BEHARI LAL BALDEO PRASAD Vs. COMMISSIONER
LAWS(ALL)-1965-3-21
HIGH COURT OF ALLAHABAD
Decided on March 16,1965

BEHARI LAL BALDEO PRASAD, COMMISSION AGENTS Appellant
VERSUS
COMMISSIONER, JHANSI DIVISION Respondents


Referred Judgements :-

MINISTER OF NATIONAL REVENUE V. WRIGHTS CANADIAN ROPES LTD. [REFERRED TO]
CALCUTTA DISCOUNT COMPANY LIMITED VS. INCOME TAX OFFICER COMPANIES DISTRICT I CALCUTTA [REFERRED TO]
P J IRANI VS. STATE OF MADRAS [REFERRED TO]
INCOME TAX OFFICER KOLAR CIRCLE KOLAR VS. SEGHU BUCHIAH SETTY [REFERRED TO]
FIRM AL AR ARUNACHALAM CHETTIAR VS. KALEESWARAR MILLS LTD [REFERRED TO]



Cited Judgements :-

JWALA PRASAD VS. VARMA S N FORMERLY ADDITIONAL DISTRICT MAGISTRATE [LAWS(ALL)-1970-7-7] [REFERRED TO]
GORA CHAND POREL VS. UNION OF INDIA [LAWS(CAL)-1985-8-17] [REFERRED TO]
NAVINCHANDRA SHAKERCHAND SHAH VS. AHMEDABAD CO OP DEPARTMENT STORES LIMITED [LAWS(GJH)-1977-3-1] [REFERRED]
PREM SHANKAR LAL ETC. VS. STATE OF UTTAR PRADESH [LAWS(ALL)-1983-12-57] [REFERRED TO]


JUDGEMENT

Satish Chandra, J. - (1.)THIS is an application under Article 226 of the Constitution praying that the Income Tax recovery certificate and the proceedings consequent thereto be all quashed.
(2.)THE petitioner Messrs Behari Lal Baldeo Prasad was a Hindu undivided family carrying on business. It was assessed to income-tax for the years 1952-53 and 1953-54 and a tax demand of Rs. 14,495/- was due from this firm. For the assessment years 1949-50, 1950-51 and 1951-52 an amount of Rs. 19,200/- was due from this firm by way of penalty. Thus a demand of Rs. 33,695/- had to be paid by this firm to the Income-tax Department, In 1956 differences between the members of the family led to a stoppage of business. A Partition Suit (No. 13 of 1956) was instituted in the Court of the Civil Judge, Orai. THE trial court appointed a Receiver over the family properties.
On 20-7-1959 the Income-tax Officer issued a recovery certificate under Section 46 (2) of the Income-tax Act, .1922 for Rs. 33,695/-. By an order of the Income-tax Appellate Tribunal dated 6-12-61 the amount of penalty imposed on the petitioner firm was reduced to Rs. 5,900/-. The total amount due from the petitioner thus stood reduced by a sum of Rs. 13,300/-.

On 7-2-61 the Income-tax Officer had sent a communication to the Collector stating that the arrears outstanding from the petitioner were Rs. 16,995.70 up. The petitioner has characterised this document as a fresh recovery certificate. In the counter-affidavit the Income-tax Officer has stated that this was not a fresh recovery certificate but only an intimation to the Collector about the details of the assets owned by the firm as also some of the outstanding arrears. From paragraph 11 of the petition it appears that this amount of Rs. 16,995. 70 up consisted of a sum of Rs. 2,500/- only on account of penalty for 1949-50. The petition does not state that this document included the balance of the penalty due for the next two succeeding years. The total penalty on 7-2-1961 was Rs. 19,200. It had not been reduced till then. The reduction was made by the Tribunal ten months later, i.e., on 6-12-61. This document itself has not been filed. It is difficult to fix its true nature or character. But it seems clear that it did not indicate the entire demand then due from the firm. It cannot be treated as a fresh Recovery Certificate under Section 46 (2), so as to nullify the earlier one issued on 20-7-1959.

(3.)IN 1963 certain properties belonging to the petitioner were put up for sale in proceedings for recovery of the tax demand. On 12-11-1963 a property, which the learned counsel for the petitioner identified as a 'shop', was sold for Rs. 7,000 in favour of Sri Ram Nath Gupta, the fifth respondent. The next day, i.e., on 13-11-1963 two other properties were sold in favour of the sixth respondent, Sri Ram Swaroop Gupta, in separate lots, one was a bank goclown which was sold for Rs. 15,000 and the other is known as Vijai Tila and tin's was sold for Rs. 13,100.
In the case of Income-tax Officer, Kolar v. Seghu Buchiah Setty, (1964) 52 ITR 538; (AIR 1964 SC 1473), the Supreme Court considered the scope of Sections 29 and 45 of the Indian Income-tax Act, 1922. It held that when any tax levied by an assessment order is varied by an appellate or revising authority the original order merges into the order of such authority, In cases where the original order of assessment is varied the original order ceases to exist and all steps taken for the recovery of the demand due on the basis of the original order become null and void. In such cases a fresh notice of demand must be served upon the assessee and proceedings for recovery be taken on its basis, afresh. The effect of this decision is that proceedings for recovery pending on the basis of a notice of demand issued in pursuance of an original order of assessment become null and void the moment the demand is varied in appeal. The Tribunal varied the tax demand due on account of penalty on 6-12-1961. In view or the Supreme Court decision the proceedings for recovery on the basis of the certificate issued on 20-7-1959 became null and void on or after 6-12-1961. The sale of the properties having taken place in pursuance of the certificate or 1959 will also become null and void.

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