TaxTMI 
TaxTMI 
1982 (9) TMI 16
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....bsp; | ------------------------------------------------------- | | | | Piramal Gulab Rai Girdhari Lal Pooran Mal Ganga Issueless Hari Prasad | &nb....
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....d an objection before the Collector, Deoria, against the aforesaid attachment. That objection was rejected. Then, he filed a suit for injunction bat withdrew it with permission to file fresh suit and then he filed suit No. 22 of 1961, in the Court of the Civil judge, Deoria, for injunction. That suit was dismissed on May 14, 1963. Sri Khandelia filed a First Appeal, being F.A. No. 245 of 1963, against that judgment and decree in this court. That appeal was dismissed on May 5, 1977. On February 28, 1977, the petitioner came up to this court by way of Civil Misc. Writ Petition No. 102 of 1977. That petition was dismissed summarily on May 11, 1977, on the ground that an alternative remedy was available to the petitioner. In the meantime the TRO, Gorakhpur, issued a proclamation of sale on April 6, 1977, and the attached property was sold on May 12, 1977, for a sum of Rs. 2,30,000. The auction purchasers were Deoki Nandan Khandelia and Sitaram Motani, respondents Nos. 5 and 6. The petitioner filed an objection under rr. 9 and 11 of the Second Schedule to the Act before the TRO, Gorakhpur, respondent No. 2, on June 2, 1977. Respondent No. 2 dismissed that objection by his order date....
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....quently treated as one under r. 9. Before that the petitioner had filed a writ petition before the High Court which was dismissed. Further, it has been averred that the demand notices were duly served on the assessee, HUF, by registered post. According to the respondents the plea that demand notices had not been served was never raised at any time during this protracted litigation before. An attempt was made to raise this plea for the first time in the First Appeal No. 245 of 1961, by an application for amendment of the plaint in January, 1977. That application was dismissed by the court as mala fide on 10th February, 1977. It has also been averred that the petitioner is in collusion with late Sri Kanhaiya Lal Khandelia, to whom he purported to have sold the house in question, in order to delay and defeat the recovery of the impugned dues. It has been averred that the recovery proceedings are perfectly legal and valid. The petitioner has filed a rejoinder to this counter-affidavit. A preliminary objection was raised by Sri Markandey Katju, the learned counsel for the respondents Nos. 1 to 4, that this court should not exercise its jurisdiction under art. 226 of the Constituti....
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....aud is alleged. It reads : " Except as otherwise expressly provided in this Act, every question arising between the Income-tax Officer and the defaulter or their representatives, relating to the execution, discharge or satisfaction of certificate duly filed under this Act, or relating to the confirmation or setting aside by an order under this Act of a sale hold in execution of such certificate, shall be determined, not by suit, but by order of the Tax Recovery Officer, before whom such question arises : Provided that a suit may be brought in a civil court in respect of any such question upon the ground of fraud. Thus, in respect of questions relating to the execution, discharge, or satisfaction of a certificate it is only the TRO who has got jurisdiction to decide the same. These matters cannot be determined by a suit. A suit can be filed in a civil court only if fraud is alleged. Against the order passed by the TRO there is an appeal provided under r. 86 of this Schedule, and thereafter the remedy for the aggrieved party is only to challenge the order under art. 226. Rule 11 of the Schedule provides for investigation by the TRO of any claim or objection made to the attachme....
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....y because the petitioner's conduct has not been clean. Further, according to the learned counsel the recovery proceedings were legally perfect and valid and they had started with the issue of certificate dated March 27, 1947, and that the second certificate was only in continuation of the same and also purported to amend the first certificate. We shall first examine the case on merits. Since these two certificates were issued in 1947 and 1951, respectively, the provisions of the 1922 Act would be relevant. Section 46 of that Act provides or mode and time of recovery. The provisions of this section so far as they are relevant for the present purpose read as under : " 46. (2) The Income-tax Officer may forward to the Collector certificate under his signature specifying the amount of arrears due from an assessee, and the Collector, on receipt of such certificate, shall proceed to recover from such assessee the amount specified there in as if it were an arrear of land revenue : Provided that without prejudice to the powers conferred by this subsection, the Collector shall, for the purpose of recovering the amount specified in the certificate, have also all the powers which (a) a ....
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....ount of arrears due from an assessee. On receipt of such certificate the Collector shall proceed to recover that amount as if it were the arrears of land revenue. In doing so, the Collector shall have all the powers which a Collector has under the Revenue Recovery Act or a civil court has under the CPC for the purpose of the recovery of the amount due under a decree. The proceedings for the recovery are required to be commenced within one year from the 1st day of the financial year in which the demand is made under the Act. Further, a proceeding for the recovery shall be deemed to have commenced if , some action is taken to recover the whole or any part of the sum within the aforesaid period. There are several modes of recovery specified in this section. They are not mutually exclusive nor do they affect in any way any other law for the time being in force relating to the recovery of debts due to the Government. What is, therefore, required to be seen in the present case is as to whether this certificate issued on March 27, 1947, was a valid certificate and whether any action was taken to recover the whole or any part of the sum in pursuance of it. Further, it has to be seen as to ....
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....issued to the Collector, Faizabad District. The recovery was to be made from Seth Mohan Lal Marwari, Deoriawala, r/o Pahari Kothi, Ayodhya, District Faizabad. The sum mentioned therein was Rs. 2,55,366-14 annas and it was on account of income-tax/super-tax, E.P.T. arrears. Various objections were raised by learned counsel for the petitioner in regard to this certificate. They were : that it was addressed by the III Addl-cum-E.P.T., ITO, Cawnpore, to the Collector, Faizabad, which he could not do; that it was in the name of Seth Mohan Lal Marwari and not the assessee-HUF. In other words, it was not a recovery certificate issued against the assessee-HUF, for the reason that under the Act an individual and an HUF constitute different assessable entities. It is also not known as to how it was issued by the ITO, Cawnpore, when the assessing officer was the ITO, Gorakhpur. According to the counsel, therefore, this certificate does not fall under s. 46(2) of the 1922 Act, so as to save limitation for recovery of the dues outstanding against the assessee-HUF. According to the counsel, therefore, it was absolutely a null and void document. We do not agree with these learned submissions and,....
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....trict and action may be taken to recover the amount through the Collector, Deoria. Both these letters are annexed to the counter affidavit. The question for consideration is as to whether this recovery certificate is null and void because of the defects pointed out on behalf of the petitioner. In Ram Charan Lal Ram Narain v. ITO [1965] 56 ITR 316, learned single judge of this court took the view that under s. 46(2) of the 1922 Act read with s. 5 of the Revenue Recovery Act, 1890, an ITO can make a request for recovery of arrears of income-tax only to the Collector of the District in which his office is situated. He cannot make request to the Collector of another district. Now, in our opinion, this decision can be distinguished on the ground that it was based on a consideration of the provisions contained in ss. 3 and 5 of the Revenue Recovery Act, 1890. Sub-s. (1) of, s 3 of that Act reads: " 3. (1) Where an arrear of land Revenue, or a sum recoverable as an arrear of land revenue, is payable to a Collector by a defaulter being or having property in a district other than that in which the arrear accrued or the sum is payable, the Collector may send to the Collector of that other d....
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.... is payable ". In a case where the assessee is an undivided Hindu family and if default is committed in the payment of the tax due, it is a default committed by the HUF. It cannot be said that the default has been committed by the karta. However, in our opinion, the matter has to be examined in proper perspective with a reference to the antecedent and contemporary circumstances. We have already mentioned above that the order for the issue of recovery certificate was made in the file of the assessee-HUF. There is no dispute that Seth Mohan Lal was the karta of the assessee-HUF at the relevant time. It is correct that in the certificate he was not described as karta of the family. We find that in the appellate order of the Tax Recovery Commissioner dated December 7, 1979, copy of which is annex. 18, to the writ petition, it has been stated in para. 9 : " It is also evident from the record that the appellant, Sri Hari Prasad made an application dated 19-9-1940, requesting that the income-tax dues (past and future) should be realised from Sri Mohan Lal Marwari and he (Sri Hari Prasad) had nothing to do with the income-tax demand. " It was in these circumstances that the certificate w....
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....ny place in Bihar is competent to forward a certificate under s. 46(2) of the 1922 Act to any Collector of the State, if he proceeds to realise the arrears of tax by institution of proceedings under the Bihar and Orissa Act, and not under the Revenue Recovery Act, 1890. In the present case as well there is nothing to indicate that the proceedings to realise the arrears of tax were instituted under the Revenue Recovery Act. That being so, the impugned certificate did not suffer from any illegality, inasmuch as it was forwarded by the ITO, Cawnpore, to the Collector, Faizabad. We are, thus, of the view that this certificate merely suffered from an irregularity inasmuch as the status of Seth Mohan Lal Marwari is not mentioned. However, if the certificate is examined in the background of the facts obtaining before its issue, it can safely be said that it was issued against him in his capacity as karta of the assessee-HUF and not as individual. It did not suffer from any other legal infirmity and, therefore, it was not a void document as urged on behalf of the petitioner. It was certainly covered by the provisions contained in sub-s. (2) of s. 46 of the I.T. Act (1922). Now, we come t....
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....; ---------- Grand Total 2,35,447-7 ---------- &n....
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....y indicated above that the earlier certificate was issued in the name of the karta of the family though the status was not specified therein but on a consideration of the facts preceding the issue it becomes quite clear. The " duplicate " certificate was issued in the name of the assessee-HUF. The Explanation to sub-s. (7) contains a deeming clause that a proceeding for the recovery, of arrears shall be deemed to have commenced if some action had been taken to recover the whole or any part of it within the period prescribed by the main provision. The expression used in the Explanation is " some action ". This expression has been liberally construed to mean forwarding for arrears of tax to the Collector under s. 46(2) of the Act and not necessarily of the institution of the certificate case by the certificate officer concerned (See Aruna Devi Jajodia v. Collector of Madras [1952] 21 ITR 349 (Mad), Kashiram Agarwalla v. Collector of 24-Parganas [1958] 33 ITR 800 (Cal), Lal Bhan Pratap Narain Bahadur Pal v. State of Uttar Pradesh [1962] 46 ITR 247 (All), and Raja Bahadur Kamakshya Narain Singh v. ITO [1969] 74 ITR 563 (Pat). In the instant case apart from the forwarding of certificate....
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....recovery certificate was issued on March 27, 1947, and the other on August 11, 1951. Sri Mohan Lal was the karta of the assessee-HUF and Hari Prasad the present petitioner and Sohan Lal were the coparceners. During the course of the recovery proceedings the karta as also the two coparceners of the assessee-HUF sold portions of the house property. The petitioner sold his portion to Kanhaiya Lal Khandelia on November 26, 1951, i.e., after the issue of the second certificate but before the attachment of this house property by the Collector, Deoria. On July 12, 1953, Sri Khandelia filed an objection before the Collector, Deoria, against this attachment. The objection was rejected and he then filed a civil suit for injunction ; but, withdrew it with permission to file fresh suit. Then, he filed Suit No. 22 of 1961, in the court of civil judge, Deoria, for injunction. That suit was dismissed on May 14, 1963, and the first appeal against that judgment and decree was dismissed by this court on May 5, 1977. A copy of that appellate judgment is annex. C-A to the counter affidavit. The view taken by this court was that the sale deed executed by Hari Prasad, petitioner, was a collusive documen....
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....arose to the petitioner as far back as 1962, on the rejection of his representation on November 9, 1962, he allowed some eleven years to go by before filing the writ petition. There being no satisfactory explanation of the inordinate delay, the view taken was that the petition was liable to be dismissed. In the instant case, the cause of action to the petitioner arose on March 27, 1947, when the first recovery certificate was issued and again on August 11, 1951, when the amended certificate was issued and then on July 12, 1953, when the petitioner's house property was attached. It was, however, only on February 28, 1977, when the so called transferee had lost in his attempt to stall the recovery, that be came forward with petition challenging the recovery before this court. Evidently there was inordinate and inexplicable delay and the petitioner cannot be allowed the reliefs claimed. We may also refer to another decision of the Supreme Court in Naib Subedar Lachhman Dass v. Union of India, AIR 1977 SC 1979, where an inexplicable delay of four years from the date of action had occasioned, was held sufficient to merit dismissal of the petition summarily. We are thus inclined to agre....