Union of India vs Bolla Veerabhadram (died) and Another

S.V. Maruthi J.

This LPA arises out of the judgment of the learned Single Judge in Appeal No. 1000/79. The Defendant - Union of India is the appellant. The plaintiff filed a suit for recovery of Rs.25,000/- paid by her towards estate duty assessed in respect of the estate of her deceased father in law late Manne Satyanarayana Murthy. It is not necessary to refer to the pleadings in detail in the plaint as well as in the written statement in the light of the view which we propose to take in the LPA.

Pursuant to attachment of the property belonging to her minor sons the estate duty authorities approached her (plaintiff) to pay the amount of estate duty. She paid about Rs.25,000/- under protest and filed the suit under question for refund of the same on the ground that she is not liable to pay the estate duty.

In the written statement various pleas were taken. One amongst the various other pleas is that she is in possession of Ac. 1-79 cents and Ac. 1-80 cents settled by her husband in her name which is subject to a charge of the Estate duty and, therefore, she is liable to pay the estate duty and the payment of Rs.25,000/-made by her is legal and valid. It is further pleaded that she is not entitled for refund of the said amount. On the basis of the said pleadings, the trial Court decreed the suit. On appeal, the learned Single Judge dismissed the appeal. Aggrieved by the same, the Union of India filed the present LPA. It is not necessary to refer to various other arguments advanced by the learned Counsel in view of the judgment of the Supreme Court in CIT v. Parmeshwari Devi Sultania (1998) 97 Taxman 269 wherein the Supreme Court considering the scope of Section 293 of the Income Tax Act, 1961 held as follows:-

"The High Court did not approach the question in its proper perspective. It failed to consider the effect of the decree if passed in the suit on die order u/s 132(5) or other proceedings u/s 132B. Section 293, as it originally stood, provided that ''no suit shall be brought in any civil Court to set aside or modify any assessment or order made under this Act.

The word ''assessment'' was omitted and the words ''proceeding taken'' were inserted in its place. This made the section more comprehensive in nature. Direct effect of the decree in the suit would be that the gold ornaments, subject-matter of this suit, would be taken out of the order of the ITO . u/s 132(5) and would not be available to be applied in proceedings u/s 132B.

XX XX XX When the plaintiff was unable to get the release of the seized gold ornaments, allegedly belonging to her mother, under the provisions of die Act, she could not by filing a partition suit indirectly get a decree to have a finding that the gold ornaments belonged to her mother and that she had right to claim her share therein. If she succeeded in her claim this will have direct effect on getting that order of the ITO u/s 132(5) set aside or modified to that extent. This Section 293 does not permit. The decree if passed in a suit would not only effect share of the plaintiff which she was seeking on partition of the gold ornaments, but also whole of the ornaments 21 gms., would get effected and taken out of the order under sub-section (5) of Section 132.

Section 293 is quite specific and does not admit of any ambiguity-if ultimately a suit is to result in a decree or order which sets aside or modifies any proceeding taken or order made under the Act, that suit would not be maintainable. The Court is not concerned with the frame of the suit as such but to see the ultimate result to which the suit would lead to. In the present case, both the Commissioner and Union of India had been impleaded as defendants. On pleadings of the parties, an issue would have to be framed on the validity of proceedings u/s 132 which could not be permitted in view of the bar contained in Section 293."

It is a case where there was a raid u/s 132 of the Income Tax Act and seizure of certain properties belonging to the step brother of the plaintiff in the suit. After the raid and seizure the plaintiff filed the suit for partition of the plaint schedule property including the property which was the subject-matter of the said seizure. The objection that was raised by the Union of India in the suit was that the suit was not maintainable. The matter ultimately went up to the Supreme Court. The Supreme Court held that the suit is not maintainable.

Section 78 of the Estate Duty Act is in para materia with Section 293.of the Income Tax Act. The relevant Section reads as follows:

'' ''No suit shall be brought in any civil Court to set aside or modify any estate duty determined under this Act and no prosecution, suit or other proceedings shall lie against the Government or any officer of Government for anything in good faith done or intended to be done under this Act.2."

The main contention of the plaintiff/ respondent is that the amount of Rs.25,000/-was paid under coercion and, therefore, she is entitled to recover the same. Admittedly, the amount paid by her pursuant to the liability under the Estate Duty Act and pursuant to a warrant of attachment made against the properties which were bequeathed to the minors by their grand-father and, therefore, the said properties are liable to an estate duty. Section 78 prohibits any suit being filed against the Government questioning the action taken in good faith. Since a suit is barred questioning any action taken in good faith, the suit is not maintainable u/s 78 of the Estate Duty Act. It is true that such a plea was not taken either in the written statement or during the course of arguments either in trial trial Court or before the learned single Judge. However, this being a pure question of law and in view of die judgment of the Supreme Court referred to 1 supra, we are of the view that they can be raised at the stage of LPA. We, therefore, are of the view that the suit is not maintainable and it is liable to be dismissed and it is accordingly dismissed.

However, during the pendency of die appeal the learned single Judge directed the Revenue to deposit 50% of the decretal amount together with costs for granting stay of operation of the decree. The Revenue has '' complied with the said direction and the plaintiff has withdrawn the same.

We may point out at this stage that u/s 71 of the Estate Duty Act, die Board may remit die payment of duty and interest outstanding after 20 years from death. It says that-

"If after die expiration of twenty years from a death upon which estate duty became leviable any such duty remains unpaid, the Board may, if it thinks fit, on the application of any person accountable or liable for such duty or interested in the property, remit the payment of such duty or any part thereof or any interest thereon. "

Since the Board is competent to remit the estate duty, we direct the respondents to make an application before the Board for waiving the estate duty payable as the death took place sometime prior to 1969 and die Estate Duty Act is repealed, within three weeks from today. On such application being filed, die Board is directed to consider the same and pass appropriate orders in accordance with law within 12 weeks thereafter. Till such time a decision is taken on the application filed by the respondents for waiver of the estate duty u/s 71 of die Estate Duty Act, no coercive steps should be taken by the Revalue. The appeal is accordingly allowed. No order as to costs.