1999 (4) TMI 66 - HC - Income Tax

Summary

Issues:
Challenge to attachment of property for recovering dues of a firm where the petitioner is not a partner.

Analysis:
The petitioner challenged the attachment of her property for recovering the dues of a firm in which she is not a partner. The petitioner's husband is a partner in the firm, and the attached property was acquired by the petitioner using her own resources by selling other properties. The petitioner argued that the property belonged to her, and she had already paid taxes on her capital sources. The Income Tax Officer (ITO) failed to distinguish between his role as a prosecutor and an adjudicator. While the ITO had the right to initiate proceedings based on a belief, fairness and due process were essential. The court emphasized the constitutional rights of individuals, including the freedom to hold property independently regardless of gender. The court found it unreasonable to assume that the petitioner held the property benami for her husband without substantial evidence. The court directed the ITO to objectively determine the objection raised by the petitioner before proceeding with the recovery of dues from the attached property. The court highlighted the importance of adjudication and providing the petitioner with a remedy through appeal or revision if aggrieved.

The respondent alleged that the petitioner had no ostensible source of income to acquire the property and held it benami for her husband. The court noted the petitioner's assertion that she had legitimate sources of income and had paid taxes on her capital sources in the past. The court emphasized the need for the Recovery Officer to have substantial evidence before proceeding with the recovery of dues from the petitioner's property. The court highlighted the duty of the adjudicator to objectively assess the petitioner's objection before continuing with the recovery proceedings. The court allowed the petition, directing the ITO to determine the objection regarding the property's ownership before further recovery actions. The court stressed the importance of following due process and providing individuals with a fair opportunity to present their case before taking coercive recovery measures.