2019 (9) TMI 555 - HC - Income Tax

Warrant of Arrest issued by Recovery Officer - notice to show cause not issued - prescribed procedure was not followed - HELD THAT - no order for the arrest and detention in civil prison of a defaulter shall be made unless the Tax Recovery Officer has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause as to why he should not be committed to civil prison, unless the Tax Recovery Officer is satisfied for the reasons which are mentioned in clause (a) and (b) of sub-rule (1) of Rule 73 of Schedule II of the Act. In the instant case, the impugned notice dated 21.11.2017 does not fulfill the requirements prescribed under Rule 73 (1) of Schedule II of the Act, in as much as, no specific show cause notice has been given to the petitioner asking him to show cause as to why he should not be detained in civil prison. The impugned order is procedurally ultra-vires. It is accordingly quashed and set aside. In the result, the petitioner shall be released forthwith from the custody. The petitioner shall deposit his Passport before the Recovery Officer-I, Debt Recovery Tribunal-II, Bengaluru as a condition precedent to his release from the jail. The petitioner shall not leave the Country without seeking leave of the Director General of Police, Bengaluru.

Summary

Issues:
1. Validity of the Warrant of Arrest dated 10.10.2018 issued in TRC.No.187/2017 (DCP No.9471/2016) in O.A.No.1074/2013 by Recovery Officer-I, Debts Recovery Tribunal-II, Bengaluru.

Analysis:
The petitioner challenged the validity of the Warrant of Arrest, arguing that the provisions of Rules 73 and 74 of the Income Tax Act, 1961 were not complied with before its issuance. The petitioner contended that the impugned Warrant of Arrest was procedurally ultra-vires.

The respondent, on the other hand, claimed that a notice was issued to the petitioner, asking him to appear before respondent No.1, which indicated compliance with the relevant provisions. The respondent argued that the petitioner was a defaulter, justifying the impugned order.

The court examined Rule 73(1) of Schedule II of the Act, which outlines the requirements for the arrest and detention of a defaulter. It mandates that no order for arrest shall be made without issuing a notice to show cause and satisfying specific conditions.

The court found that the notice dated 21.11.2017 did not meet the requirements of Rule 73(1) as it did not specifically ask the petitioner to show cause for potential detention in civil prison. Consequently, the court deemed the impugned order procedurally ultra-vires and quashed it, ordering the petitioner's immediate release on the condition of depositing the Passport before the Recovery Officer.

The court allowed respondent No.1 to proceed against the petitioner in accordance with the law if advised to do so. The pending interlocutory application was dismissed, and the writ petition was disposed of, concluding the legal proceedings.