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TMI Blog2013 (1) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice of rule. 2. Having regard to the controversy involved in the present petition which lies in a very narrow compass, the petition is taken up for final hearing today. 3.This petition under articles 226 and 227 of the Constitution of India has been filed with the following substantive prayer : Issue a writ of certiorari and/or a writ of mandamus and/or any other writ direction or order to quash and set aside the impugned notice dated February 26, 2010, at annexure W and the recovery proceedings initiated by respondent No. 2 against the petitioner for the assessment year 1985-86 in the interest of justice. 4. The facts as appearing in the petition are that on August 7, 1985, the peti-tioner had filed declaration under section 184(7) of the Income-tax Act, 1961 (the Act), for continuation of registration of the partnership firm in Form No.12 for the assessment year 1985-86. The petitioner received a notice dated November 11, 1987, from the Income-tax Officer, Circle I/F, Ahmeda-bad, calling upon it to furnish the reasons for late filing of Form No. 12 as per the provisions of section 184(7) of the Act. The petitioner furnished the reasons, vide letter dated December 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Recovery Officer renewing the earlier request. Thereafter, there was no communication till June, 1996. On July 1, 1996, the petitioner received a summons dated June 24, 1996, under rule 83 of the Second Schedule to the Income-tax Act, 1961, to appear before the Tax Recovery Officer along with the books of account, etc. Vide letter dated July 4, 1996, the petitioner referred to the earlier letters addressed by it to the authorities and requested to drop the proceedings. The petitioner thereafter received copies of letters dated July 19, 1996, and November 27,1996, addressed by the Tax Recovery Officer to the Income-tax Officer, Ward I (4), Ahmedabad, stating that it was not possible to make recovery of demand against the petitioner as the representative of the peti-tioner had stated that the petitioner had not received a copy of the assess-ment order and the demand notice. Thereafter, for a period of almost four years nothing was done. On January 31, 2000, the petitioner received a notice from the Tax Recovery Officer, Ahmedabad, in connection with the arrears of taxes amounting to Rs. 54,181 for the assessment year 1985-86. The petitioner again addressed a letter dated February 7, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Ombudsman that it was not possible for the said office to take action in this regard. The petitioner thereafter addressed a letter dated April 21, 2010, to respondent No. 1-Commissioner of Income-tax reiterating what was stated in the earlier communication. Since no action was taken by respon-dents Nos.1 to 3 in the matter of vacating the attachment of the account of the petitioner since March, 2010, the petitioner has filed the present petition under article 226 of the Constitution of India. 5. In response to the petition respondent No. 2 has filed an affidavit-in-reply stating that the petitioner had been served with a notice of demand dated September 12, 1994, under rule 2 of the Second Schedule to the Act by the Office of the Tax Recovery Officer which had not been challenged by the petitioner at the relevant time. That the demand is now sought to be challenged by the petitioner after a lapse of 16 years. That no records are available with the Office of the Assessing Officer, as the matter is very old. However, there is no factual averment regarding demand notice under section 156 of the Act ever having been served upon the petitioner. 6.Mr. B. D. Karia, learned advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition should be rejected on the ground of inordinate delay and laches. Referring to the averments made in the petition and more particularly, to paragraphs 6 and 7 thereof, it was pointed out that recovery certificate was drawn as per the provisions of sections 222 to 226 under the Second Schedule to the Act and the assessee was also served with Form No. 57 dated September 12, 1994, by the Tax Recovery Officer on December 5, 1994, wherein a demand of Rs. 54,181 had been raised which includes tax and interest under section 220(2) of the Act for the assessment year 1985-86. That the said demand was never disputed by the petitioner till date and that the certificate of recovery having not been challenged, the petitioner ought not to be permitted to challenge the same belatedly by way of this writ petition. 8.Thus, the controversy that arises for determination is (i) whether any legally valid demand notice had been served upon the petitioner ? and (ii) in case the first issue is answered in the negative, whether in the absence of a legally valid demand notice, the recovery proceedings initiated by the respondents are legal and valid. 9.From the facts emerging on record, no dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in any notice of demand under section 156 is not paid within the period limited under sub-section (1), the assessee shall be liable to pay simple interest of 12 per cent. per annum from the day commencing after the end of the period mentioned in sub-section (1). Sub-section (3) provides that without preju-dice to the provisions contained in sub-section (2), on an application made by the assessee before the expiry of the due date under sub-section (1), the Income-tax Officer may extend the time for payment or allow payment by instalments, subject to such conditions, as he may think fit in the circum-stances of the case. Sub-section (4) thereof provides that if the amount is not paid within the time limited under sub-section (1) or extended under sub-section (3), as the case may be, at the place and to the person mentioned in the said notice, the assessee shall be deemed to be in default. On a plain reading of sub-section (4) of section 220 of the Act, it is apparent that a person can be said to be an assessee in default, (i) if he does not pay the amount specified in a notice under section 156 within the time limited under sub-section (1), viz.,35 days of the service of notice, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time stipulated therein and non-satisfaction of such demand, does not stand satisfied. Thus, in the absence of service of a demand notice under section 156 of the Act on the petitioner, which is a basic requirement for invoking the provisions of section 220 of the Act, the petitioner could not have been treated to be an assessee in default. In paragraph 6 of the affidavit-in-reply filed on behalf of the respondents it has been stated that demand raised under section 143(1) was reflected as outstanding in the arrear demand and collection register, therefore, the recovery certificate was drawn as per the provisions of sections 222 to 226 under the Second Schedule to the Income-tax Act. However, in the absence of any demand notice having been served on the petitioner, one fails to understand as to how interest under section 220(2) of the Act came to be computed and as to how the petitioner came to be treated as an assessee deemed to be in default. Thus, in the absence of service of notice of demand under section 156 of the Act, the subsequent proceedings under sections 220 to 226 of the Act are evidently without jurisdiction. 12.The apex court in the case of Sri Mohan Wahi v. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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