No fresh demand notice is required where appellate restoration leaves Government dues unchanged and recovery proceedings continue.

Where an appellate order restored the assessment without changing the amount of Government dues, no fresh notice of demand was required under the Income-tax Act and the Recovery Proceedings Validation Act. A certificate based on the original demand was also not extinguished merely because an intermediate appellate order had altered the assessment, if that order had not attained finality. The recovery process could continue from the earlier stage and operate according to the final operative order, with the period during which the assessee's favourably operative appellate order remained in force excluded from recovery. The writ relief was therefore set aside and the recovery proceedings held maintainable.

---

---

Issues: (i) whether a fresh notice of demand was necessary after the appellate order had restored the assessment and no variation in the amount of Government dues had been made; (ii) whether the certificate proceedings initiated on the original demand had abated or could continue notwithstanding the appellate and further proceedings.

Issue (i): whether a fresh notice of demand was necessary after the appellate order had restored the assessment and no variation in the amount of Government dues had been made.

Analysis: Section 225(4) of the Income-tax Act, 1961 contemplates amendment or withdrawal of a certificate where the outstanding demand is reduced and the order has become final and conclusive. Section 3 of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964 further provides that where Government dues are reduced, no fresh notice of demand is necessary and the proceedings may continue from the earlier stage. Where the appellate order merely restores the original assessment and does not alter the amount of demand, the statutory scheme does not require a fresh demand notice.

Conclusion: No fresh notice of demand was required.

Issue (ii): whether the certificate proceedings initiated on the original demand had abated or could continue notwithstanding the appellate and further proceedings.

Analysis: A certificate issued on the basis of a demand does not automatically come to an end merely because an intermediate appellate order has set aside or reduced the assessment, if that order is itself under challenge and has not attained finality. Until the relevant appellate or other proceeding becomes final and conclusive, the recovery proceedings remain in abeyance and revive in accordance with the last operative order. The statutory provisions do not compel extinction of the certificate in such a situation.

Conclusion: The certificate proceedings did not abate and could continue according to the final operative order.

Final Conclusion: The revenue's challenge succeeded, the writ relief granted by the High Court was set aside, and the recovery proceedings were held maintainable without a fresh demand notice, subject to exclusion of the period during which the appellate order in favour of the assessee remained operative.

Ratio Decidendi: Where an appellate or other proceeding does not change the amount of Government dues, or where the relevant reduction order is not yet final and conclusive, recovery proceedings based on the original demand are not extinguished and no fresh notice of demand is required.

---