Tax recovery certificate and limitation challenges failed where no withdrawal, cancellation, or statutory time bar was proved.
A recovery certificate is the legal for tax recovery proceedings, and such proceedings cannot continue if the certificate is validly withdrawn or cancelled; here, no material showed withdrawal or cancellation of the impugned certificate, so the challenge failed. Limitation for recovery under the old income-tax regime had to be computed from the relevant statutory period, including the effect of instalment arrangements; on the facts, recovery was shown to be within time, so the limitation objection failed. The existence of an alternative statutory remedy did not bar writ jurisdiction as an absolute rule, and the petition was entertained and decided on merits.
Issues: (i) Whether the recovery proceedings could continue after withdrawal or cancellation of the recovery certificate by the Income-tax Officer under the Income-tax Act, 1961. (ii) Whether the recovery certificate was barred by limitation under the Indian Income-tax Act, 1922. (iii) Whether the writ petition was maintainable in view of the alternative statutory remedies.
Issue (i): Whether the recovery proceedings could continue after withdrawal or cancellation of the recovery certificate by the Income-tax Officer under the Income-tax Act, 1961.
Analysis: A recovery certificate remains the legal foundation for action by the Tax Recovery Officer, and if it is validly withdrawn or cancelled by the competent authority, the recovery proceedings cannot continue. On the facts, however, there was no material showing that the impugned certificate had been withdrawn or cancelled. The documents relied upon by the petitioner related to different Bakijai proceedings and did not pertain to the impugned certificate. The respondents consistently asserted that the certificate remained subsisting, and the petitioner produced no order or credible basis to show otherwise.
Conclusion: The contention failed and the recovery proceedings were not invalid on that ground.
Issue (ii): Whether the recovery certificate was barred by limitation under the Indian Income-tax Act, 1922.
Analysis: Limitation for commencing recovery proceedings under the old Act had to be tested with reference to the statutory period running from the relevant financial year, and where payment by instalments was allowed, the period was to be computed accordingly. The challenge was vague and unsupported by the necessary factual foundation. The respondents showed that the demands were raised in time, that instalments were granted, and that recovery was commenced within the statutory period. No reliable material rebutted that position.
Conclusion: The certificate was not barred by limitation.
Issue (iii): Whether the writ petition was maintainable in view of the alternative statutory remedies.
Analysis: The existence of an alternative remedy does not by itself oust writ jurisdiction. It is a rule of discretion, and the Court may entertain a petition where jurisdictional error or grave injustice is alleged. Since the petition had been entertained earlier, the parties were heard on merits, and the statutory remedies were no longer practically available, the Court proceeded to determine the controversy instead of rejecting the petition at the threshold.
Conclusion: The petition was entertained and decided on merits.
Final Conclusion: The challenge to the recovery proceedings failed on merits, as neither withdrawal of the certificate nor limitation was proved, and the writ petition was dismissed with costs.
Ratio Decidendi: Recovery proceedings under the income-tax law can continue only on the basis of a valid subsisting recovery certificate, but a belated writ challenge fails where no material shows withdrawal or cancellation of the certificate and the statutory limitation for recovery is not established to have been breached.
TaxTMI 
AI Drafter ✕
TaxTMI 
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