9911796707
TMI Blog2000 (9) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... ere settled as per proceedings of the Ministry of Finance, Government of India, by order No. 74 (29)II/57, dated September 25, 1957 and for the assessment years 1950-51 to 1956-57 by the Central Board of Revenue. As per the two settlements, a sum of Rs. 9,15,458 was fixed by the Central Board of Revenue as the amount due as per the settlement dated September 25, 1957, and as per the settlement dated October 24, 1957, the tax due was fixed at Rs. 22,90,863. Thus, the total amount outstanding was determined at Rs. 32,06,321. As per the terms, tax quantified/computed in respect of the settlement dated September 25, 1957, was to be paid before March 31, 1959, and that in respect of the second settlement dated October 24, 1957, before March 25, 1960. The settlement provided for payment of interest at 6 per cent. per annum in the event of failure to liquidate/clear the tax liability as per the terms of the settlements. Copies of the settlements are produced and marked as exhibits P-1 and P-2. According to the petitioner, no penalty could be imposed or prosecution launched as per the settlements. The petitioner contends that during the life time of Thangal Kunju Musaliar, he had remitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner, the demand made by the Tax Recovery Officer was in respect of interest and the penalty imposed, as the entire amount of tax had admittedly been paid leaving a large surplus which has to be refunded to the petitioner. The demand shown was not enforceable. In the two settlements effected by Thangal Kunju Musaliar, interest at 6 per cent. was stipulated. The petitioner submits that no penalty is payable. However, it is the case of the petitioner that certificates have been issued in the name of the petitioner and fresh demands were raised. A copy of the demand is produced as exhibit P-7. The original petition is filed for a prohibition forbearing the third respondent---the Income-tax Officer, A-Ward, Quilon, from recovering any amount in pursuance of the recovery proceedings initiated under exhibit P-7, to call for the records of the case leading to the issue of exhibit P-7 notice and to quash the same and to direct the respondents to refund the balance amount. A counter affidavit has been filed by the second respondent-Commissioner of Income-tax. In paragraph 3 of the counter affidavit, it is contended that the present proceedings are either covered or deemed to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) Whether, on the facts and circumstances of the case, could it be said that the proceedings initiated for recovery of the tax dues of the late Thangal Kunju Musaliar from his legal representatives are barred by limitation ? The learned judge, after referring to the decisions in Isha Beevi v. TRO [1971] 80 ITR 82 (Ker) and Isha Beevi v. TRO [1975] 101 ITR 449 (SC), held as follows (page 542 of 189 ITR) : "It is in this background that the question as to whether the 11 certificates (in dispute) which were "Issued after the death of Thangal Kunju Musaliar can be corrected by substituting the names of the legal representatives in the place of the deceased assessee and, enforced against the legal representatives requires to be considered." The learned judge took the view that it is not the case of the Revenue that these proceedings were preceded, by a declration that the legal representatives, inasmuch as they failed to Pay the tax dues of the deceased assessee, in terms of the demand notice under section 156 served on them after the death of the assessee, are assessees in default. The argument of counsel for the Revenue that the corrected certificates can be treated as fresh certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, they were invalid under section 66(3) of the Travancore Income-tax Act and section 221 of the Income-tax Act, 1961. (3) By the gift deeds executed by Thangal Kunju Musaliar in favour of his wives and children, he title to the properties comprised in them passed to the donees and, therefore, the Revenue cannot attach the properties. The Division Bench considered these questions and gave the following findings. The Additional Personal Assistant to the Collector, being a Tax Recovery Officer within the meaning of section 2(44) of the Income-tax Act, 1961, is an authority constituted under section 221 of the Income-tax Act, 1961, to recover arrears of income-tax due under that Act and, therefore, he is the corresponding authority referred to in the proviso to section 13(1) of the Indian Finance Act, 1950, and is competent to take proceedings to recover the arrears of tax due under the Travancore Income-tax Act. Regarding the question of validity of the 11 certificates, the Division. Bench held as follows : "These provisions imply that the certificate must be against a defaulter who is alive--they make provision only for recovery on the defaulter's death after the issue of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covery Officer, would, by operation of the abovementioned provisions of law, automatically devolve upon the Collector or an Additional Collector or upon such officer as may be empowered by the State Government by a special or general notification in the Official Gazette 'to effect recovery of land revenue or other public demand' under any law relating to land revenue or other public demand. The appellants, not having raised the question at any earlier stage that the Additional Personal Assistant to the Collector was not an officer so authorised, cannot do so in appeal to this court. However, we leave it open to them to take such an objection, which really raises a question of fact as to whether the required notification was or was not made, before the Tax Recovery Officer himself. If such an objection had been taken there or even in the High Court, the relevant notification may have been produced. We are unable to see any flaw in the reasoning adopted by the High Court." The next question that was considered was regarding the lumping together of demands which were legal as well as those could not, according to the assessee, be covered by provisions of law. The Supreme Court held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or liabilities attaching to the said properties or any position thereof." Along with exhibit P-7, it can be seen that the certificates for recovery are attached. As soon as exhibit P-7 was obtained, the petitioner preferred a representation before the Central Board of Direct Taxes, New Delhi. There, he has voiced a complaint that excess amount has been paid and he is not liable to pay any penalty. The petitioner sent a letter to the Income-tax Officer, Quilon, on September 18, 1985. A reply was given by the Income-tax Officer, Quilon. In that reply, it is stated thus : "Recovery action has been resorted to only against the properties which were owned by the deceased debtor. Hence, there is nothing illegal about it. You will also note that in place of those defective certificates mentioned in the High Court order proper certificates have been issued subsequently and these have never been challenged". Many grounds are stated in the original petition challenging exhibit P-7. One of the contentions taken is that the tax liability under the Act had been fully paid and it is not open to the respondent to initiate proceedings for the collection of penalty and interest under the said Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention regarding the incompetency of the officer, who issued the certificates and the contention that the gifts were not accepted by this court and in appeal before the Supreme Court, the findings of this court were upheld. The Supreme Court upheld also the findings regarding the invalidity of the 11 certificates. In the last part of the judgment of the Supreme Court on a concession made on behalf of the Revenue, the Supreme Court held that the Tax Recovery Officer will only use the procedure in the Travancore Income-tax Act so far as it is possible to apply it. Thus, after the judgment of the Supreme Court, the Department was allowed to continue the proceedings against the petitioner. The only restriction was that the amounts under the 11 certificates which were invalidated could not be recovered on the basis of the attachment orders issued and as far as possible, the procedure under the Travancore Income-tax Act should be applied with regard to the liability under the Travancore Income-tax Act. It is now the admitted fact that exhibit P-7 proclamation of sale contains amounts covered under the certificates, which were found to be invalid by this court as well as by the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be said that what was corrected was a clerical error. It is true that if there is a mistake in the name of a person, that can be corrected. But that correction can be made only if that person is liable under law. As has been described in the judgment of the learned single judge, so far as the legal representatives are concerned, the provisions under sections 159, 220 to 222 and 285 of the Second Schedule are relevant, Section 159(1) of the Income-tax Act provides that where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. Section 220 of the Income-tax Act is a section regarding collection and recovery of tax. This section says that if the liability to pay tax other than advance tax arises, notice under section 156 shall be issued within 35 days. Under section 156 of the Income-tax Act, when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under the Income-tax Act, the Income-tax Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court in Raja Pid Naik v. Agrl. ITO [1968] 69 ITR 401 [FB]. Thus, we agree with the learned single judge that exhibit P-7 in so far as it contains the amount under the 11 certificates, which were corrected under section 224(2) of the Income-tax Act is not valid and the amount under those certificates cannot be recovered. But the petitioner is not satisfied by the declaration that the 11 certificates are invalid. According to the petitioner, the entire proceedings are illegal and exhibit P-7 has to be quashed in toto. In this context, it is pertinent to note that at the time when the attachment order was issued, he challenged the same on certain specific grounds in the previous litigation that ended in the judgment of the Supreme Court. According to us, the contentions which were not raised in those proceedings regarding the validity of the recovery proceedings cannot be raised here. So far as the valid certificates are concerned, demands were issued to the deceased, Thangal Kunju Musaliar, and he has not raised any contention challenging the same. The grounds in the original petition regarding the payment in amount, according to us, are to be considered by the recovery auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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