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TMI Blog1984 (6) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... aid premises for a period of ten years on a monthly rent of Rs. 7,625 and obtained an advance of Rs. 50,000. Since the lease deed has to be registered according to law and because an income-tax clearance certificate is prerequisite for such registration, he applied to the 3rd respondent for such a certificate. He sought to convince the 3rd respondent about the reasonableness of the rent and also wrote a letter on April 23, 1983, undertaking to remit the entire monthly rent towards the tax arrears. He deposited the sum of Rs. 50,000 received from the tenants as advance towards the said arrears. The petitioner says that the 3rd respondent directed him to obtain a 'No Objection' endorsement from the 4th respondent, i.e., Tax Recovery Officer. When he applied to the Tax Recovery Officer for such an endorsement, the latter opined that he does not come into the picture, nor is there any occasion for granting a no-objection endorsement under rule 16(2) of the Second Schedule to the Act. In such a situation, the petitioner says, he approached the Commissioner of Income-tax, Survey Investigation, Hyderabad (2nd respondent), requesting him to direct the 3rd respondent to issue the income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order can be made only where the Tax Recovery Officer is satisfied that the defaulter is capable of raising funds for payment of the tax outstanding. It is also submitted that the amount of rent to be received by the petitioner cannot even meet 25% of the interest payable on the outstanding tax. It is further submitted that assessments for the years 1972-73 to 1977-78 as also for 1981-92 are still pending, which are also likely to result in huge arrears of tax. The filing of an undertaking by the tenant is admitted, out it is submitted that, inasmuch as the petitioner has not made satisfactory provision for payment of all existing liabilities as required by s. 230A(1)(a) of the Act, he is not competent to lease or otherwise deal with the property, and no clearance certificate can be issued to him until he makes such satisfactory arrangement. Mr. M. M. Firdos, the learned counsel for the petitioner, submitted, firstly, that the lease not being a transfer of property within the meaning of rule 16(2) of the Second Schedule to the Act, the prohibition contained in the said rule does not apply and, hence, the authorities were in error in not issuing a certificate under s. 230A. He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a course is called for in the circumstances. It is now held by the Supreme Court in Tripathi v. State Bank of India, AIR 1984 SC 273, that " the rules of natural justice are flexible and cannot be put on any rigid formula. In order to sustain a complaint of violation of principles of natural justice on the ground of absence of opportunity of cross-examination, it has to be established that prejudice has been caused to the appellant by the procedure followed. " The principle of the said decision is that, unless prejudice is established, any and every violation of the principles of natural justice does not call for the quashing of the order. Indeed, that has been the view right from 1949, when it was said in the case of Russell v. Duke of Norfolk [1949] 1 All ER 109 (CA), that the principles of natural justice cannot be put in a strait-jacket and that the application of the said principles depends upon the facts and circumstances of each case.. We are not unaware of the reasoning of Lord Reid in Ridge v. Baldwin [1964] AC 40 (HL), where the learned judge refused to countenance the argument that, even if principles of natural justice are followed, the result would be the same. We are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by directing the ITO to consider whether a clearance certificate should be issued to the petitioner in respect of such a transaction. It would be a futile exercise; nor can the ITO be asked to issue a clearance certificate to enable the defaulter-petitioner to enter into, or execute, a deed of lease, which is prohibited by law. It is another matter if the attachment is raised for one or the other reason. In case the attachment is raised, the bar under r. 16(2) disappears. It is not necessary for us in this writ petition to go into the question whether the attachment can be raised only in the circumstances mentioned in r. 12, or whether it is open to the Tax Recovery Officer to raise the attachment in other situations as well. That question does not arise for our consideration herein. Counsel for the petitioner contended that the attachment in this case was effected as far back as October 1, 1982 and that no further proceedings have been taken in that behalf, while, at the same time, the ITO has refused to issue the certificate, thereby disabling the petitioner from leasing out the property. It is contended that the petitioner is losing the lease amount. Firstly, no such allega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguish the right, title or interest of any person to or in any property valued at more than fifty thousand rupees, no registering officer appointed under that Act shall register any such document, unless the Income-tax Officer certifies that-(a) such person has either paid or made satisfactory provision for payment of all existing liabilities under this Act, the Excess Profits Tax Act, 1940 (15 of 1940), the Business Profits Tax Act, 1947 (21 of 1947), the Indian Income-tax Act, 1922 (11 of 1922), the Wealth-tax Act, 1957 (27 of 1957), the Expenditure-tax Act, 1957 (29 of 1957), the Gift-tax Act, 1958 (18 of 1958), the Super Profits Tax Act, 1963 (14 of 1963), and the Companies (Profits) Surtax Act, 1964 (7 of 1964); or (b) the registration of the document will not prejudicially affect the recovery of any existing liability under any of the aforesaid Acts ........ It is evident from a reading of sub-s. (1) that the certificate can be issued in three situations, viz., (i) where the applicant has paid all his existing liabilities under the I.T. Act and other Acts specified in cl. (a) of the sub-section ; (ii) where the applicant has made satisfactory provision for payment of al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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