1966 (4) TMI 7 - HC - Income Tax

It was not open to the petitioner to have waited till after the attachment order, etc., had been issued for filing objections as contemplated by cl. (vi) of s. 226(3) of the Income Tax Act, 1961 Act - Once he sent his objections earlier which were not supported by an affidavit which were rejected and the attachment proceedings were taken, it was too late for the petitioner to take advantage of the provisions contained in cl. (vi)

Summary

Issues:
Petition under articles 226 and 227 challenging attachment order and show-cause notice regarding alleged dues to late S. Pratap Singh Kairon's sons. Interpretation of section 226(3)(vi) of the Income-tax Act, 1961 regarding objections to notice demanding payment.

Analysis:
The petitioner, a broker involved in transactions related to second-hand cars, was summoned by the Income-tax Officer investigating the income-tax cases of late S. Pratap Singh Kairon's sons. The petitioner's statements, including one recorded on oath, detailed transactions of the sons. An attachment order was issued due to alleged dues from the petitioner to one of the sons. The petitioner objected, claiming illiteracy and coercion in signing statements. He later sent objections with an affidavit denying any liability. The crux of the issue lies in the interpretation of section 226(3)(vi) of the Income-tax Act, which deals with objections to notices demanding payment.

The petitioner argued that upon raising objections supported by a statement on oath, the Income-tax Officer must verify the veracity of the objections before imposing personal liability. However, the Income-tax Officer contended that previous statements by the petitioner admitting liability negated the need for further verification. The court analyzed the language of the provision, emphasizing the necessity of filing objections supported by an oath immediately upon receiving the notice. The petitioner's delayed objections, supported by an affidavit, were deemed untimely and ineffective.

The court highlighted that the petitioner's failure to submit objections supported by an oath upon receiving the notice, and instead waiting until after attachment proceedings, precluded him from availing the protections under section 226(3)(vi). The judgment underscored the importance of timely and genuine objections in challenging demands for payment under the Income-tax Act. The court dismissed the petition, citing the petitioner's delayed and inadequately supported objections as reasons for refusal, despite acknowledging the absence of a prescribed limitation period for filing objections.

The court referenced a previous decision emphasizing the necessity for factual, unambiguous, and bona fide objections under the relevant section of the Income-tax Act. It clarified that the new section's language required a different interpretation, rendering the previous decision less applicable. Ultimately, the court dismissed the petition without costs, highlighting the importance of timely and genuine objections under the law.