TaxTMI 
TaxTMI 
Jurisdiction and Procedure for Tax Recovery : Clause 414 of the Income Tax Bill, 2025 Vs. Section 223 of the Income-tax Act, 1961
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....termines the jurisdiction and powers of the Tax Recovery Officer (TRO) in cases where recovery of tax arrears is necessary, especially when the assessee has multiple connections to different jurisdictions or possesses assets spread across various locations. The provision is substantially similar to Section 223 of the Income-tax Act, 1961, and is operationalized in practice through Rule 117B of the Income-tax Rules, 1962, which prescribes the form and manner in which statements (certificates) for recovery are to be drawn up. This commentary provides a detailed examination of Clause 414, analyzing its structure, legislative intent, and practical implications. A comparative analysis is undertaken with Section 223 of the Income-tax Act, 1961, ....
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....ministration. Detailed Analysis of Clause 414 of the Income Tax Bill, 2025 1. Sub-section (1): Determination of Jurisdiction Clause 414(1) lays down the primary rule for determining which Tax Recovery Officer is competent to effect recovery u/s 413 (presumably the provision dealing with the issuance of recovery certificates or similar instruments under the new Bill). * Clause 414(1)(a): The TRO within whose jurisdiction the assessee carries on business or profession, or has the principal place of business or profession. * Clause 414(1)(b): The TRO within whose jurisdiction the assessee resides or any of his movable or immovable property is situated. The provision further clarifies that the "jurisdiction for this purpose" is to be de....
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..... Key Features and Interpretation: * The provision is designed to ensure that the recovery process is not stymied by jurisdictional limitations, especially for high-value or complex cases involving multiple assets. * The transfer mechanism is triggered both by actual inability to recover (objective criteria) and by the opinion of expediency (subjective criteria), providing necessary discretion to the TRO. * The requirement of certification (in the prescribed manner) for partial recovery ensures procedural integrity and prevents duplication or over-recovery. * The provision maintains the chain of authority and accountability, as the receiving TRO acts under the same legal mandate as the original TRO. 3. Prescribed Certification and....
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.... legislative choice to maintain continuity in the recovery framework. Key Differences and Developments * Reference to Authorizing Authority: Section 223 refers to the "Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner" authorized u/s 120, whereas Clause 414 refers to "any income-tax authority not below the rank of Commissioner who is authorized in this behalf by the Board in pursuance of section 241". This may reflect a streamlining or updating of administrative hierarchy under the new Bill. * Reference to Related Provisions: Section 223 is linked to action u/s 222 (certificate for recovery), while Clause 414 refers to Section 413. This is a result of renumbering or restructuring in the 2025 B....
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....laps: In complex cases involving multiple businesses or widespread assets, there may be disputes regarding the appropriate TRO, especially where assets are transferred or relocated during the pendency of proceedings. * Procedural Lapses: Non-compliance with certification or form requirements could lead to legal challenges, potentially delaying recovery. Practical Implications 1. For Tax Authorities * Administrative Efficiency: The provision allows for seamless transfer and coordination between TROs, reducing bottlenecks in recovery. * Discretion and Accountability: TROs are empowered with discretion to determine when inter-jurisdictional cooperation is necessary, but are bound by formal procedures and documentation. * Jurisdiction....