H.N.SETH - (1.) ONE Babu Lal Kedia died intestate on May 4, 1963. Vijai Kumar Kedia, one of tbe grandsons of the deceased, filed the necessary estate duty return. The relationship between the accountable person and the deceased would be evident from the following pedigree : JUDGEMENT_302_ITR104_1976Html1.htm Case of the accountable person was that the deceased formed a joint Hindu family with his widowed daughter-in-law, Smt. Prakashwati Devi and his three grandsons, Krishna Kumar, Vijai Kumar and Munni Lal. He had thrown all his property in the common hotchpotch of the family. Thus, the only property that passed on the death of Babu Lal Kedia was his interest in the joint Hindu family property. Total value of such joint Hindu family property was Rs. 4,16,240 out of which the interest of the deceased was only one-half.
(2.) THE Assistant Controller of Estate Duty, Kanpur, held that according to the Hindu law the deceased could not form a joint Hindu family with his daughter-in-law and the three grandsons. As there did not exist any joint Hindu family, any declaration made by the deceased than he as throwing his assets and properties into the family hotchpotch was of no consequence. THE assets alleged to have been thrown by the deceased in the family hotchpotch continued to belong to him in his individual capacity and computed the value of the asset left by the deceased as Rs. 7,09,824. The accountable person then filed an appeal before the Zonal Appellate Controller of Estate Duty. The Zonal Appellate Controller, by his order date March, 22, 1967, allowed the appeal in part. He accepted the contention of the accountable person that the deceased Hindu undivided family consisted of himself, his widowed daughter-in-law, Smt. Prakashwati Devi and the three grandsons. Accordingly, he had only one-half share in the value of such assets. He also issued directions for the deletion of certain add-backs made by the Assistant Controller and for the modification of the assessment order accordingly. Both the Assistant Controller and the accountable person, being aggrieved by the order of the Zonal Appellate Controller, filed appeals before the Income-tax Appellate Tribunal. The Appellate Tribunal reversed the judgment of the Appellate Controller on the question whether the deceased formed a joint Hindu family with his widowed daughter-in-law and the three grandsons and held that the deceased had full and not merely half interest in the assets left by him, as claimed by the accountable person. It also modified the order of the Zonal Appellate Controller in respect of certain other items the value of which had been included as the asset of the deceased while computing the value of the property left by him. Before the Tribunal, accountable person raised a plea that no assessment under the Estate Duty Act could take place unless all the heirs of the deceased, who were tha accountable persons, had been brought on the record. However, the Tribunal rejected the plea and held that there was no defeat in the assessment order made on the basis of the returns filed or adopted by Vijai Kumar Kedia and that for that purpose it was not necessary to bring the other heirs of the deceased on the record. Subsequently, at the instance of Sri Vijay Kumar Kedia, the accountable person, the Income-tax Appellate Tribunal stated the case and referred the following questions of law, under section 64(1) of the Estate Duty Act,1953, for the opinion of this Court : 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment was valid in law without impleading and bringing on record the other legal heirs of the deceased 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the amount of Rs. 10,253 out of the total addition of Rs. 24,453 made by the Assistant Controller was in the nature of a gift and was not permissible deduction under section 9(2)(b) of the Estate Duty Act 3. Whether the Tribunal was right in holding that the value of the gold gifted was liable to assessment at the rate prevailing on the date of the death of the deceased and not on the date when the gift was made 4. Whether the Tribunal was right in sustaining the valuation of the gold at Rs. 115 per tola in view of its finding that at the material time the value of the gold was at Rs. 62.50 per 10 grammes 5. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was proper presentation of the appeal by the department and the same was maintainable as such 6. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in holding that full value of the personal estate of the deceased is includible in the estate duty assessment or only half of the said estate is includible in the estate duty assessment being half the share of the deceased in H.U.F. properties impressed with the character of the H.U.F. property through the document dated November 13, 1961 7. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the deceased was not competent in law to bring into existence a Hindu undivided family consisting of himself, his daughter-in-law and his grandsons 8. Whether, out of Rs. 62,567 being the refund given by the income-tax department to the H.U.F. a sum of Rs. 31,288 held by the Appellate Tribunal to be includible in the estate duty assessment of the deceased is correct in law. So far as the first question is concerned, it is not disputed that Sri Vijai Kumar Kedia, one of the grandsons of the deceased, was an accountable person and thathe filed the necessary estate duty return. Section 53 of the Estate Duty Act, 1953, runs thus : Persons accountable, and their duties and liabilities. - (1) Whether any property passes on the death of the deceased - (a) every legal representative to whom such property so passes for any beneficial interest in possession or in whom any interest in the property so passing is at any time vested, (b) every trustee, guardian, committee or other person in whom any interest in the property so passing or the management thereof is at any time vested, and (c) every person in whom any interest in the property so passing is vested in possession by alienation or other derivative title.
(3.) SHALL be accountable for thewhole of the estate duty on the properth passing on the death but SHALL not be liable for any duty in excess of the assets of the deceased which he actually received or which, but for his own neglect or default, he might have received : Provided that nothing in this section SHALL render a person accountable for duty who acts merely as agent or bailiff for another person in the management of property. (2) Notwithstanding anything contained in sub-setion (i), where an heir-at-law proves to the satisfaction of the Controller that some other person is in adverse possession of any assets of the deceased, the heir-at-law SHALL not be accountable for the portion of the estate duty payabel in respect of such assets : Provided that he shall become so accountable if, and to the extent that, he subsequently recovers possession of such assets. (3) Every person accountable for estate duty under this section shall, within six months of the death of the deceased, deliver to the Controller an account in the prescribed form and verified in the prescribed manner of all the properties in respect of which estate duty is payable : Provided that the Controller may extend the period of six months aforesaid on such terms which may include payment of interest as may be prescribed. (4) Where the person accountable knows of any property which he has not included in his account because he does not know its amount or value, he may state that such property exists, but he does not know the amount or value thereof and that he undertakes, as soon as the amount and value are ascertained, to bring a supplementary account thereof and to pay both the duty for which he may be liable in respect of such property and any further duty payable by reason thereof for which he may be liable in respect of the property mentioned in the original account. (5) Where two or more persons are accountable, whether in the same capacity or in different capacities, for estate duty in respect of any property passing on the death of the deceased, they shall be liable jointly and severally for the whole of the estate duty on the property so passing According to sub-section (1) every legal representative and every person, in whom an interest in the property so passing on the death of the deceased vests, has been made accountable for the whole of the estate duty on the property passing on the death of the deceased, but a provision has been mader that such liability will not exceed the estate of the deceased which is actually received by the person concerned or would have been received by him but for his neglect or default. Sub-section (2) provides that where an heir of the deceased proves to the satisfaction of the Controller that someone is in adverse possession of any asset of the deceased he shall not be accountable for the portion of the estate duty payable in respect of that asset. Sub-section (3) makes it obligatory on every person accountable for the estate duty to deliver to the Controller an account in the prescribed form and verified in the prescribed manner of all the properties in respect of which the estate duty is payable within six months of the death of the deceased. Thus, the liability to account for the property passing on the death of a person and to pay estate duty in respect thereof is of each and every accountable person and no accountable person can be absolved of the responsibility of complying with the provisions of sub-section (3) merely because some other accountable person had not chosen to acconnt for the property left by the deceased. The position is amply clarified by sub-section (5) which provides that where two or more persons are accountable, whether in the same capacity or different capacities, for the estate duty in respect of any property passing on the death of the deceased, they shall be liable jointly and severally for the whole of the estate duty on the property so passing. This section after laying down that the liability of an accountable person is joint and several does not provide that the separate liability of an accountable person can be fixed only in the presence of and along with other accountable persons. ;