TAJ MUHAMMAD VS RAZA HAIDER
1993 P T D 667
[Lahore High Court]
Before Irshad Hasan Khan and Muhammad Arif, JJ
A.K. NASIR
versus
CONTROLLER OF ESTATE DUTY, LAHORE
Civil Tax Reference No. 26 of 1982, decided on 16/02/1993.
(a) Estate Duty Act (X of 1950)---
----S.61(1)---Re-opening of assessment---Notice issued by Controller of Estate Duty---Validity---Term "evidence" used in the notice---Connotation---No objection as to validity of notice raised before Controller---Effect---While issuing notice for re-opening of assessment, requirements of S.61(1) Estate Duty Act 1950 were fully met---Mere absence of specific direction to accountable person to submit account of all the property had not rendered the notice in question as void or invalid---Accountable person was provided an opportunity through the impugned notice to put in any representation/evidence against the proposed re-valuation in terms of S.61(1), Estate Duty Act, 1950---Term "evidence" used in impugned notice is of wide connotation and includes direction for submitting account of all property within the meaning of S.61(1) Estate Duty Act, 1950---Notice issued to accountable person for re-valuation of property in question, being in terms of S.61(1) Estate Duty Act, 1950, was thus valid.
(b) Estate Duty Act (X of 1950)---
----S.61---Estate Duty Rules 1971, R.25-A(l)---Object, purpose and scope of S.61, Estate Duty Act---Proceedings conducted by Controller of Estate Duty to re-determine valuation of property in question---Validity---Valuation of property in question could not be made with retrospective effect---Revaluation of property in question, by the Controller of Estate Duty did not suffer from any infirmity in law.
Section 61 of the Estate Duty Act is a self-contained provision which empowers the Controller to re-determine the valuation if for any reason it is discovered by him that too low a valuation was placed on the property subject to estate duty. The proceedings were validly initiated and completed pursuant to a valid notice served upon the applicant. The applicant fully participated in the proceedings before the Controller and declined to lead any evidence to contradict the reports of the Deputy Commissioner concerned on which revaluation of the disputed land was made. Revaluation did not suffer from any infirmity in law.
Revaluation done by the Controller after notice under section 61(1) of the Estate Duty Act, 1950 has the effect of setting right a manifest wrong in that the earlier valuation on the basis of Produce Index Unit-value had no warrant or authority in law. Rule 25-A(1) of the Estate Duty Rules, having been incorporated on 29-10-1971 could not be made the basis for the valuation of the disputed land with retrospective effect.
The revaluation of the disputed land by the Controller of Estate Duty which was upheld by the Appellate Tribunal had not been shown to be suffering from any infirmity in law. (p. 6701 B ,
Controller of Estate Duty v. Syeda Kishwar Sultana and another PLD 1976 Lah. 229 = 1976 PTD 125 and Controller of Estate Duty v. The Estate of Syed Wander Ali Shah (1976) 34 Tax 49 (Lah.) rel.
Imtiaz Javed for Applicant.
Muhammad Ilyas Khan for Respondent.???????????
Date of hearing: 14th February, 1993.
JUDGMENT
IRSHAD HASAN KHAN, J.---The facts leading to this Reference by the Income Tax Appellate Tribunal, Lahore are that General Attorney of the Trustees of the estate of late Sir William Roberts, who died on 16-6-1971, filed an appeal before the Tribunal challenging before it the order, dated 1-11-1975 passed by the Controller of Estate Duty, Lahore under sections 61(1)/58-A of the Estate Duty Act, 1950, hereinafter called the Act, whereby the value of the agricultural land owned by the deceased was determined on the basis of market value at Rs.17,35,405 in place of valuation initially determined at the rate of Rs.10 per Produce Index Unit. The appeal was, however, dismissed by order dated 4-7-1977 wherein it was held that the Controller of Estate Duty did not travel beyond the scope of his jurisdiction in re-opening the assessment under section 61(1) of the Act in that in the original valuation of the land in dispute was not determined as prescribed under section 38(1). The applicant herein moved an application under section 59-A of the Estate Duty Act, 1950 for referring the following questions to this Court for decision:---
"(1) Whether on the facts and circumstances of the case the notice, dated 13-8-1975 a valid notice within the meaning of section 61(1) without requiring the assessee to submit an account of all property?
(2) Whether the notice, dated 29-9-1975 could be issued under section 58-A without there being a pending return available for adjudication?
(3) Whether a notice under section 61(1) could be issued without there being any material on record to show under valuation of the property?
(4) Whether the rule 25-A not relied upon by the assessee could be made a basis for re-opening the assessment or upholding the same?
(5) Whether the valuation made on the basis of one mode could be substituted by another mode when the earlier mode is not illegal?
(6) Whether the valuation made in the original assessment was illegal?
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(7) Whether the assessment could be re-opened on the basis that the earlier assessment was not legal?"
2. On the basis of material placed before it and after considering the submission of the parties, the Tribunal took the view that several questions specified in the application for reference were only of particular determination of one and the same question which was formulated in the following terms:---
"Whether on the facts and circumstances of the case the Tribunal was justified in holding that the Controller was competent under section 61(1) of the Estate Duty Act to re-open assessment?"
3. Mr. Imtiaz Javed, learned counsel for the applicant argued that before proceeding under section 61(1), the Controller had to issue a notice in terms of the said section which was not done in the instant case, in that the statutory requirement was that the notice should specifically require an accountable person to submit an account of all property within such time as may be specified by the Controller in this behalf. Here, the notice did not contain the afore-quoted requirement, and therefore, the action taken by the Controller on the basis of said notice was of no legal consequences.
4. The contention raised by the learned counsel for the applicant turns on the determination of the scope of notice issued by the Controller which reads as under:---
"My predecessor determined the value of agricultural land owned by the late Sir William Roberts on the basis of Produce Index Units whereas the value of such lands should have been computed on the basis of the market value as on the date of death of the late Sir William Roberts. In this view of the matter I propose to revalue the agricultural lands under subsection (1) of section 61 (of the Estate Duty Act, 1950). However, before I do so an opportunity is afforded to you to put in any representation/evidence against the proposed action."
5. A bare perusal of the notice served on the applicant would shoe that in the phraseology used therein a particular mention has not been made in it requiring the accountable person to submit an account of property within such time as has been specified by the Controller in this behalf but the applicant was provided an opportunity to put in any representation/evidence against the proposed re-valuation of the agricultural land under subsection (1) of section 61 of the Act. The term "evidence" used in the notice is of a wide connotation and includes the direction for submitting an account of all the property within the meaning of section 61(1) ibid. It is not denied by the learned counsel for the applicant that the applicant failed to raise any objection as to the validity of the notice before the Controller. On the contrary, his authorised representative admittedly appeared before the Controller on 5-9-1975 and made a categorical statement that he did not wish to produce any evidence except the written statement, which he did on 4-9-1975. Thus visualised, the requirements of section 61(1) were fully met in this case and mere absence of specific direction to the accountable person to submit an account of all the property has not rendered the notice in question as void or invalid.
6. It is next contended that not only the Controller could not assume jurisdiction unless the statement of account was filed but the proceedings under section 58-A of the Estate Duty Act, 1950 could not be initiated unless there was a return pending adjudication before the Controller of Estate Duty. According to the learned counsel for the applicant, as there was no return pending before the Controller, therefore, the power vesting in the Controller in respect of valuation under section 58-A was not attracted. This contention, too has no merit. Section 61 of the Act is a self-contained provision which empowers the Controller to redetermine the valuation if for any reason it is discovered by him that too low a valuation was placed on the property subject to estate duty. Here the proceedings were validly initiated and completed pursuant to a valid notice served upon the applicant. The applicant fully participated in the proceedings before the Controller and declined to lead any evidence to contradict the reports of the Deputy Commissioner, Rahim Yar Khan on which revaluation of the disputed land was made. There is great force in the submission of Mr. Muhammad Ilyas Khan that re-valuation did not suffer from any infirmity in law. It is not the case of the applicant that the re?valuation done by the Controller was on the higher side and that the same was not the market value at the relevant time.
7. Be that as it may, the re-valuation done by the Controller after notice under section 61(1) of the Act has the effect of setting right a manifest wrong in that the earlier valuation on the basis of Produce Index Unit-value had no warrant or authority in law. As held in Controller of Estate Duty v. Syeda Kishwar Sultana and another PLD 1976 Lah. 229 = 1976 PTD 125 and I Controller of Estate Duty v. The Estate of Syed Wander Ali Shah (1976) 34 Tax 49 (Lah.) rule 25-A(1) of the Estate Duty Rules, having been incorporated on 29-10-1971 could not be made the basis for the valuation of the disputed land with retrospective effect.
8. Looked at from whatever; angle, the re-valuation of the disputed land by the Controller of Estate Duty which was upheld by the Tribunal had not been shown to be suffering from any infirmity in law.
9. Far the foregoing reasons we are of the opinion that question reproduced above does not strictly arise: out of the Tribunal's order. The Reference is, therefore returned as above. But there is no order as to costs in the circumstances of this case.
Reference answered accordingly.
A.A./A-362/L????????????????????????????????????????????????????????????????????????????????????? Reference answered.