1998 (9) TMI 54 - HC - Income Tax

Summary

Issues:
Challenge to notice dated February 17, 1995 for quashing. Dispute over tax recovery for assessment years 1982-83, 1983-84, 1984-85, 1990-91, and 1991-92. Validity of attachment order under section 226(3) of the Income-tax Act, 1961. Justification for recovery of outstanding tax due from the assessee.

Analysis:

1. Challenge to Notice and Tax Recovery Dispute:
The petitioner, a regular assessee since 1971-72, challenged a notice dated February 17, 1995, seeking to quash it. The dispute arose from a search at the petitioner's residence in 1983, leading to contested income assessments for 1983-84 and 1984-85. The Assessing Officer attached rent for tax recovery related to various assessment years. The petitioner argued against the attachment, citing payment of tax for 1991-92 and pending appeals for 1990-91. The petitioner sought quashing of the attachment order due to pending stay applications and unresolved appeals.

2. Validity of Attachment Order under Section 226(3):
The court examined the legality of the attachment order under section 226(3) of the Income-tax Act, 1961. It was noted that the search at the petitioner's premises led to upheld assessments for 1982-83, 1983-84, and 1984-85 based on seized materials. The court referred to relevant sections of the Act regarding tax collection and recovery procedures. The petitioner's contention of non-service of notices was countered by the Department's claim of sending notices to the petitioner's known address. The court emphasized the importance of timely tax payment and the consequences of default under the Act.

3. Justification for Recovery of Outstanding Tax:
The court analyzed the circumstances surrounding the tax recovery for assessment years 1982-83, 1983-84, 1984-85, 1990-91, and 1991-92. It was observed that the petitioner's actions indicated an attempt to delay tax payment, as evidenced by failed appearances before the Recovery Officer and lack of stay applications before the Commissioner of Income-tax (Appeals). The court dismissed the petitioner's arguments for quashing the notice under section 226(3) and upheld the Recovery Officer's right to proceed with tax recovery based on undisputed tax demands.

In conclusion, the court found no merit in the petitioner's claims and dismissed the petition, allowing the Recovery Officer to recover outstanding tax due from the assessee. The judgment highlighted the importance of compliance with tax laws and procedures, emphasizing the legal obligations of the assessee in fulfilling tax liabilities as per the Income-tax Act, 1961.