Controller of Estate Duty vs Mrs. Neela Devi G. Shah

S.K. Keshote, J.—The income tax Appellate Tribunal, Jaipur Bench, Jaipur, on the application of the Controller of Estate Duty, Jodhpur, in R.A. No. 216/JP of 1997 (arising out of EDA No. 4/JP of 1993), under its order dated June 16, 1998, referred the following two questions for the opinion of this court : 1. Whether, on the facts and in the circumstances of the case, the income tax Appellate Tribunal was legally justified in law in holding that levying of interest u/s 70(1) of the Estate Duty Act in this case was invalid ?

Whether, on the facts and in the circumstances of the case, the income tax Appellate Tribunal was legally justified in law in holding that a separate order had to be passed by the Assistant Controller of Estate Duty for valid levy of interest u/s 70(1) of the Estate Duty Act ?

The facts, leading to reference of these two questions for the opinion of the court, are that the late Shri Paras Raj G. Shah, the assessee, died on March 16, 1982. The return of estate duty was required to be filed within six months from the date of expiry by the accountable person. The return of the estate duty was filed on October 22, 1984, by Smt. Neela Devi P. Shah, the widow of the assessee. The Assessing Officer, while completing the assessment, charged interest u/s 70(1) of the Estate Duty Act, 1953 (for short, "the Act, 1953"), on the ground that instalment was granted subject to payment of interest. The matter was carried in appeal to the Controller of Estate Duty (Appeals). On the point of this interest charged u/s 70(1) of the Act, 1953, the appellate court confirmed the order of the Controller of Estate Duty, Jodhpur.

The accountable person took the matter further in appeal to the income tax Tribunal, Jaipur Bench, Jaipur. That appeal came to be decided on May 2, 1997. The learned Tribunal accepted the contention of the accountable person and levy of the interest u/s 70(1) of the Act, 1953, was held not valid and accordingly ordered for deletion thereof. The Revenue filed an application for reference of the two questions of law aforestated and, as said in the preceding paragraphs of this order the learned Tribunal referred the questions for opinion, to this court under the impugned order and that is how the matter is before us.

The learned Tribunal recorded a finding of fact that instalment had been granted in favour of the accountable person for payment of the estate duty. The authorised officer had levied interest u/s 70(1) of the Act at the time of the original assessment and also in the setting aside proceedings. The learned Tribunal held relying on the decisions in the cases of Prem Nath Khandelwal Vs. Assistant Controller of Estate Duty, and H.M. Jaffar Vs. Assistant Controller of Estate Duty, held that in order to levy the interest u/s 70(1) of the Act a separate and speaking order has to be passed by the Assistant Controller of Estate Duty. The learned Tribunal also observed that besides passing a separate order it is also necessary that such order should be passed before the assessed duty has been paid up. That was not the case of the Department and the learned Tribunal has held this levy of interest to be invalid and accordingly ordered for deletion thereof.

The Estate Duty Act, 1953, was itself repealed in the year 1985 and these questions referred for the decision of this court are no longer of any general public importance. The questions of law referred for adjudication of this court in the present reference are really sterile as it could not arise hereafter. The learned Tribunal has decided the matter in favour of the accountable person relying on the aforesaid two decisions and the Act itself has been repealed. It may not be now in the larger interest of the Department or the accountable person to consider the matter in core depth and decide the same. Even if two views are possible on the scope of section 70(1) of the Act and one of them had appealed to the Tribunal and had been accepted by the High Courts and the view could not also be said not to advance the cause of justice, there is no justification to interfere where the Act itself has since ceased to exist. This view has been fortified by the judgment of the Hon''ble Supreme Court in the case of CED v. Roshan Jahangir Gandhi [1994] 205 ITR 428.

Accordingly, this reference is returned unanswered.