Holding

The Supreme Court held that there was no apparent mistake in the assessment; the assessment was final and could not be reopened under Section 61 of the Estate Duty Act.

Summary

Shri Anantharamakrishnan died intestate leaving several heirs. One heir, Sivasailam, prepared the estate duty account and the other heirs agreed to be bound by his accounts. The assessing authority treated Amalgamations Private Ltd, a company that had received shares from the deceased, as a "controlled company" under s.17 of the Estate Duty Act and made the entire estate duty assessment against it, using Rule 15 for valuation. No appeal was filed and the duty was fully paid. Later, the appellant Kalyani Sundaram, through her husband, sought rectification of the assessment under s.61, alleging errors and lack of detail. The Assistant Controller refused, the High Court dismissed the writ, and the Supreme Court held that there was no apparent mistake, the assessment was final, the matter was a private family dispute, and s.61 could not be invoked. The appeal was dismissed.

Issues considered

Whether Section 61 of the Estate Duty Act can be invoked to rectify an estate duty assessment after it has become final and the duty has been paid.
Whether the assessment against Amalgamations Private Ltd as a controlled company was proper or should have been directed against the heirs of the deceased.
Whether the appellant had locus standi to seek rectification of the assessment.
Whether the dispute constitutes a private family matter unsuitable for relief under Section 61.

Legislation cited

Estate Duty Acts. 17, s. 19(1), s. 61
Estate Duty Rules, 1958s. Rule 15

Subjects

Estate dutyAssessmentRectificationSection 61Controlled companyAccountable personsPrivate family disputeLocus standi

Judgment

KALYANI SUNDARAM
A
v.
ASSISTANT CONTROLLER OF ESTATE
DUTY MADRAS & ANOTHER

MAY 12, 1989
B
'
[R.S. PATIIAK, CJ. AND B.C. RAY, J.]

Estate Duty Act/Estate Duty Rules, 1958-Sections 17, 19(1),
JO( l)(e), J6, J7 & 61/Rule 15-Assessment of Accountable persons-
Made-Entire estate dilty paid up-Whether rectification of assessment
permissible. ·
c
Shri Anantharamakrishnan, a reputed industrialist died in
Madras on April 18, 1964 intestate leaving behind his widow, Valli, two
sons, Sivasailam and Krishnamoorthy and two daughters, Kalyani and
Seethe. Some time thereafter, his son Sivasailam, being an accountable
person rendered the Estate Duty account. All other heirs i.e. his D
mother, brother and sisters, who were also accountable persons, being
the heirs of the deceased wrote to the Assistant Controller of Estate
Duty that as accountable persons they agreed to abide by the accounts
rendered by Sivasailam and whatever explanation is furnished by him
would be binding on them.
E
M/s. Amalgamations Private Ltd. is a company which held shares
in most of the companies including Simpson and Company Ltd. in
which company the deceased Anantharamakrishnan too held shares. By

~
a letter of April 27, 1965, Amalgamations informed the assessing au-
thority that the deceased had transferred property to it in the form of
. shares and that at the time of his death, ·he had controlling interest in the F
Company. On September 13, 1965, the Assessing Authority wrote to
Amalgamations that the deceased having transferred 80,377 shares of
Simpson, as such Amalgamations was a controlled company within the
meaning of s. 17 of the Estate Duty Act and thus the said company l!!td
to be regarded as one of the accountable persons in respect of the estate
of the deceased. Amalgamations was therefore required to submit an G

*" account of the estate. Accordingly Amalgamations Oled a return and no
objection thereto was taken by any of the heirs.

Treating Amalgamations as a controlled company and in view of the
fact that the deceased had control over its affairs, the assessing authority
valued the shares as per_ the provisions of Rule 15 of the Rule framed l>Y H

233
234 SUPREME COURT REPORTS [1989] 3 S.C.R.

the Board under Section 30(1)(e) of the Act. The principal value of the
A shares was determined ofRs.2,12,29,998 and the duty was computed at
Rs.1,67,74,697.58, out of which provisional duty in the sum of
Rs.65,50,542. 73 had been paid. The assessment order was addressed
both to Amalgamations as also to Shri Sivasailam as accountable
persons. No appeal was preferred against the said assessment by the
B accountable persons.

K. S. Sundaram husband of the appellant as her agent and
constituted power of attorney, on June 11; 1974 wrote to' the Assistant
Controller seeking certain clarifications. The Assistant Controller
referring to the agreement between the heirs of .the deceased Anan·
tharamakrishnan that they were hound by the accounts rendered or
c explanation given by Sivasailam, replied that, since all subsequent pro·
ceedings had been completed aOer discussion with Sivasailam and
Amalgamations, the assessment had become final and that it was not
possible to enter into any further discussion.

D On 2nd January, 1975, appellant's husband as agent filed an
application under Sec. 61 of the Estate Duty Act, and it was contended
by him that the assessment order was vitiated by several errors in·
asmuch as Rule 15 only prescribed the method of valuation of shares
and debentures of the controlled company and the rule was appendage
to Sections 36 & 37 of the Act. It was urged that the assessment order
E did not show any details and therefore a rectification order should be
made indicating the exact amount included under Section 17(1) of the
Act as the property passing on the death of the deceased. He stated that
he required this information to know the precise amount which his
principal had to pay to Amalgamations, as the assessment order did
not, in terms, indicate apportionment of the duty, for which reason
F rectification was required.

On January 25, 1975, the Assistant Controller declared by an
order that he was unable to find any mistake in the assessment order
which called for any rectification and therefore he declined to act under
Sec. 61 of the Act.
G
Order passed by the Assistant Controller was challenged in the
High Court by means of Writ Petitions. The High Court dismissed the
Writ Petitions holding that there was no error apparent on the record
and therefore there was no reason for invoking Sec. 61 of the Act. The
High Court took the view that proceedings reflected a private dispute
H between the appellant and other members of the family. Hence this
appeal by the appellant.
KALYANJ SUNDARAM v. ASSIT. COLLECTOR 235

··-..,: Dismissing the appeal the Court,
A
HELD: All the heirs other than Sisivaislam had agreed that as
accountable persons they wonld abide by the accounts rendered by
Sivasailam and any information furnished by him with regard to the
estate dnty matter wonld be binding on them. The appellant cannot be
heard now to dispute the quantum of liability and the basis on which the B
liability was computed. Nor is it open to her to contend that it is not
Amalgamations which is liable to pay the duty, but the duty is payable
by the heirs of the deceased. The assessment had become final and no
appeal against it had been attempted. [239C-D]

The appellant acquiesced wholly and completely in the assessment C
y to estate duty being made ou Amalgamations. [239E]

The assessment was completed in 1970 and the entire estate duty
has now been paid up. It was only after the entire estate duty was paid
that the appellant filed the application for rectification on January 2,
1975. [239E-F] D

l The question whether the assessment was justified on Amalgama-
tions or should it have been taken against the heirs of the deceased
stands concluded now and upon all the facts and circumstances of the
- case it was not permissible for the appellant to have recourse to Sec. 61
of the Act in order to re-open the case, as there was no mistake apparent •E
on the record. [240D-E]

That this litigation was woven around a private dispute among the
family members. [239G]

Hari Vishnu Karnath v. Syed Ahmed Ishaque and Others, [1955] F
l SCR ll04, ll23; Hind Trading Company v. Union of India & Anr.,
[1969] 2 SCR 533; M.K. Venkatachalam, Income-tax Officer and
Another v. Bombay Dyeing and Manufacturing Co. Ltd., [1958] 34
!TR 143, 149-50; Commissioner of Income-tax, Madras v. Mr. P. Firm
Muar, [1965] l SCR 815, 822 and Thungabhadra Industries Ltd. v. The
Government of Andhra Pradesh, [1964) 5 SCR 174, 180, referred to. G

·-t- CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
2319-2320 of 198f

From the Judgment and Order dated 14.3.1980 of the Madras
High Court in Writ Petition Nos. 4959 and 4960 of 1975. H
236 SUPREME COURT REPORTS [1989] 3 S.C.R.

A Soli J. Sorabjee, Harish N. Salve, S. Ganesh, Mahapatra, P.S.
Shroff and Mrs. P.S. Shroff for the Appellant.
f
N.A. Palkhiwala, Gauri Shanker, S.C. Manchanda, J.B.
Dadachanji, Mrs. A.K. Verma, D.N. Mishra, M.S. Haran, Ram
· Chandran, Mrs. J. Ramachandran Ms. A. Subhashini and C.V. Subba
B Rao for the Respondents. )'

The Judgment of the Court was delivered by

PATHAK, CJ. These appeals by special leave are directed
against the judgment and order of the High Court of Madras dismis- )-
sing the writ petitions filed by the appellant against the refusal of the
.c first respondentto rectify an assessment order and pass consequential "'(
directions.

Shri Anantharamakrishnan, a reputed industrialist in Tamil
Nadu, died intestate in Madras on 18 April, 1964. He left behind his
D widow, Valli, his two sons, Sivasailam and Krishnamoorthy and two
daughters, Kalyani and Seetha. Some time after his death, Sivasailam,
as an accountable person rendered the estate duty account. All the
heirs, other than Sri Sivasailam, who were also accountable persons
j
wrote to the Assistant Controller of Estate Duty on 15 December,
1964 that as accountable persons they agreed to abide by the accounts
E rendered by Sri Sivasailam and any explanation furnished by him with
regard to the Estate Duty case would be binding on them.

Messrs. Amalgamations Private Ltd. (shortly referred to as
'Amalgamations') is a company which holds shares in most of the~
companies including Simpson and Company Ltd. (shortly referred 'to
F -- as 'Simpson') of the group. By letter dated 27 April, 1965 Amalgama-
tions informed the assessing authority that the deceased had transfer-
red property in the form of shares in Simpson to it and that the
deceased had controlling interest in that company at the time of his
death. On 13 September, 1965 the assessing authority wrote to
Amalgamations that the deceased had transferred 80,377 shares of
G Simpson, and therefore Amalgamations was a controlled company
within the meaning of s. 17 of the Estate Duty Act. By virtue of s. ·-j-
19( 1) of the Estate Duty Act the controlled company had to be
regarded as one of the persons accountable for the estate of the
deceased. Amalgamations was required to submit an account of the
estate. Amalgamations filed a return before the Assistant Controller.
H No objection was raised by the heirs of the deceased or by Amalgama-
KALYANI SUNDARAM v. ASSTI. COLLECTOR [PATI!AK, CJ.I 237

tions to the latter being treated as an accountable person. A

After due enquiry the assessment of Estate Duty was completed
on 27 January, 1970 and the duty payable by the estate was determined
at Rs.1,67,74,697.58, of which provisional duty had been paid in the
amount of Rs.65,50,452.73 leaving a balance of Rs.1,02,24,244.85.
The assessment order was addressed to Amalgamations as well as Sri B
Sivasailam as accountable persons. The Assistant Controller of Estate
Duty proceeded on the basis that Amalgamations was a "controlled
company" and the deceased had control over its affairs, and therefore
valuation of the shares held by the deceased in the company had to be
made in the manner laid down in Rule 15 framed.~y the Board under s.
30( 1)( e) of the Estate Duty Act. The principal value of the assets was . C
determined at Rs.2,12,29,998· and the duty was computed at
Rs.1,67,74,697.58. There was no appeal against the assessment by any
of the accountable persons.

Kalyani Sundaram, one of th'e daughters of the deceased artd the
appellant before us, became entitled to the death of Anantharama- D
kiishnan to a fifth share in his estate under the Hindu Succession Act.
Her husband, K.S. Sundaram, as her agent constituted by power of
attorney, wrote on 11 June, 1974 to the Assistant Controller seeking
certain clarifications regarding the assessment. The Assistant Control-
ler replied on 25 June, 1974 referring to the specific agreement of the
accountable persons to abide by the accounts rendered by Sri E
Sivasailam and to be bound by any explanation given by him. The
Assistant Controller referred to the fact that all subsequent proceed-
ings had been completed after discussion with Sri Sivasailam and
\ Amalgamations and as the assessment had now become final it was not
.J~ possible to enter into any discussion concerning it. ·.
F
On 2 January, 1975 the appellant's husband as agent filed an
application under s. 61 of the Estate Duty Act contending that the
assessment order was vitiated by several errors inasmuch as Rule' 15
prescribed only the method of valuation of the shares and debentures
of the controlled company and the Rule was an appendage toss. 36 &
37 of the Act, that unless property was transferred without considera- G
·-t· tion by the deceased to Amalgamations and some benefit accrued to
the deceased from the company s. 17(1) of the Act would not be
attracted, that the decision to treat Amalgamations as an. accountable
person because of the transfer of shares rested on the transfer of shares
made by the deceased, that on a number of aspects of the case the
assessment order did not show any detail, and therefore a rectification H
238 SUPREME COURT REPORTS [1989] 3 S.C.R.

A order should be made indicating the exact amount included under s.
17(1) of the Act as the property passing on the death of the deceased.
He required this information, he said, to enable him to work out the
amount which his principal had to pay to Amalgamations by way of
reimbursement of the duty. If the apportionment of the duty had been
effected by the order itself, he said, the need for rectification would
B not have arisen.

Section 61 empowers the Controller "to rectify any·mistake
apparent from the record" at any time within five years from the date
of the order passed by him. On 25 January, 1975 the Assistant Control-
ler passed an Order declaring that he was unable to discover any
mistake which called for rectification in the assessment order and
c therefore he declined to act under s. 61 of the Act. This order was
challenged by the writ petitions out of which the present appeals arise.

The High Court dismissed the writ petitions. Sethuraman, J.
held that there was no apparent error, and therefore no reason for
D invoking s. 61 of the Act and Balasubramanyan, J. in a concurring
judgment, held likewise and also dealt with other aspects of the case.
Both learned Judges were of the view that the proceeding reflected a
private dispute between the appellant and other members of the
family, and that the forum and remedy selected by the appellant were
not appropriate for that purpose.
E
The fundamental question in these appeals is whether the app~l
lant is right in invoking s. 61 of the Act.

Learned counsel for the appellant contends that the heirs of the
deceased on whom the estate devolves are liable to pay estate duty
F attributable to the property which falls to their respective shares and
that if an accountable person pays any part of the estate duty in
respect of any property not passing to him he is entitled to reimburse-
ment by the person entitled to such property. This, says learned
counsel, has no application in respect of the duty payable by virtue of s.
17 of the Act, which provides that the slice of the assets of a controlled
G company shall be deemed to pass on the death of the deceased for the
purposes of estate duty and the slice will be included in the property
passing on his death if the deceased made a transfer of that property to
the controlled company and benefit accrued to the deceased in the
three years ending his death. The slice of the assets of the controlled
company does not come to any heir; therefore no heir is called upon to
H pay the amount of estate duty attributable to the inclusion of that slice
. .., KALYANI SUNDARAM v. ASSTI. COLLECTOR !PATHAK, CJ.] 239

in the chargeable estate. Bys. 19 the controlled company itself is liable
A
to pay the corresponding amount of estate duty. In the present case,
however, learned counsel urges, no slice of the assets of Amalgama-
lions has been included in the estate of the deceased by the assessing
authority as property deemed to pass on the death of the deceased and
J therefore the demand issued to the.controlled company constitutes a
'!'- mistake apparent from the record. The application of Rule 15 is also B
contested and this, according to learned counsel, is a clear mistake
committed by the Controller. It is urged that there is a mistake ap-
- --.f parent from the record in the directions requiring Amalgamations to
pay the entire amount of estate duty.

It seems to us that all the heirs other than Sisivaislam had agreed
y that as accountable persons they would abide by the accounts rendered c
by Sisivaislam, and any information furnished by him with regard to
the estate duty matter would be binding on them. The appellant
cannnt be heard now to dispute the quantum of liability and the basis
on which the liability was computed. Nor is it open to her to contend
that it is not Amalgamations which is liable to pay the duty, but the D
duty is payable by the heirs of the deceased. The assessment has be-
come· final and no appeal. against it has been attempted. It was for the
benefit of the heirs that there was general agreement to have the
- /J. assessment made on Amalgamations and indeed when the assessment
was completed and finalised, no objection was taken. The appellant
acquiesced wholly and completely in the assessment to estate duty E
being made on Amalgamations. No separate assessment was made on
the appellant nor on the other heirs. The assessment was completed in
1970 and the entire estate duty has now been paid up. It was only after
the entire estate duty was paid that the appellant filed the application
). for rectification on 2 January, 1975.
F
It was contended by learned counsel for the private respondents
that the appellant en joyed no locus standi in order to maintain the
application under s. 61 and these appeals t.hereafter, but we do not
propose to enter into this question ..

Further, it appears that this litigation is woven around a private G

* dispute among the family members. That is hardly any justification for
invoking s. 61 of the Act.

We have carefully perused the reasons given individually by the
two learned Judges of the High Court and we are in complete agree-
· ment with them that there is no mistake apparent on the record. H
240 SUPREME COURT REPORTS [1989] 3 S.C.R.

A In support of the contention that there was a mistake apparent
on the record, learned counsel has referred us to Hari Vishnu Karnath
v. Syed Ahmed lshaque and Others, [1955] 1S.C.R.1104, 1123; Hind
Trading Company v. Union of India & Anr., [1969] 2 SCR 533; M.K.
Venkatachalam, Income-Tax Officer and Another v. Bombay Dyeing
B and Manufacturing Co. Ltd., [1958] 34 ITR 143, 149-50 and Commis-
sioner of Income-Tax, Madras v. Mr. P. Firm, Muar, [1965] 1 S.C.R.
815, 822 but having regard to the facts of the case before us we do not
find anything in those cases which can be of assistance to the appellant.

Learned counsel for the appellant states that having regard to the
terms of the order granting special leave to appeal the appellant is
C justified in requesting the court to consider the issues on the merits.
We are unable to spell out such intent of the Court from the terms of
the order granting special leave to appeal. We do not think that the
observations of the Court in Thungabhadra Industries Ltd. v. The
Government of Andhra Pradesh, [1964] 5 S.C.R. 174, 180 affect the
position before us.
D
The real question is whether the assessment was justified on
Amalgamations or should it have been taken against the heirs of the
deceased. In our opinion, that question stands concluded now and
upon all the facts and circumstances of the case we do not think it
permissible for the appellant to have recourse to s. 61 of the Act in
E order to re-open the case.

The appeals are dismissed, there is no order as to costs.

Y.L. Appeals dismissed.