Deficit stock recovery notices set aside and remitted for fresh adjudication after hearing the taxpayer.

Ambiguous earlier proceedings had left the deficit stock dispute unresolved, so the recovery notices could not stand without fresh consideration. The Court found that the prior order did not clearly and conclusively determine the stock issue, while also recognising that the revenue should not be prevented from recovering tax if it is lawfully payable. Balancing both positions, the notices were interfered with and the matter was remitted to the assessing authority for a fresh decision after giving the petitioner an opportunity to file a reply and be heard.

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Issues: Whether the impugned recovery notices for deficit stock could be sustained and whether the matter required fresh consideration by the assessing authority.

Analysis: The prior order had created an ambiguity because it referred to two issues in the body while also setting aside the earlier assessment orders in general. On that basis, the dispute relating to deficit stock had remained unresolved in the subsequent proceedings. Since the earlier course of action had not clearly and conclusively settled that question, the Court held that the deficit stock issue was still alive. At the same time, the petitioner was entitled to an opportunity to respond, and the revenue could not be deprived of recovery if tax was lawfully payable. To balance both sides, the impugned recovery notices were interfered with and the matter was sent back for a fresh decision after hearing the petitioner.

Conclusion: The recovery notices were quashed and the matter was remitted to the respondent for fresh adjudication on the deficit stock issue, with an opportunity to the petitioner to file a reply and be heard.

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