2018 (7) TMI 1414 - HC - Income Tax

Recovery of income tax dues - arrest of person - Writ of habeas corpus directing the respondents to produce/release Ashwin Kumar Kataria, the father of the petitioner ( the detenu ), who is said to have been detained in civil prison - Held that - From the perusal of the record it appears that the detenue is residing at Akola and he neglect the service of notice, therefore, service of notice were made through affixure. Even after the service of notice, he deliberately remained noncooperative and absconding. T.R.O. also found that after the attachment of the aforesaid land of the detenue he objected the execution of the certificate and transfer of his property. He refuses to pay the arrears of amount of tax, therefore, a show cause notice was issued against him under Rule 73 of Second Schedule of the Income Tax Act. As per Rule 73 of the Second Schedule of the Income Tax Act, the Recovery Officer is having discretion to pass an order that detenue be detained in the custody and under the aforesaid powers the TRO has issued detention warrant against the detenue. The father of the petitioner has been arrested under the warrant of the Income Tax Department and after the arrest he would produce before him by the Police Authorities and he was sent for safe custody till the finalisation of the investigation and after that on 23/02/2018, the detention order was passed, therefore, there was no need to produced him before the Magistrate, under the provision of Section 57 of the Cr.P.C.. Proceedings done by the TRO is under the statutory provisions and therefore, no violation has been made under Article 21 of the Constitution of India. In the considered view of this Court, Article 21 of Constitution of India has no application in the matter because there is specific provisions have been made for recovery of tax dues. In the present matter Tax Recovery Officer followed the procedure established under the provisions of Income Tax Rules before directing arrest of the detenu for the recovery of arrears of tax, therefore, the judgment relied by the counsel for the petitioner in the case of Gajendra Kumar Banthia vs. Union of India reported in 1996 (3) TMI 109 - CALCUTTA HIGH COURT is not applicable in the circumstances of the present matter.

Summary

Issues:
1. Detention of individual under Rule 76 of Second Schedule of Income Tax Act 1961 without compliance with legal procedures.
2. Alleged violation of fundamental rights under Articles 21 and 22 of the Constitution of India.
3. Dispute over tax dues and detention of individual in civil prison.
4. Compliance with Rule 73 of Second Schedule of Income Tax Act for arrest and detention.
5. Application of Article 21 of the Constitution of India in tax recovery matters.

Analysis:

Issue 1: The petition was filed for a writ of habeas corpus challenging the detention of the individual under Rule 76 of the Income Tax Act without following proper procedures. The detenu, engaged in cotton business, had significant tax dues, leading to attachment of his property. The petitioner argued that the detenu was detained illegally, curtailing his fundamental rights under the Constitution.

Issue 2: The petitioner contended that the detenu's rights under Articles 21 and 22 of the Constitution were violated due to the alleged illegal detention. The respondent, on the other hand, argued that the detention was lawful under the provisions of the Income Tax Act and proper procedures were followed, including issuance of notices and warrants.

Issue 3: The respondent asserted that the detenu was lawfully detained in prison as per the Income Tax Act, with tax dues amounting to over &8377; 6 crores. The detenu's non-compliance and alleged attempts to evade payment were cited as reasons for the detention. The respondent argued that the detention was in accordance with the law and the detention order clearly specified the reasons for detention.

Issue 4: The Court examined the compliance with Rule 73 of the Second Schedule of the Income Tax Act, which requires proper issuance and service of notices before arrest and detention. Notices were issued to the detenu, and after non-payment of tax arrears, a warrant of detention in civil prison was issued and served, leading to the detenu's remand to the district jail.

Issue 5: The Court analyzed the applicability of Article 21 of the Constitution in tax recovery matters. It was observed that specific provisions exist for the recovery of tax dues, and the procedures followed by the Tax Recovery Officer were in line with the Income Tax Rules. The Court cited legal precedents to support the legality of the detention in tax recovery cases and dismissed the petition, finding no substance in the petitioner's arguments.

In conclusion, the Court dismissed the writ petition, emphasizing the legality of the detenu's detention under the Income Tax Act and rejecting the petitioner's claims of violation of fundamental rights.