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P. Vs. Thyagaraj and Another V. Tax Recovery Officer and Another. - Court Judgment

SooperKanoon Citation
SubjectDirect Taxation
CourtChennai High Court
Decided On
Case NumberWrit Petition No. 704 of 1981
Reported in[1987]165ITR413(Mad)
AppellantP.
RespondentThyagaraj and Another V. Tax Recovery Officer and Another.
Excerpt:
- .....commenced. thus the issues involve investigation of facts which cannot be undertaken in writ proceedings. on the other hand, we find that rule 11 of schedule ii to the income-tax act provides for such an investigation by the tax recovery officer. in this case, the order passed by the tax recovery officer directing the tenant to pay rents to the department has been challenged as being without jurisdiction and also on the ground that the tax recovery proceedings are barred under section 231. the validity of such contentions can be investigated by the tax recovery officer under rule 11 of schedule ii which provides that whenever a party pleads that a particular property is not liable to attachment or sale, he can prefer a claim before the tax recovery officer and such a claim has.....
Judgment:

RAMANUJAM J. - The petitioners herein seek a writ of certiorari from this court to quash the order of the first respondent dated February 16, 1976. This circumstances under which the petitioners have come to this court seeking the said relief are as follows : The petitioners father, late B.Vedanayagam, was doing business in partnership under the name and style of R.Y.P.V. Nadar & Co., at Colombo, with R. Yesudan Nadar and P. S. Gopalaswami as partners. In respect of the income from the said business, the partners of the said firm had been assessed in the years 1947-48 to 1950-51 and 1963-64 and 1964-65. In view of the non-payment of the tax, certificates under section 46(2) of the Indian Income-tax Act, 1922, were issued as early as March 26, 1958, and May 19, 1959. Based on the said certificates, recovery proceedings had been initiated. While those recovery proceedings were pending, the petitioners father died. After the death of the petitioners father, a property which originally belonged to the deceased and which has been leased out to the Tamil Nadu Mercantile Bank was proceeded against for recovery of the tax arrears, and a garnishes order had been issued to the said bank for the payment of the rents to the Tax Recovery Officer. According to the petitioners, the recovery proceedings have been initiated in respect of the said property on the basis that the petitioners have inherited the same from their father. Vedanayagam, who is said to be the defaulter while in fact the said property has become the property of the petitioners not by inheritance but by a gift deed even in the year 1966 which has been registered as document No. 636 dated March 9, 1966. The petitioners have, therefore, filed this writ petition contending that the Tax Recovery Officer, the first respondent herein, has no jurisdiction to proceed against the property which belonged to them even in the year, 1966. The petitioners contention is that once the property having been gifted by Vedanayagam to the petitioners under a gift deed of the year 1966, the property ceased to be that of Vedanayagam and, therefore, for the arrears due by Vedanayagam, the petitioners property cannot be proceeded against. Another contention put forward by the petitioners is that the recovery proceedings themselves are time-barrier under section 231 of the Income-tax Act, 1961.

The first respondent, the Tax Recovery Officer, has filed a counter-affidavit to the effect that the gift deed having come into existence after the proclamation has been issued regarding the property at the sage of the recovery proceedings even during the lifetime of Vedanayagam, the transaction of gift should be taken to be void and that the recovery proceedings having been initiated even during the lifetime of Vedanayagam, the defaulter, the said proceedings cannot be said to be time-barred.

We find that the questions which are at issue in the writ petition require a detailed investigation as to whether the property said to have been gifted by the petitioners father and which is sought to be proceeded against the Tax Recovery Officer was ancestral or self-acquired in the hands of Vedanayagam and as to when the recovery proceedings commenced. Thus the issues involve investigation of facts which cannot be undertaken in writ proceedings. On the other hand, we find that rule 11 of Schedule II to the Income-tax Act provides for such an investigation by the Tax Recovery Officer. In this case, the order passed by the Tax Recovery Officer directing the tenant to pay rents to the Department has been challenged as being without jurisdiction and also on the ground that the tax recovery proceedings are barred under section 231. The validity of such contentions can be investigated by the Tax Recovery Officer under rule 11 of Schedule II which provides that whenever a party pleads that a particular property is not liable to attachment or sale, he can prefer a claim before the Tax Recovery Officer and such a claim has to be investigated by him. The rule also provides the nature of the evidence to be adduced at the stage of the investigation. Therefore, the petitioners have got an alternative remedy provided by the status. We are, therefore, of the view that the petitioners should go before the Tax Recovery Officer under rule 11 of Schedule II of the Income-tax Act to challenge the impugned order said to have been passed by the first respondent. Therefore, without going into the merits of the rival contentions, we direct the petitioners to go before the Tax Recovery Officer by filing a claim petition.

In pursuance of impugned orders passed by the first respondent, monies have been deposited by the tenant to the credit of the writ proceedings. The said amount will be kept in deposit till the Tax Recovery Officer decides the claim to be filed by the petitioners. The petitioners are given three months time from this date to make their claim before the Tax Recovery Officer. The amount in deposit will be disposed of in accordance with the findings rendered by the Tax Recovery Officer after investigation of the claim to be made by the petitioners.

With these observations, the writ petition is dismissed. There will be no order as to costs.


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