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of <h1>Supreme Court quashes garnishee order for tax arrears, mandates compliance with tax recovery provisions</h1> <h3>Kulithalai Cane Farms P. Ltd. Versus Agricultural Income-Tax Officer And Another</h3> Kulithalai Cane Farms P. Ltd. Versus Agricultural Income-Tax Officer And Another - [2000] 246 ITR 809 Issues:Writ petition for prohibition against collecting agricultural income-tax arrears from third parties.Analysis:The petitioner, a managing director, challenged the first respondent's power to issue garnishee orders for tax arrears, leading to a writ petition seeking prohibition. Disputes arose between the parties, culminating in a compromise decree from the Supreme Court. The petitioner alleged improper assessment practices by the first respondent, including best judgment assessments and shifting assessment circles without notice. The petitioner contended that the assessment was illegal, highlighting discrepancies in tax calculations and unauthorized collection actions.The petitioner also raised concerns about lands under trespass, illegal tax collections, and an order of attachment for arrears. The petitioner's counsel argued that the attachment order lacked legal basis, citing relevant provisions of the Tamil Nadu Agricultural Income-tax Act, particularly sections 40 and 41 governing tax recovery procedures. The court examined the requirement for a certificate specifying arrears due from an assessee under section 41 and noted procedural lapses in the case, questioning the authority of the District Revenue Officer to act on behalf of the Collector.The court scrutinized the records provided by the government advocate, revealing deficiencies in the delegation of powers for tax recovery. Consequently, the court quashed the impugned order due to the violation of section 41 but granted liberty to the respondent to proceed afresh within a specified timeframe, emphasizing compliance with the Act's provisions. The writ petition was allowed, with a directive for the petitioner to deposit a specified amount pending final orders, subject to refund if deemed not liable for the tax. The judgment balanced procedural adherence with the petitioner's rights, ensuring a fair and lawful resolution of the tax dispute.
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