1962-VIL-144-ALH-DT

Equivalent Citation: [1963] 49 ITR 1

ALLAHABAD HIGH COURT

CIVIL MISC. WRIT NO. 1830 OF 1962

Dated:25.10.1962

GENERAL NARAIN SHAMSHER JUNG BAHADUR RANA

Vs

ASSISTANT CONTROLLER, ESTATE DUTY

Saran Behari Lal for the Petitioner

R.L. Gulati for the Respondent

Bench

S. C. MANCHANDA, J.

JUDGMENT

This is a writ petition directed against the order of the Estate Duty Officer dated the 27th of March, 1961, levying a penalty of Rs 10,000 for default in complying with the notice of demand dated the 7th of January, 1961,

The facts leading up to this petition briefly are these : The petitioner is the son and accountable person of the deceased, who died on the 13th July, 1959. The petitioner had filed a statement of account as required by the Estate Duty Act showing properties valued at Rs 4.02 lakhs, which included cash in hand of Rs 60,000. On the 27th December, 1960, assessment was completed by the Assistant Controller and the net value of the property which passed, or was deemed to pass, on the death of the deceased was worked out at Rs 9,05,111. The main item which was enhanced was the cash in hand which is estimated at Rs 4,40,509 against Rs 60,000 returned. A demand notice for payment of the estate duty of Rs 1,32,272 was issued as against Rs 37,361,55, the figure at which provisional assessment was made. As the amount demanded was a large one, time was asked for payment, but in the meanwhile, under the provisions of section 46(5A) of the Income-tax Act read with section 73 of the Estate Duty Act, 1953, a notice was issued by the Assistant Controller to the Agent, State Bank of India, Varanasi, freezing the assets of the deceased. This made the petitioner's position more difficult. The Assistant Controller was alive to the situation and gave the petitioner time up to the 21st March, 1961, by his letter dated 16th March, 1961, which is annexure "D" to the counter-affidavit. The petitioner had instructed the bank to sell the shares and to pay the duty. The Assistant Controller did not wait beyond the 27th March, 1961 ; and as the money had not been received from the bank he imposed a penalty of Rs 10,000.

The record therefore shows that the petitioner was not sleeping but was trying his best to meet the demand. Against the said order levying penalty the petitioner went up in appeal to the Appellate Controller of Estate Duty, New Delhi, but as the tax demanded had not been paid before the appeal was filed, the appeal was held to be incompetent. The Appellate Controller of Estate Duty, New Delhi, has been made a party to the petition but relief against him has not been claimed for the simple reason that this officer is beyond the jurisdiction of this court. By an amendment to the petition a letter from the Assistant Controller has been brought on the record dated the 28th of October, 1961, whereby the old demand notice which had already been served on the petitioner on the 7th January, 1961, for non-compliance of which the impugned penalty was levied on the 27th March, 1961, was cancelled by him, as it was not in the proper form as required by the Act.

The short question which arises in the petition apart from the merits is whether the order of penalty in law can be sustained, the penalty being for default of a particular demand notice which itself the Assistant Controller subsequently treated as cancelled. Mr. Gulati, the learned Standing counsel has relied strongly on a decision of the Calcutta High Court in the case of Protap Chandra Ganguly v. Commissioner of Income-tax [1930] 4 ITC 418, for the proposition that the second notice issued is a valid notice and is not illegal. That is, however, not the question which arises in this writ petition. The second notice is not under challenge in this petition. What is challenged, however, is the order of penalty pursuant to the earlier demand notice which itself the Estate Duty Officer cancelled. There cannot be any doubt that if the demand notice itself is cancelled for any reason whatsover, there can be no default in respect of such notice of demand. Before there can be any default the notice of demand should be valid in all respects.

For these reasons, I would direct that a writ will issue quashing the order of the Assistant Controller, Estate Duty, dated the 27th March, 1961, imposing a penalty of Rs 10,000. The interim stay order is discharged. The writ petition is allowed, but in the circumstances of the case the parties shall bear their own costs.