1999 (10) TMI 42 - HC - Income Tax

Summary

Issues Involved:
1. Recovery of income-tax arrears from the petitioners.
2. Legality of arresting the petitioners for recovery.
3. Attachment and sale of the residential house for recovery of arrears.
4. Applicability of Himachal Pradesh Debt Reduction Act, 1976, to the recovery proceedings under the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Recovery of Income-tax Arrears from the Petitioners:
The petitioners sought to restrain the respondents from recovering income-tax arrears for the assessment years 1960-61 and 1961-62, amounting to Rs. 12,868 and Rs. 26,494 respectively, which had accumulated to Rs. 1,48,509 with interest and penalty. The court observed that the petitioners' request for waiver of the arrears was beyond its jurisdiction and should be addressed by the authorities under the Income-tax Act.

2. Legality of Arresting the Petitioners for Recovery:
The court examined the legality of the arrest warrants issued against the petitioners. It noted that the second petitioner, being a woman, was exempt from arrest under Rule 81 of Schedule II to the Income-tax Act. For the other petitioners, Rule 85 indicated that recovery proceedings could continue against legal representatives of the deceased defaulter, except for arrest and detention. The court found that the arrest warrants were issued due to the petitioners' non-cooperative behavior and refusal to respond to notices.

3. Attachment and Sale of the Residential House for Recovery of Arrears:
The petitioners argued that the residential house should be exempt from attachment and sale under Rule 10 of the Second Schedule to the Income-tax Act, which exempts property from attachment and sale as per the Code of Civil Procedure (CPC). They relied on Section 21 of the Himachal Pradesh Debt Reduction Act, 1976, which inserted clause (ccc) in Section 60 of the CPC, exempting one main residential house from attachment. However, the court held that this exemption applied only to proceedings under the Himachal Pradesh Debt Reduction Act and not to recovery proceedings under the Income-tax Act.

4. Applicability of Himachal Pradesh Debt Reduction Act, 1976, to the Recovery Proceedings under the Income-tax Act, 1961:
The court examined whether the Himachal Pradesh Debt Reduction Act, 1976, and the amendment to Section 60 of the CPC applied to the recovery proceedings under the Income-tax Act. It referred to a previous Division Bench decision in Himachal Lithographers v. Punjab and Sind Bank, which held that the amendment applied only to proceedings under the Himachal Pradesh Debt Reduction Act. The court agreed with this reasoning and concluded that the amendment did not have general application to all proceedings in the state, including those under the Income-tax Act.

Conclusion:
The writ petition was dismissed, and the court held that the residential house left by the deceased defaulter, Sukhdev Singh, was not exempt from attachment and sale for recovery of income-tax dues. The interim order of stay was vacated, and no costs were awarded.