2004 (3) TMI 53 - HC - Income Tax

Tax recovery - Tax Recovery Officer giving the order to recover the tax amount lump sum at the direction of the Additional Commissioner of Income-tax - Earlier Tax Recovery Officer himself granted instalments - Tax Recovery Officer had passed the impugned order at the direction of the Additional Commissioner of Income-tax and hence it cannot be maintained Impugned notice is therefore, set aside - We leave the matter to the Tax Recovery Officer to decide the entire matter independently - The petitioner will be at liberty to approach the Income-tax Appellate Tribunal for relief, if any, in the matter as the appeal is still pending there.

Summary

Issues:
1. Challenge to tax recovery order issued by Tax Recovery Officer directing immediate payment of a substantial amount.
2. Competency of Tax Recovery Officer to grant instalments independently.
3. Validity of directions issued by Additional Commissioner of Income-tax to Tax Recovery Officer.

Analysis:
1. The petitioner challenged a tax recovery order demanding immediate payment of a significant sum while the appeal against the assessment order was pending before the Income-tax Appellate Tribunal. The impugned order required the petitioner to pay Rs. 25 lakhs instantly and another Rs. 25 lakhs by a specified date. The challenge was based on the grounds that the Tax Recovery Officer, being a quasi-judicial authority, should independently decide on instalments under sections 225/226 of the Income-tax Act. The High Court set aside the impugned order as it was passed at the direction of the Additional Commissioner of Income-tax, indicating lack of independence in decision-making.

2. The petitioner's counsel relied on a Supreme Court judgment emphasizing the independence of quasi-judicial authorities in decision-making processes. The court noted that the Tax Recovery Officer's order was influenced by the Additional Commissioner of Income-tax, which compromised the independence required in such matters. The court emphasized that quasi-judicial authorities must act independently and impartially in resolving disputes, without being influenced by external directions.

3. The respondent's counsel argued that the petitioner did not seek a stay on the amount's realization before the Tribunal and that the instalment amount was insignificant considering the outstanding arrears. The court refrained from delving into this aspect at that stage, leaving it to the Tax Recovery Officer to decide independently without external influence. The petitioner was granted the liberty to seek relief from the Income-tax Appellate Tribunal, considering the pending appeal. Ultimately, the writ petition was disposed of, emphasizing the need for independent decision-making by the Tax Recovery Officer without external influence.