Scope of Sec.224. - Income Tax - 1412/CBDT

INSTRUCTION NO. 1412/CBDT Dated: September 17, 1981 In a petition to the chairman CBDT, it has been stated that the ITO issue recovery certificates even when the demand has been paid or a rectification/appeal effected is pending. Under the existing law the TRO is not competent to hear the objections of the assessee and to vary the demand certified to him. Therefore when the recovery proceedings are initiated by the TRO the assessee has still to approach the ITO concerned to give effect to rectification/appeal effect etc. Even in cases where the ITO modifies the demand by giving credit for pre-paid taxes or by passing an order of rectification or giving appeal effect he does not send any intimation of the modified demand to the TRO. This causes avoidable harassment to the assessees. In the light of the difficulties pointed out in the above petition the legal position in respect of power to vary the certified demand has been considered by the board. U/s.224 of the IT Act it is not open to the assessee to dispute before the TRO the correctness of an assessment or to raise objections to the certificate on any ground. Under the said section the power to withdraw or correct any certificate vests with the ITO only. U/s.225 of the IT Act the power to grant stay or to grant instalments in respect of the certified demand also vests with the ITO. Though it is true that power to vary a certified demand vests only with the ITO issuing the certificate, there is no express bar on the TRO to satisfy himself about the correctness of the certified demand. Under clause 4 of 2nd schedule the TRO can call upon an assessee to pay the demand within a specified time or within such further time as the TRO may grant in his discretion. This power to grant further time would imply that the TRO can either stay the recovery for a specified time or for an indefinite time. The board therefore is of the view that in cases where the assessee disputes the demand certificated to the TRO for the reasons that the same has already been paid or it requires reasons that the same has already been paid or it requires modification as the rectification or appeal effect is pending in his case, the TRO will first collect the undisputed portion of the demand. Only after the undisputed demand has been collected, he will write to the ITO to consider the assessees objections and to intimate the correct demand so that balance outstanding if any can be collected by the TRO. The TRO at the end of the month should send a list of such cases to the IAC where he has requested the ITOs to consider the assessees objections. The IAC in his turn would keep a watch on such cases and ensure that the ITOs send intimation of the modified demand to the TRI within a reasonable time. Till such time the ITO sends the modified demand the TRO will not take any further action on the certificate originally issued to him. This will not only avoid harassment to the assessees but would make the ITOs responsible for taking appropriate action, the powers for which vest only in them u/s.224 and 225 of the I.T.Act. These instructions may be brought to the notice of all the officers in your charge.