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Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the appellants were liable as garnishees of the notified person and whether the recovery orders could stand when the Custodian had not proved the subsisting debt by admissible evidence.
Analysis: The liabilities sought to be recovered arose from loans allegedly advanced in 1996-1997, whereas the relevant notification against the concerned person was issued only in 2001. The appellants' plea was that the loans had already been repaid by cheque and by adjustment against supplies, and the burden to prove a subsisting debt lay initially on the Custodian under the Evidence Act. The recovery claim rested substantially on an unproved communication from the Income Tax Department, and no witness from that Department was examined. The appellants' failure to produce old account records after many years did not justify shifting the initial burden away from the Custodian or sustaining the finding merely on the basis of incomplete proof.
Conclusion: The appellants were not proved to be liable as garnishees on the basis of admissible evidence, and the recovery orders could not be sustained.
Ratio Decidendi: In a recovery proceeding, the party asserting a subsisting debt must first prove it by admissible evidence, and the burden cannot be shifted to the opposite party unless that primary burden is discharged.
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