V.Sethuraman, J - (1.)THE following question has been referred u/s 64(1) of the ED Act of 1953 at the instance of the CED.
"Whether, on the facts and in the circumstances of the case, the Asstt. Contr. had information leading to the formation of reasonable belief in his mind that property liable to be charged to Estate Duty, had escaped assessment."
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(2.)THE estate duty assessment arose on the death of one A. P. Ramchandra on 23rd May, 1960. He was a partner in four firms and owned agricultural lands in several villages. He left behind him, his wife, Padmavathi as his sole heir.
On 18th April, 1960, he sold 11.28 acres of punja lands in Rajakilpakkam village to one A.K. Sridharan for a sum of Rs. 9, 000/- another 12.8 acres of land (Punja) in the same village to A. K. Sriram for Rs. 13, 000/- another 30.62 acres of punja lands in Madambakkam village to A. P. Vivekananda for a sum of Rs. 2, 900/- and a further 24.64 acres of punja lands in the same village to A. K. Srikanth for Rs. 3, 500/- There was also another sale of 17. 87 acres of punja lands in Taramani village to A. K. Srivatsan for a sum of Rs. 3, 500/-. The purchasers were sons of his brothers. In the course of assessment to estate duty, the Asst. CED considered that the sale had not been effected for full consideration in money or money's worth and that they should be considered as gifts as contemplated by s. 27(1) read with s. 9 of the ED Act. As the gifts had been made within 2 years prior to the death of the deceased, the Asst. Contr. was of the view that the properties so gifted should be deemed to have passed on the death of the deceased u/s 9 of the Act. The proposal of the Asstt. Contr. to include the value of the lands, was intimated to the accountable persons. M/s. Suri & Company, Chartered Accountants objected to the said proposal and furnished a note to him dated 22nd February, 1965. The objection was based on the ground that the brothers' sons were not "relatives" within the meaning of the said expression as defined in s. 27(2) of the ED Act and that consequently ss. 9 and 27(1) of the Act were not applicable. The accountable person appealed to Appl. CED.

(3.)DURING the pendency of the appeal, the Asstt. Contr. claimed that he went through one of the files relating to Hyderabad Estate Duty Circle and came across an extract from P. Ramanatha Aiyar's Law Lexicon wherein it was stated that the expression "issue" included
"lineal descendants". He considered that the persons to whom the deceased had sold the lands for inadequate consideration could be taken as 'issues' of the relatives within the meaning of s. 27(7) of the Act. He again wrote to the accountable person, his proposal to include the value of the element of bounty arising out of the sale of lands to his nephews by taking action u/s. 61.There was an objection, by letter dated 29th March, 1966 on the ground that the question had been discussed and considered by the Asstt. Contr. at the time of the original assessment, that the Asstt. Contr. had accepted the contention urged on behalf of accountable person at the original assessment stage and that therefore there was no mistake apparent from the record so that action could be taken u/s 61 of the ED Act as proposed.