1975 (4) TMI 32 - HC - Income Tax

Summary

Issues:
1. Challenge to the constitutionality of section 222 of the Income-tax Act, 1961 and the recovery proceedings.
2. Assessment of the petitioner as the successor of a defunct firm without notice to the transferor-firm.

Detailed Analysis:

Issue 1:
The petitioner challenged the constitutionality of section 222 of the Income-tax Act, 1961, arguing that the provision for recovery through the Tax Recovery Officer is discriminatory and violates Article 14 of the Constitution. The petitioner contended that the option for the authorities to choose between recovery through the Tax Recovery Officer or civil suit is disadvantageous to the assessee. However, the court held that the provisions under section 222, read with the Second Schedule of the Act, provide adequate safeguards and opportunities for appeal, revision, and review, similar to those in civil suits. The court cited previous judgments to support that the availability of two recovery procedures does not render one unconstitutional. Therefore, the court rejected the petitioner's argument that section 222 is ultra vires the Constitution.

Issue 2:
The petitioner disputed the assessment as the successor of a defunct firm, claiming that he only purchased the stock-in-trade and did not succeed to the ownership of the firm. The petitioner argued that notice should have been served on the transferor-firm for apportionment of the assessment amount. However, the court held that the question of whether the petitioner was the successor or a mere purchaser is a question of fact to be determined by the assessing authority. Since the petitioner did not raise this objection during the assessment proceedings, the court ruled that he cannot raise it in a writ application. Consequently, the court dismissed the petitioner's challenge regarding the assessment without notice to the transferor-firm.

In conclusion, the High Court dismissed the writ petition, upholding the constitutionality of section 222 of the Income-tax Act, 1961, and rejecting the petitioner's challenge to the assessment proceedings for not serving notice on the transferor-firm. The judgment was delivered by N. K. Das J., with agreement from G. K. Mishra C.J. and P. K. Mohanty J.