1983 (5) TMI 22 - HC - Income Tax

Summary

Issues:
1. Whether a tax recovery proceeding initiated under the Income Tax Act, 1961 for recovery of tax dues assessed under the Indian Income Tax Act, 1922 is maintainable in law.

Detailed Analysis:
The judgment by the High Court of Calcutta involved a challenge to an order passed by the Commissioner, Presidency Division, regarding the maintainability of a tax recovery proceeding under the Income Tax Act, 1961 for tax dues assessed under the Indian Income Tax Act, 1922. The Commissioner held that the recovery proceeding under the new Act was not maintainable, citing Section 297(2)(c) of the 1961 Act. The dispute arose as the assessment was completed under the 1922 Act before the 1961 Act came into effect, leading to a disagreement on whether the recovery should proceed under the old Act or the new Act.

The Court analyzed Section 297 of the Income Tax Act, 1961, which repeals the 1922 Act and provides for savings. The Commissioner's reliance on clause (c) of sub-section (2) of Section 297 was deemed incorrect by the Court. The Court highlighted that the recovery proceeding can only be initiated when the assessee is in default, emphasizing that the demand for payment is part of the assessment process and not the recovery proceeding itself. The Court agreed with the argument that the recovery proceeding had not been initiated under the old Act, as the assessee had not failed to pay in accordance with the demand.

The Court further pointed out that clause (j) of Section 297 was more relevant in this context, allowing the recovery of sums payable under the repealed Act under the new Act without prejudice to any action already taken for recovery under the old Act. The Court concluded that the Revenue authorities were justified in initiating the recovery proceeding under the provisions of the Income Tax Act, 1961. As a result, the Court set aside the Commissioner's orders and directed the continuation of the recovery proceedings under the 1961 Act. The revisional applications were allowed, and the rules were made absolute without any costs. Justice S. N. Sanyal agreed with the judgment delivered by Justice Anil K. Sen.