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Issues: Recovery proceedings for income-tax dues, agreement for instalment payments, enforcement of demand, contravention of section 220(3) of the I.T. Act, petitioner's default in compliance with terms and conditions.
Recovery Proceedings for Income-tax Dues: The petition under Article 226 of the Constitution of India pertains to recovery proceedings initiated by the Tax Recovery Officer (TRO) to collect income-tax dues from a partnership firm and its partners. The firm, M/s. Atma Singh Steel Rolling Mills, was being assessed under the Income Tax Act, with the petitioner being one of the partners. The total demand against the firm and its partners was stated to exceed Rs. 15,00,000. The petitioner, along with his brother, approached the Commissioner with a request to enter into a compromise for paying the tax dues. The Commissioner allowed an installment of Rs. 8,000 per month, subject to specified conditions. Despite this agreement, the TRO and the Department attempted to enforce the entire demand by seeking to attach and sell the petitioner's house, leading to the claim of acting in contravention of Section 220(3) of the I.T. Act. Agreement for Instalment Payments: The petitioner and his brother agreed to the terms and conditions set by the ITO for paying the tax arrears in installments of Rs. 8,000 per month. However, it was observed that the petitioner and his brother were not actively cooperating with the TRO as required. They were not presenting themselves before the TRO, and dates for their appearance were repeatedly being postponed. The petitioner and his brother seemed reluctant to start the mills, assuming that installments would be deferred in months when the mill did not operate. The court noted that the intention was not to allow them to benefit from their own inaction and lack of cooperation. Enforcement of Demand and Contravention of Section 220(3) of the I.T. Act: The Department's actions in enforcing the entire demand, including attempting to attach and sell the petitioner's property, were challenged on the grounds of contravening Section 220(3) of the Income Tax Act. The Department argued that Section 220(3) was not applicable as the petitioner had approached the Commissioner for installments instead of the ITO. However, the court did not base its decision on this argument, focusing instead on the petitioner's compliance with the agreed terms and conditions. Petitioner's Default in Compliance with Terms and Conditions: The court found that the petitioner and his brother had not fulfilled their obligations as per the agreed terms and conditions for paying the tax dues in installments. Despite more than six years passing without any payment towards the tax dues, the petitioner failed to adhere to the conditions laid out in the agreement. Consequently, the court dismissed the petition, stating that the petitioner's default in complying with the terms and conditions rendered him ineligible for the relief sought. The petition was thus rejected, with no costs imposed in the circumstances of the case.
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