Clearance certificate u/s 230A. - Income Tax - 1660/CBDT

INSTRUCTION NO. 1660/CBDT Dated: November 8, 1985 In pursuance of the recommendations made by the Public Accounts Committee (1983-84) (Seventh Lok Sabha) in para 5.18 of its 217 Report, the Board entrusted the conduct of comprehensive study of the working of Tax Recovery Machinery to the Directorate of O M Services. In the course of the review, the D.O.M.S highlighting the peculiar problems faced by the Department in the administration of Sec. 230A of the Income-tax Act. Para 5.21 of the Report reads as under:- 'It has been found that some Income-tax Officer issue clearance certificate for the registration of transfer of immovable property under section 230A to the assessees without consulting the TROs even in respect of cases in which TRCs have been issued. There may be cases where there are no tax arrears as per the records of the ITOs whereas interest chargeable under section 220(2) of the Act and Rule 5 of the Second Schedule for late payment of the tax arrears are still in arrears with the TROs. It has been reported that some assessees have sold their properties which were attached by the TROs after obtaining 230A certificate from the ITOs. This results in the defaulters being able to alienate their only properties without the TROs being able to recover the tax arrears/interest from them. It is, therefore, recommended that ITOs/IACs (Assessment) be directed by the Board to consult the TROs and obtain their report before the issue of 230A certificates in respect of the defaulters against whom TRCs have been issued. CIT(R) Madras has issued such instruction to all Officers in Tamil Nadu Charge". 2. The findings of the Directorate of O M Services have been considered by the Board and it has been decided to accept the recommendations made therein. It may be clarified in this connection that according to clause (b) of sub-section (1) of section 230A of the Income-tax Act, the Income-tax Officer will have to certify that the Registration of the documents will not prejudicially affect the recovery of any existing liability under any of the Acts mentioned in clause (a) thereof. The term 'existing liability' used therein is significant. The issue of a T.R.C. in a particular case is a positive indication of the existing tax liability in that case. In the circumstances the issue of certificates u/s 230A by Income-tax Officers without obtaining a report from the concerned TROs may result in loss of revenue in these cases. To protect the interest of revenue it is, therefore, imperative that the Income-tax Officers/IACs (Assessment) should obtain reports from the concerned Tax Recovery Officers before the issue of 230A certificates in respect of defaulters against whom TRCs have been issued. 3. These instructions may be brought to the notice of all concerned.