1978 (10) TMI 18 - HC - Income Tax

Income Tax Act, Jurisdiction Of High Court, Recovery Proceedings, Refund Of Tax, Treasury Officer, Writ Jurisdiction

Summary

Issues Involved:
1. Validity of recovery proceedings under Section 46 of the Indian Income-tax Act, 1922.
2. Commencement of recovery proceedings within the stipulated period.
3. Entitlement to a writ of mandamus for the refund of wrongfully recovered tax.

Issue-wise Detailed Analysis:

1. Validity of Recovery Proceedings under Section 46 of the Indian Income-tax Act, 1922:

The appellant contested the demand made by the Income Tax Officer (ITO), arguing that recovery proceedings were barred under Section 46(7) of the Indian Income-tax Act, 1922. The appellant claimed that no recovery certificates were received by the Treasury Officer and the Tehsildar, which was a prerequisite for lawful recovery under Section 46(2). The court found that the ITO had discretion to forward a certificate to the Collector for recovery, but there was no evidence that such certificates were actually received by the Treasury Officer or the Tehsildar. The court concluded that the recovery proceedings were not warranted by law, and the learned single judge erred in assuming that the recovery certificates had been received.

2. Commencement of Recovery Proceedings within the Stipulated Period:

Section 46(7) mandates that recovery proceedings must commence within one year from the last day of the year in which the demand is made. The respondent failed to establish that proceedings were commenced within this period. The burden of proof was on the respondent, and no evidence was produced to support the claim that proceedings had commenced within the stipulated time. Consequently, the court found that the recovery proceedings were not authorized by law, and the appellant was entitled to the writ prayed for.

3. Entitlement to a Writ of Mandamus for the Refund of Wrongfully Recovered Tax:

The respondent argued that a writ petition solely for the refund of income tax is not maintainable, citing the Supreme Court judgment in Suganmal v. State of Madhya Pradesh. However, the court distinguished the present case from Suganmal, noting that the invalidity of the recovery proceedings was established by the court itself, not by an appellate authority. The court referred to the Supreme Court judgment in State of Madhya Pradesh v. Bhailal Bhai, which supports issuing a writ of mandamus for the refund of money realized without authority of law. The court also cited a Division Bench judgment of the Andhra Pradesh High Court in Annapurna Match Industries v. Union of India, which directed the refund of wrongfully collected duty. The court concluded that the appellant was entitled to the relief of having the recovery orders quashed and to the consequential relief of a refund.

Judgment:

The appeal was accepted, and the recovery proceedings and the order of recovery made by the respondent were quashed. The judgment of the learned single judge, to the extent it dismissed the writ petition of the appellant, was set aside. The respondents were directed to refund the amount illegally recovered from the appellant. No costs were awarded for the appeal.