Commencement of Recovery Proceedings triggers limitation; failure to record special reasons invalidates additional recovery mode.

A proceeding under the recovery provisions commences when the revenue takes statutory action initiating recovery (here, issuance of a certificate under section 46(2) on October 29, 1953), and that commencement governs limitation under the explanation to section 46(7). Notices issued under section 46(5A) constitute a distinct mode of recovery and notices served within the extended limitation period are effective for subsequent notices in the same mode. However, where one mode of recovery is already on foot, resort to an additional mode requires recording special reasons; absence of such recorded reasons vitiates the later proceedings under the additional mode.

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Issues: (i) Whether a certificate under section 46(2) of the Income-tax Act, 1922 was issued and whether its issue constitutes the commencement of recovery proceedings for limitation purposes; (ii) Whether notices issued under section 46(5A) of the Income-tax Act, 1922 (in December 1954 and July 1957) amount to recovery proceedings and whether issuance to some debtors within the extended limitation period saves subsequent notices to other debtors; (iii) Whether, where one mode of recovery under section 46 is already on foot, resort to another mode under section 46 (specifically section 46(5A)) requires recording of special reasons and absence of such recorded reasons vitiates subsequent proceedings.

Issue (i): Whether a certificate under section 46(2) was issued and whether that issue marks commencement of recovery proceedings for limitation.

Analysis: Relevant provisions treat the several modes of recovery in section 46 as actions initiated by the Income Tax Officer that may set in motion other agencies (e.g., the Collector). The explanation to section 46(7) deems a proceeding to have commenced if some action to recover the sum is taken within the prescribed period. Department records and contemporaneous departmental enquiries show direction to issue a certificate on October 26, 1953, a certificate prepared on October 29, 1953, and a dispatch entry; subsequent correspondence with the Collector confirms nonreceipt but supports that the certificate was forwarded. Precedent and the statutory scheme treat the issue of the certificate as initiating recovery proceedings.

Conclusion: In favour of Revenue. A certificate under section 46(2) was issued on October 29, 1953, and its issue constitutes commencement of recovery proceedings for the purpose of the limitation in section 46(7).

Issue (ii): Whether notices under section 46(5A) are recovery proceedings and whether notices issued to some debtors within the extended limitation period save later notices to other debtors.

Analysis: The explanation to section 46(7) declares the several modes of recovery are not mutually exclusive and that action taken in one mode does not preclude recourse to another mode. Issuing notices to persons from whom money is due is expressly a mode of recovery under section 46(5A). The proviso to section 46(7) extending limitation where recovery proceedings are stayed applies; notices issued within the extended period are effective even if they prove infructuous. The statutory scheme contemplates that a mode of recovery commenced within the period may be applied to different debtors identified subsequently as part of the same mode.

Conclusion: In favour of Revenue. Notices issued under section 46(5A) in December 1954 amount to recovery proceedings and, read with the proviso to section 46(7), may sustain subsequent notices in the same mode.

Issue (iii): Whether resorting to an additional mode of recovery under section 46 while another mode is already in progress requires recording of special reasons, and whether absence of recorded special reasons renders subsequent proceedings unlawful.

Analysis: The latter part of the explanation to section 46(7) permits the Income Tax Officer to have recourse to any such mode of recovery "if for any special reasons to be recorded he so thinks fit." The textual link to "the several modes of recovery specified in this section" indicates the requirement to record special reasons applies where the Officer adopts an additional mode under section 46 while another mode is being pursued. No special reasons were recorded by the Officer before issuing notices under section 46(5A) while proceedings under section 46(2) were on foot. The statutory requirement is mandatory and absence of the recorded reasons invalidates the later steps taken under the additional mode.

Conclusion: In favour of Assessee. The proceedings under section 46(5A) (both 1954 and 1957) are vitiated for failure to record the special reasons required when an additional mode of recovery under section 46 is adopted while another mode was already on foot.

Final Conclusion: The petitions succeed on the ground that proceedings under section 46(5A) were unlawful for failure to record the special reasons required by the explanation to section 46(7); consequential relief follows and the writs are made absolute.

Ratio Decidendi: For limitation and validity purposes a proceeding commences when the revenue takes statutory action initiating recovery (e.g., issue of a certificate under section 46(2)), the several modes in section 46 are not mutually exclusive and may operate concurrently, but resort to an additional mode under section 46 while another mode is in progress requires the Income Tax Officer to record special reasons; absence of such recorded reasons renders the subsequent mode unlawful.

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