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TMI Blog1969 (9) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... nder rule 48 of the Second Schedule to the Income-tax Act, 1961, on the basis of 22 certificates covering a total amount of Rs. 50,42,970.34. Some of the certificates were issued under section 46(2) of the Income-tax Act, 1922, and the others under section 22(1) of the Income-tax Act, 1961. Thangal Kunju Musaliar had before his death executed gift deeds of immovable properties in 1947, 1953, 1954 and 1956 in favour of his wives and children. He had also executed a mortgage, exhibit D-4, on March 17, 1957, in favour of the Governor of the State of Kerala, for 20 lakhs of rupees in consideration of the State Government guaranteeing an overdraft accommodation for the amount by the Central Bank of India in order to enable him to reopen his factories which were closed at the time. By the writ petitions in question the appellants challenged the validity of exhibit P-1 order and prayed for an appropriate direction or order quashing the order, and restraining the respondents from proceeding further on the basis of the attachment. The main contentions in the writ petitions were : (1) that the attachment was for recovery of arrears of income-tax due from Thangal Kunju Musaliar both und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r those years under the provisions of the Income-tax Act, 1961, are immune from attack. As regards the second contention, the learned judge was of the view that although there was no provision for issuing certificates mentioning the name of a deceased assessee, since the appellants did not object to the validity of the certificates on this ground when notices were served upon them under rule 85 of the Second Schedule to the Income-tax Act, 1961, they were precluded from taking the ground in the writ petitions. And in respect of the third contention, the learned judge said that since the appellants had resorted to the alternative remedy of suits in respect of some of the properties attached under exhibit P-1, and as it is still open to them to file claim petitions in respect of the other properties under rule 11 of the Second Schedule to the Income-tax Act, 1961, it was not proper that the writ court should entertain the objection especially as it involved resolution of disputed questions of fact. Counsel for the appellants contended that, for recovery of arrears of income-tax due under the Travancore income-tax Act, proceedings can be taken only under the provisions of that Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer and Commissioner of Income-tax v. Bhikaji Dadabai and Co. There was no provision in the Indian Income-tax Act, 1922, which was extended to the Travancore-Cochin State on April 1, 1950, for the levy, assessment and collection of arrears of income-tax due under the Travancore Income-tax Act. Section 46(2) of that Act provides : " The Income-tax Officer may forward to the Collector a certificate under his signature specifying the amount (if arrears due from an assessee, and the Collector, on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein as if it were an arrear of land revenue : Provided that without prejudice to any other powers of the Collector in this behalf, he shall, for the purpose of recovering the said amount, have the powers which under the Code of Civil Procedure, 1908 (V of 1908), a civil court has for the purpose of the recovery of an amount due under a decree. " The word " assessee " has been defined in the Act as follows : " 'Assessee' means a person by whom income-tax or any other sum of money is payable under this Act, and includes every person in respect of whom any proceeding under this Act has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Division Peishkar, an officer not appointed under the Travancore Income-tax Act, was constituted as the authority to recover the arrears of tax due under that Act, so also the Collector was constituted as the authority to recover the arrears due under the Income-tax Act, 1922. They were authorities because they were invested with part of the sovereign power of the State, namely, the power to collect tax. (See the decision in Rajasthan State Electricity Board v. Mohan Lal). Since the Income-tax Act, 1961, repealed and re-enacted with modifications the provisions of the Income-tax Act, 1922. the authority constituted under the corresponding provision of the Income-tax Act, 1961, to recover arrears Of tax under that Act, would be the authority competent to proceed to recover the arrears of tax due under the Travancore Income-tax Act. Section 8(1) of the General Clauses Act reads : " Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals and re-eracts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed shall, unless a different in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the arrears of income-tax due urnder the Travancore Income-tax Act for the years 1119 and 1120 M.E. are concerned, they are covered by exhibit D-1 order dated September 25, 1957, passed by the Central Government in pursuance of section 3 of the Central Act 33 of 1950 Section 3 modified the provisions of the Travancore Income-tax (Investigation Commission) Act XIV of 1124. Section 3 provides : " If immediately before the commencement of this Act there is in force in any Part B State other than Jammu and Kashmir any law (hereinafter in this section referred to a the State law ) corresponding to the Taxation on Income (Investigation Commission) Act, 1947 (XXX of 1947), that law shall continue to remain in force with the following modifications, namely :-- . . . . (d) the report of the Central Commission shall be submitted to the Central Government, and the Central Government may, by order in writing, direct that such proceedings as it thinks fit under the law in force in the State relating to income-tax, super-tax or excess profits tax or any other law, shall be taken against the person to whose case the report relates in respect of his income other than agricultural income, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the choice of the law under which the proceedings should be taken. The plenary power to proceed under any law, having been granted to the Central Government, there was nothing wrong in the Central Government leaving the choice of the law to the Income-tax Officer. After all, so long as the recovery can be only in accordance with law, the choice of alternative laws substantially similar in character can well be left to the authority effecting the recovery. We think that the arrears of income-tax due for these two years could have been recovered under the Income-tax Act, 1922, and can now be recovered under the provisions of the Income-tax Act, 1961. We are not satisfied that by reason of exhibit D-2 settlement, the revenue is precluded from recovering the arrears of income-tax due for the period covered by the settlement under the provisions of the Income-tax Act, 1961. As the terms of the settlement binding on the assessee have been broken by him, the revenue cannot be held to be bound by the terms of the settlement binding on them. The next question for consideration is whether the 11 out of the 22 certificates, namely, certificates Nos. 12 to 22 (both inclusive), annexed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes were not validly issued, the attachment effected on the basis that these amounts could also be recovered on the, basis of the certificates is bad. In Sriramiah v. Income-tax Officer, Kolar, it was held that if the amount for the recovery of which an assessee's properties are sold in tax recovery proceedings is higher than what is really due from the assesses the sale would be invalid and the Collector could be restrained by an order from confirming the sale. In Collector of North Arcot v. V. K. Kannan the certificate for recovery was for a sum, which was substantially in excess of what was actually due, and it was held that the error would go to the root of the jurisdiction of the Collector to recover the arrears, and the proceedings taken by the Collector for recovery of the arrears would be invalid. For this proposition the learned judges relied on the decision in Santosha Nadar v. First Additional Income-tax Officer, Tuticorin, where Rajagopalan, Offg. C.J. and Srinivasan J., laid down that where a certificate is issued under section 46(2) of the Income-tax Act, 1922, for a sum which is substantially in excess of the sum that was actually due, that error would go to the root ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or other dealings with the property attached. The validity of an order of attachment of immovable property is not dependent upon the correctness of the statement of the amount due in the order of attachment. An attachment would not become invalid even if the decree amount is reduced in an appeal preferred from it. Nor is an attachment before judgment rendered invalid merely because the amount for which the decree is passed is less than the amount shown in the plaint as due. Counsel also relied upon the ruling of a Division Bench of this court in Annamma Kunjacko v. Tax Recovery Officer. That was a case where a defaulter was arrested for arrears of income-tax due from him both under the Travancore Income-tax Act, 1121, as well as under the Income-tax Act, 1922. There was no provision for arrest of a defaulter in the Travancore Income-tax Act, although there was a provision for it in the Income-tax Act, 1922. So, the contention was raised that because the arrest was made for arrears of tax due both under the Travancore Act and the Indian Act, the arrest was illegal. The contention was upheld. In doing so the learned judges relied upon article 21 of the Constitution, which says tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in pursuance of the attachment. We express no opinion on the question whether these certificates could be corrected or whether fresh certificates for the amounts could be issued and the properties attached in pursuance thereof. It was contended for the appellants that Thangal Kunju Musaliar had executed four gift deeds during his life that the title to the properties included in the gift deeds passed to the donees, and that the revenue should not have proceeded to attach the properties as if they belonged to Thangal Kunju Musaliar at the time of his death. It is contended that the revenue should have filed a suit and obtained an adjudication that the gift deeds were either sham or intended to defeat or delay his creditors before proceeding to attach the properties. Reliance was placed in this connection upon the ruling of this court in Abdulla v. State of Kerala, where Vaidialingam J. held that when a dealer assessed to sales tax transferred his property, the amount assessed cannot be recovered from the property transferred, unless there is an adjudication by a civil court that the transfer was either intended to defeat or delay the creditors or that it was sham. We are not sati ..... 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