Statutory tax recovery safeguards defeat Article 14 challenge; factual successor-liability objections cannot be raised first in writ proceedings.

Recovery machinery under section 222 read with the Second Schedule was upheld against an Article 14 challenge because the statutory scheme provided safeguards, including investigation and remedies by appeal, revision and review, and was not rendered discriminatory merely because a civil suit under section 232 was also available. The writ challenge to assessment as successor to the business also failed, since whether the petitioner had purchased only stock-in-trade or had succeeded to the business was a question of fact for the assessing authority, and objections not raised at the proper stage could not be reopened in writ jurisdiction. The petition was rejected.

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Issues: (i) Whether the recovery machinery under section 222 of the Income-tax Act, 1961, read with the Second Schedule, was unconstitutional under article 14 because a civil suit under section 232 was also available. (ii) Whether the petitioner could, in writ proceedings, challenge his assessment as successor to the business on the ground that ownership of the business had not been transferred to him and notice was not served on the transferor-firm.

Issue (i): Whether the recovery machinery under section 222 of the Income-tax Act, 1961, read with the Second Schedule, was unconstitutional under article 14 because a civil suit under section 232 was also available.

Analysis: The recovery provisions under section 222 and the Second Schedule contained elaborate safeguards, including investigation and remedies by appeal, revision, and review, and were treated as embodying principles of natural justice comparable to recovery proceedings in civil process. The availability of a civil suit did not make the statutory recovery mode more onerous or discriminatory, because the two procedures were substantially similar in protective effect and the mere existence of alternative modes of recovery does not attract article 14.

Conclusion: The challenge under article 14 failed and the recovery procedure under section 222 was upheld.

Issue (ii): Whether the petitioner could, in writ proceedings, challenge his assessment as successor to the business on the ground that ownership of the business had not been transferred to him and notice was not served on the transferor-firm.

Analysis: The question whether the petitioner merely purchased stock-in-trade or had succeeded to the business was a question of fact for the assessing authority. The petitioner had already been proceeded against on the footing of transferee/successor, and a factual objection not raised at the appropriate stage could not be entertained in writ jurisdiction. The contention regarding want of notice to the transferor-firm also depended on the factual basis of succession and apportionment, which was not open to re-agitation in the writ petition.

Conclusion: The factual challenge to the assessment as successor failed.

Final Conclusion: The writ petition was rejected because neither the constitutional challenge to the recovery mechanism nor the factual challenge to successor assessment was established.

Ratio Decidendi: A statutory recovery procedure is not violative of article 14 merely because an alternative civil remedy exists, where the special procedure contains adequate safeguards; and a pure question of fact regarding successor liability cannot ordinarily be raised for the first time in writ proceedings.

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