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TMI Blog1985 (8) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... and not binding upon the plaintiff. The plaintiff also prayed for permanent injunction. The plaintiff's case as made out in the plaint is that he is the karta of a Hindu undivided family. The Income-tax Officer, District-VI, Calcutta, assessed the income-tax of the family for the year 1955-56 by notice dated February 25, 1956, under section 29 of the Indian Income-tax Act, 1922, and directed payment of Rs. 15,595-7-0 as tax. Against the said assessment, an appeal was preferred. A sum of Rs. 5,940-11-0 was paid as tax on March 29, 1956, and subsequently other amounts were also realised. On or about March 21, 1957, the Income-tax Officer forwarded a certificate under section 46(2) of the Income-tax Act to the Certificate Officer of 24-Parga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Laws (Continuation and Validation of Recovery Proceedings) Act, 1964 (hereinafter referred to as the Act of 1964), it was not necessary to issue any fresh notice under section 29 of the Act when the tax was reduced in appeal. The learned judge held that the second notice issued under section 29 of the Act was redundant in view of the Act of 1964. Issue of fresh notice cannot invalidate the existing proceeding. Being aggrieved, the plaintiff has preferred the present appeal. The only point urged by Mr. Bagchi assisted by Mr. S.S. Roy is that in the case of ITO v. Seghu Buchiah Setty [1964] 52 ITR 538, the Supreme Court held that a fresh demand notice had to be served before an assessee could be treated as a defaulter when the amount of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imation about the reduction of the amount in appeal. The contention of Mr. Pal is that unless the assessment order is set aside in appeal, any reduction of amount does not mean that the assessee ceases to be a defaulter and the proceeding pending against him on the basis of the earlier assessment will continue in view of the provisions of section 3 of the Act of 1964 and it will not be necessary to start a fresh proceeding. Mr Pal has also referred to the case of Baladin Ram Kalwar v. ITO [1966] 62 ITR 392 (All). In this case it his been held that when the law laid down by the Supreme Court in Seghu Buchiah Setty [1964] 52 ITR 538 stood, the recovery proceedings against the assessee could not continue whenever the assessed income-tax was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and the Tax Recovery Officer of the fact of such reduction and that proceedings for recovery may be continued only in relation to the reduced amount of Government dues. Section 29 of the Indian Income-tax Act, 1922, lays down as follows: " When any tax, penalty or interest is due in consequence of any order passed under or in pursuance of this Act, the Income-tax Officer shall serve upon the assessee or other person liable to pay such tax, penalty or interest a notice of demand in the prescribed form specifying the sum so payable. " In the instant case, there is no dispute that the said notice of demand was issued. Thereafter, the Income-tax Officer forwarded the case to the Certificate Officer. After the reduction of the amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner. A person who has failed to comply with a notice of demand would continue to be a defaulter notwithstanding the reduction of his liability by an order of the appellate authority. There is only one exception to this rule and that is when the order of assessment is wholly set aside, The position was altered by the enactment of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964. Section 5 of the said Act made it retrospective and in view of that section, the provisions of this Act shall apply and shall be deemed always to have applied, in relation to every notice of demand served upon an assessee by any taxing authority under any scheduled Act whether such notice was or is served before o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Mr. Bagchi is that had no fresh notice under section 29 of the Act been issued, he would have no point to argue in this appeal in view of the provisions of the Act of 1964. The argument of Mr. Bagchi that because of the issue of the second notice, the case will go out of the ambit of the Act of 1964, is without any substance. The Act of 1964 was enacted for continuation and validation of recovery proceedings. The recovery proceeding was there when the appeal was pending and when the tax was reduced in appeal, the second notice under section 29 of the Act should be considered to be an intimation given as required under section 3(1)(b)(ii) of the Act of 1964. The, earlier certificate proceeding based on the first notice does not cease to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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