1967 (3) TMI 33 - HC - Income Tax

Court dismisses writ petitions for non-bona fide fund remittance from Ceylon to India under tax law

AEM Usoof. Versus Income-Tax Officer, Tuticorin And Another.

The court dismissed the writ petitions as the petitioner's attempts to remit funds from Ceylon to India were not deemed bona fide under section 45 of the ... Writ petitions are filed under article 226 of the Constitution of India for the issue of appropriate writs - Petition is for the issue of a writ of certiorari or any other appropriate writ to quash the order of attachment Issues:- Interpretation of section 45 of the Indian Income-tax Act, 1922 regarding default in tax payment.- Whether the petitioner's attempts to remit funds from Ceylon to India were bona fide.- Validity of the attachment of properties in India by the revenue authorities.Analysis:The judgment addressed the interpretation of section 45 of the Indian Income-tax Act, 1922, in the context of tax payment default. The petitioner argued that due to laws in Ceylon restricting remittance of funds to India, he should not be considered a defaulter under the Act. Section 45 provides exceptions for cases where remittance is prohibited or restricted. The petitioner contended that his efforts to remit funds were genuine, citing correspondence with Ceylon's exchange control authorities. However, the court found that the petitioner's attempts were not sufficient to establish a bona fide effort to remit funds, as evidenced by a brief and inconclusive response from the Ceylon authorities. The court noted that the petitioner failed to prove that the prohibition or restriction in Ceylon was the sole reason for non-remittance, leading to a dismissal of the writ petitions.The judgment delved into the petitioner's history of unsuccessful attempts to secure remittance in previous cases, emphasizing the need for genuine efforts to satisfy tax obligations. Despite the absence of fraud or collusion, the court found the petitioner's recent attempt lacked completeness and sincerity. The court cited a precedent to highlight that negligence or failure to obtain permits does not excuse non-remittance if not due to prohibition or restriction. The court concluded that the petitioner's actions did not meet the standard of a bona fide attempt to remit funds, thus rejecting the argument that he should be exempt from default under section 45.Regarding the validity of the attachment of properties in India by the revenue authorities, the court allowed the petitioner a six-month period to provide conclusive proof of the prohibition or restriction preventing fund remittance from Ceylon to India. If the petitioner fails to establish this to the satisfaction of the revenue within the specified timeframe, the revenue authorities are permitted to proceed with further recovery proceedings by selling the attached properties. The judgment highlighted the importance of substantiating claims of prohibition or restriction in the context of tax obligations and property attachment.