-Tax Officer "Trust-cum-Estate Duty Circle" to frame the assessment under the Estate Duty Act. By last question the issue, whether such a challenge going to the root of the matter, could have been allowed to be raised at the stage of final hearing by the second Appellate Authority, is also referred.
4. This Court has on 27.03.2002 issued notices and thereafter the matter was listed on various dates. On 04.08.2017, Division Bench of this Court, in the light of its earlier order dated 08.06.2017, has passed the following order :
"Shri A. Parchure with B. Mohta, Advocates for appellant.
CORAM : M.S. SANKLECHA & MANISH PITALE, JJ.
DATE : 04.08.2017.
On 8th June 2017, we passed the following order :-
"At the request of Mr. Bhoot, learned counsel appearing for the applicant, this reference is adjourned to 19.06.2017, to enable him to take instructions whether the Revenue is still ::: Uploaded on - 09/03/2018 ::: Downloaded on - 10/03/2018 01:11:11 ::: edr1.02 4 desirous to prosecute this reference. This in view of the withdrawal of the Estate Duty Act, 1953 itself."
On 12th July, 2017, we passed the following order :-
"Mr. Mohta, learned counsel appearing for the appellant -
Revenue on instructions states that in terms of CBDT circular and communication dated 8th May, 2017 to the Principal Chief Commissioner of Income-Tax, Nagpur a collegium consisting of Principal Commissioner of Income Tax, Nagpur and Principal Director of Income Tax (Investigation, Pune) has been formed. This collegium is formed to consider and review whether the reference/ appeal filed in this Court at the instance/ by the Revenue should be pursued. The present reference is being put up before the collegium to take a view thereon.
In the above view, the reference is adjourned to 4th August, 2017."
3. Today, Mr. Parchure, learned counsel appearing for the appellant - Revenue states that collegium consisting of Principal Commissioner of Income Tax, Nagpur and Principal Director of Income Tax (Investigation, Pune) are ::: Uploaded on - 09/03/2018 ::: Downloaded on - 10/03/2018 01:11:11 ::: edr1.02 5 likely to take a decision whether or not this reference should be pressed in a period of four weeks from today.
4. In view of the statement made on instructions on behalf of Revenue, the present Reference is adjourned to 8th September, 2017.
(MANISH PITALE, J.) (M.S. SANKLECHA, J.)"
5. Thereafter, no further statement, upon the decision by the Collegium, has been made. Shri Bhattad has pointed out that the Act has been repealed in the year 1995 and Department could not trace out all relevant papers having bearing on the issue. As such, collegium is not in a position to apply its mind effectively.
6. In view of this statement, on the basis of available material, we have heard Shri Bhattad, learned counsel. He has relied upon the provisions of Section 15 of the General Clauses Act, 1987, to urge that power to make any appointment also carries with it a power to make appointment either by name of ::: Uploaded on - 09/03/2018 ::: Downloaded on - 10/03/2018 01:11:11 ::: edr1.02 6 incumbent or then with reference to his office. He has relied upon Rule 5 of the Estate Duty Rules, 1953, to submit that under those provisions, the officers, not having power to frame assessment under the Income-Tax Act, 1922, were also authorized to function as Controller under the Estate Duty Act, 1953. His submission is, in this situation, Act of the Central Board of Revenue (C.B.R.), later on identified as Central Board of Direct Taxes (C.B.D.T.) in conferring the powers on Income- Tax Officer, Trust Circle, cannot be faulted with. He also submits that reference to various judgments, which only point out need to follow precedents in present matter, is unnecessary.
7. During arguments, he fairly stated that earlier judgment delivered by the Appellate Tribunal in the case of A.C.E.D. vs. Shri Sk. Fidaali Sultanali & Ors. in E.D.A. No.16 (Nag)/1978-79, has attained finality.
8. With his assistance, we have perused the relevant provisions. The original Notification No. 36/76 F. No.301/56/ 76-ED dated 03.05.1976, according to which C.B.D.T. ::: Uploaded on - 09/03/2018 ::: Downloaded on - 10/03/2018 01:11:11 ::: edr1.02 7 empowered Income-Tax Officers, Trust Circle, Nagpur, (re- designated as Trust-cum-Estate Duty Circle, Nagpur) to perform their functions in respect of estates of all deceased persons, who immediately before their death, have been or would have been assessed to income-tax. This notification issued under Section 4(2) of the Act, was in force since 10.05.1976. The original notification, however, has not been made available for our perusal.
9. Section 4 of the Estate Duty Act, 1953, prescribes the authorities for the purpose of the Act. Those authorities are
(a) Board, (b) Controllers of Estate Duty, (bb) Appellate Controllers of Estate Duty and (c) Valuers. Sub-section (2) stipulates that the Central Government can appoint as many Controllers of Estate Duty as it thinks fit and such Controllers, subject to control of Board, have to perform their functions in relation to such estates or classes of estates, as may be assigned to them by the Board. The first proviso thereto again is empowering Controller to frame assessment in relation to whole estate or any part thereof, if within his limits any part of ::: Uploaded on - 09/03/2018 ::: Downloaded on - 10/03/2018 01:11:11 ::: edr1.02 8 the estate of the deceased is located. This is subject to Rules to be framed by the Board. Second proviso again is about jurisdiction of the Controllers, subject to general or special orders issued by the Board. Sub-section (2A) is on power of the Central Government to appoint Appellate Controllers while sub- section (3) is on the power of the Central Government to appoint Valuers.
10. A perusal of Section 4 itself, therefore, shows that the Central Government is not an authority under the Act. The power to appoint authorities mentioned in Section 4(1)(b)(bb) and (c) is expressly given to the Central Government and not to Board. This distinction is emphasized by the power of supervision, conferred upon the Board in this connection. In other words, power to appoint the Controllers of Estate Duty is denied to Board by legislation.
11. Section 2(2) defines "Board" to mean, the Central Board of Direct Taxes constituted under the Boards of Revenue Act, 1963. Section 2(5) defines "Controller" to mean, a person ::: Uploaded on - 09/03/2018 ::: Downloaded on - 10/03/2018 01:11:11 ::: edr1.02 9 appointed to be a Controller of Estate Duty under Section 4 and includes a person appointed to be a Deputy Controller of Estate Duty or an Assistant Controller of Estate Duty. In the copy of enactment made available to us, the Competent Authority to appoint the Deputy Controller or Assistant Controller, does not find mention. However, in Rule 2(5), on which the learned counsel for the applicant has placed reliance, the Rule making authority has stipulated that an Assistant Controller or a Deputy Controller, not exercising the functions of the Income-Tax Officer or the Inspecting Assistant Commissioner, can exercise functions of the Controller in respect of the estate of the deceased, if the case relating to estate is specifically assigned to him under second proviso to sub-section (2) of section 4 of the Act.
12. Second proviso, as already noted supra, enables Board to issue general or special orders directing any Controller mentioned by it to exercise all or any of the powers conferred on the Controller by the Estate Duty Act, to the exclusion of any other Controller.
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13. Thus, consistent reading of Rule 5 with second proviso to section 4 mentioned supra shows that such a person to fall under special or general orders of Board, must first qualify as Controller.
14. A perusal of above mentioned provisions, therefore, show that the power to appoint the Controllers for the purposes of the Estate Duty Act, is with the Central Government only. By notification dated 03.05.1976, , the Board directed Income-Tax Officers, Trust Circle, Nagpur, to perform those functions in relation to a specific category of estate. This act of Board, therefore, shows that these Income-Tax Officers, Trust Office, Nagpur, were not already Controllers.
15. Section 15 of General Clauses Act, 1897, has no bearing on this issue as that section presupposes appointment by an authority empowered by the statute to make it. Here, we found that law does not empower Board to make any such appointment of Controller.
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16. In this situation, the material made available to us, does not enable us to take a view contrary to the judgment in the case of A.C.E.D vs. Shri Sk. Fidaali Sultanali & Ors., (supra).
17. We now proceed to consider the last question. The order passed by the Appellate Tribunal on 02.01.1981 which gives rise to this reference, itself mentions in para 2 the leave sought by the counsel for the Accountable Person to raise such question. The Tribunal has found that the question being raised was a pure question of law, not requiring verification of facts. Therefore, at second appellate stage, the question has been allowed to be raised and answered. Though in reference, correctness of this leave granted has been assailed, there is no effort to demonstrate any error in consideration by the Appellate Tribunal. The applicant - Department would have pointed out to this Court need to delve into the facts and, therefore, impermissibility of this particular approach. There is no such attempt. We, therefore, find that even answer to said question cannot be in favour of the revenue.
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18. Accordingly, we answer question Nos. 1, 3 & 4 in the affirmative i.e. against the applicant - revenue department and question No. 2 in the negative i.e. against revenue department. However, in the facts and circumstances of the case, there shall be no order as to costs.
JUDGE JUDGE
******
*GS.
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