2004 (2) TMI 38

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.... the provisions of section 46(5A) of the Indian Income-tax Act, 1922, and the decision of the apex court in ITO v. Budha Pictures [1967] 65 ITR 620, the notice issued by the respondent-authorities on October 20, 2000 (annexure A) got exhausted and the said notice cannot now be acted upon to prevent the purchasers of the goods to be manufactured by the petitioner from paying the sale price thereof to the petitioner. It is further submitted that in any view of the matter, the petitioner-company is registered as a sick industrial company under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA" for short) as per communication dated November 27, 2003 (annexure B). Therefore, in view of the provisions of sectio....

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.... be able to give employment to about 400 people. On the other hand, Mr. D.D. Vyas, learned counsel for the respondent-authorities, has submitted that the notice dated October 20, 2000 (annexure A) under section 226(3) of the Act would enure till any income-tax dues remain outstanding from the petitioner to the Department, otherwise heavy burden would be cast on the Department in issuing notice after notice for every transaction and the Department may not be able to enforce any such notice on the ground that the payment was already made before the issuance of the notice or that there would be no dues from the third party to the petitioner as on the date of receiving the notice under section 226(3) of the Act. As regards the protection ....

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....to the Revenue, cannot be and could not have been intended to be covered within section 22 of the Act. When a sick company recovers sales tax from the purchasers of its goods, it is really collecting sales tax on behalf of the State and, therefore, it cannot be permitted to recover sales tax from the purchasers and refuse to hand over the same to the Revenue. As far as income-tax liability is concerned, when the petitioner would be selling its goods to a third party, the purchase price being recovered from the purchasers would not be on behalf of the income-tax authorities. Since the petitioner is registered as a sick company by BIFR, it is not very likely that the petitioner would be required to pay income tax on the purchase price to b....