1973 (11) TMI 27 - HC - Income Tax

Summary

Issues:
1. Failure to provide intimation of tax reduction as per section 3(b)(ii) of the Kerala Taxation Laws Act.
2. Lack of authority for attachment of movable property under section 7 of the Revenue Recovery Act.
3. Violation of section 17 in selling the right to collect usufructs.

Analysis:

The petitioner, an assessee to agricultural income-tax, challenged the revenue recovery steps taken against them for arrears of tax. The first issue raised was the failure to provide intimation of tax reduction as per section 3(b)(ii) of the Kerala Taxation Laws Act. The court held that the failure to provide such intimation vitiates the revenue recovery step for the changed amount, emphasizing the mandatory nature of the provision to ensure the taxpayer is aware of the exact amount payable to avert compulsory recovery steps.

The second contention focused on the lack of authority for the attachment of movable property under section 7 of the Revenue Recovery Act. It was noted that the demand in writing, a prerequisite for attachment, was only shown to the superintendent of the petitioner's estate, not the defaulter directly. As per the Act, the demand must be shown to the defaulter, and failure to do so renders the attachment defective. The court highlighted the lacuna in the Act regarding substituted service in such cases, emphasizing strict compliance with statutory requirements.

Lastly, the violation of section 17 in selling the right to collect usufructs was addressed. The court found that the sale of the right to collect usufructs up to a specified date did not comply with the provisions of section 17, which only permits the sale of fit crops for reaping or gathering. As the auctioned items did not meet this criterion, the sale was deemed invalid. Consequently, the court ruled that the revenue recovery steps taken were violative of statutory provisions and quashed the attachment of crops and cured cardamom, ordering the restitution of the proceeds from the auctioned crops to the petitioner.

In conclusion, the court allowed the original petition, directing the restraint of the 3rd respondent from collecting yield from the attached estate and vacating the attachment of growing crops. The petitioner was entitled to the proceeds from the auctioned cured cardamom crops. The judgment highlighted the importance of strict adherence to statutory procedures in revenue recovery proceedings to safeguard the rights of taxpayers.