High Court upholds recovery proceedings under sec 226(3) without separate notice of demand (3)

The High Court dismissed the petition challenging the initiation of recovery proceedings under section 226(3) without a separate notice of demand under section 156. The court held that the intimation served the purpose of a notice of demand, deeming it sufficient. Additionally, the court ruled that coercive steps under section 226(3) could proceed even during the pendency of an application before the Commissioner of Income-tax, as the petitioner could have sought a stay before the Income-tax Appellate Tribunal. The court emphasized that extraordinary jurisdiction did not warrant interference in the recovery proceedings.

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Issues:
1. Jurisdiction to initiate recovery proceedings under section 226(3) without issuing a notice of demand under section 156.
2. Coercive steps under section 226(3) during the pendency of an application before the Commissioner of Income-tax.

Analysis:
1. The first issue raised in the judgment concerns the jurisdiction to initiate recovery proceedings under section 226(3) without issuing a notice of demand under section 156. The petitioner argued that no notice of demand had been issued as required by law, and therefore, recovery proceedings could not have been initiated. The court examined the provisions of section 143(1)(a)(i) which state that an intimation sent to the assessee is deemed to be a notice of demand under section 156. The court noted that even though no separate demand notice was issued, the intimation served the purpose of a notice of demand. The court also referred to previous judgments and legal provisions that support the concept of deeming the intimation as a notice of demand. Consequently, the court dismissed the argument that recovery proceedings were invalid due to the lack of a separate notice of demand.

2. The second issue raised in the judgment pertains to the petitioner's contention regarding coercive steps under section 226(3) during the pendency of an application before the Commissioner of Income-tax. The petitioner argued that since an application was pending before the Commissioner, recovery proceedings should not proceed. However, the court held that the petitioner could have approached the Income-tax Appellate Tribunal for a stay even while the application was pending before the Commissioner. The court emphasized that there was no restriction on seeking a stay before the Tribunal in such circumstances. Therefore, the court rejected the petitioner's argument that recovery proceedings should be halted due to the pending application before the Commissioner.

In conclusion, the High Court dismissed the petition, ruling that it could not interfere with the recovery proceedings under extraordinary jurisdiction. The judgment provided a detailed analysis of the legal provisions regarding notice of demand, deeming provisions, and the petitioner's options during the pendency of an application before the Commissioner of Income-tax.

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