Court deems pre-assessment demand for dishonored cheques illegal, quashes order, allows recovery post-assessment. The Court found the demand for payment based on dishonored cheques before completion of assessment to be illegal. The Court quashed the demand and allowed ...
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The Court found the demand for payment based on dishonored cheques before completion of assessment to be illegal. The Court quashed the demand and allowed the Writ Petition, stating that coercive recovery without an assessment order is unlawful. The respondents were given liberty to complete the assessment and recover any dues lawfully determined after assessment proceedings. No costs were awarded, and connected Miscellaneous Petitions were closed.
Issues: Challenge to demand of payment based on dishonored cheques before completion of assessment.
Analysis: The Writ Petition challenged the demand of Rs. 21,33,005/- by the first respondent for dishonored cheques issued by the petitioner, contending that spot collection of taxes is illegal when assessment is pending. The petitioner argued that coercive recovery without an assessment order is unlawful, leading to the filing of the Writ Petition.
The first respondent, in their counter affidavit, claimed that the petitioner admitted the tax amount before issuing the dishonored cheques, justifying their right to recover the amount. The petitioner's counsel argued that the demand lacked legal basis as the cheques were intended for tax payment, not compounding fees as stated in the demand.
The Court noted that no assessment order had been issued against the petitioner till date, making the collection of cheques by the Enforcement Wing officials illegal. The respondent's admission that the cheques were for tax payment, not compounding fees, further supported the petitioner's argument against the demand without an assessment order.
Referring to a previous judgment, the Court concluded that the demand without an assessment order was indeed illegal. Consequently, the Court quashed the impugned demand dated 17.04.2017 and allowed the Writ Petition. However, the respondents were granted liberty to complete the assessment and recover any dues lawfully determined after assessment proceedings. No costs were awarded, and connected Miscellaneous Petitions were closed.
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