SHREE SOMESHWARA FARMERS COOPERATIVE SPINNING MILLS LTD. VS JOINT COMMISSIONER OF INCOME-TAX (ASSESSMENT)
2000 P T D 2302
[236 I T R 829]
[Karnataka High Court (India)]
Before V. K. Singhal, J
SHREE SOMESHWARA FARMERS COOPERATIVE SPINNING MILLS LTD.
versus
JOINT COMMISSIONER OF INCOME-TAX (ASSESSMENT) and others
Writ Petition No.38098 of 1998, decided on 07/01/1999.
Income-tax---
----Recovery of tax---Writ--Notice of demand---Intimation under S.143(1)(a) is deemed to be a notice of demand---Appeal, against assessment pending before Tribunal---Assessee not applying to Tribunal for stay of recovery proceedings---Recovery proceedings could not be interfered with by High Court in writ proceedings---Indian Income Tax Act, 1961, Ss. 143, 220 & 226(3)---Constitution of India, Art. 226.
The provisions of section 143(1)(a)(i) of the Income Tax Act, 1961, provide that if any tax or interest is found due on the basis of the return after adjustment of the tax liability deducted or paid, an intimation is required to be sent to the assessee and that intimation is deemed to be a notice of demand issued under section 156:
Held, dismissing the writ petition, that in the intimation sent under section 143(1)(a), dated November 30, 1994, a note was given that this intimation was deemed to be a notice of demand under section 156 and the amount was required to be paid within 30 days of the service of the intimation. This was not objected to earlier and, therefore, it could not be objected to at this stage. Even on merits the fiction created for treating the intimation under section 143(1)(a) dispenses with the requirement of issuing notice of demand under section 156. All the machinery provisions of recovery of tax passed are applicable to the tax for which intimation only has been given. The contention, therefore, that the tax had not become due was not correct. The other contention regarding the application which was pending before the Commissioner of Income-tax, could not also be considered at this stage. It was for the petitioner to have approached the Tribunal when the second appeal was pending before it. There is no restriction in moving the application for stay before the Tribunal even if the application is pending before the Commissioner where the appeal is pending. In these circumstances, the High Court could not under its extraordinary jurisdiction interfere with the recovery proceedings.
Manmohanlal v. ITO (1987) 168 ITR 616 (SC) not applied.
ITO v. Seghu Buchiah Setty (1964) 52 ITR 538 (SC) ref
E. S. Kiresur for Petitioner.
E. R. Indra Kumar for Respondents
JUDGMENT
By this petition, notice issued under section 226(3) of the Income Tax Act, 1961, has been assailed. Argument of learned counsel for the petition is two-fold.
First, it is stated that against the order passed under section 143(1)(a) an appeal was preferred to the appellate authority. The order under section 143(1)(a) was passed by the Assessing Authority at Hubli but because of change of place of business, the appeal effect order has been passed by the assessing authority at Belgaum. It is submitted that no notice of demand as contemplated under section 156 has been issued and as such the recovery proceedings under section 226(3) could not have been initiated. Reliance -is placed on the judgment given in the case of Manmohanlal v. ITO (1987) 168 ITR 616, wherein it was observed by the apex Court that 'the Court has jurisdiction to examine and decide as to whether there has been a proper service of demand notice and the direction for payment, could be made only if the Court is satisfied that the proper 'notice-has been served.
Secondly, the petitioner cannot move the Income-tax Appellate Tribunal where the appeal is pending since he has moved the Commissioner of Income-tax for not initiating the recovery proceedings and as such the coercive steps under section 226(3) should not be taken during the pendency of the application before the Commissioner of Income ?tax.
I have considered over the matter. The. provisions of section 143(1)(a)(i) provide that if any tax or interest is found due on the basis of the return after adjustment of the tax liability deducted or paid, an intimation is required to be sent to the assessee and that intimation is deemed to be a notice of demand issued under section 156. Section 156 provides for issue of notice of demand. The order under section 143(1)(a) was passed on November 3, 1994. The order of the Commissioner of Income-tax (Appeals) was passed on June 26, 1995, and the appeal effect order was passed on July 27, 1995 (Annexure-C). According to Annexure-C a sum o Rs.4,50,841 is payable. A revised challan in respect thereof was issued. But no demand notice was issued. In accordance with the provisions of section 143(1)(a)(i) the intimation is deemed to be a notice of demand under section 156 and the appeal effect order takes the same character as the original order passed under section 143(1)(4,). Under section 143(1)(b) revised intimation in pursuance of the appellate order is contemplated. After the decision of the apex Court in the case of ITO v. Seghu Buchiah Setty (1964) 52 ITR 538, the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964, was passed which contemplated that when the dues are reduced in appeal it is not necessary for the taxing authority to serve upon the assessee a fresh notice of demand. The proviso to section 220(.2) also provides that where as a result of the order under section 250, the amount on which interest. was payable has been reduced, the interest shall be reduced accordingly, and the excess interest paid, if any, shall be refunded. In the intimation sent under section 143(1)(4), dated November 30, 1994, a note is given that this intimation is deemed to be a notice of demand under section 156 and the amount is required to be paid within 30 days of the service of the intimation. This was not objected to earlier, and therefore, cannot be objected to at this stage. Even on merits, the fiction created for treating the intimation under section 143(1)(4) dispenses with the requirement of issuing notice of demand under section 156. All the machinery provisions of recovery of tax assessed are applicable to the tax for which intimation only has been given. The contention, therefore, that the tax has not become due is not correct. The decision given in the case of Manmohanlal (1987) 168 ITR 616 (SC) referred to above is not applicable to the facts of the present case.
The other contention which is raised is regarding the application which is pending before the Commissioner of Income-tax cannot also be considered at this stage. It was for the petitioner to have approached the Tribunal when the second appeal was pending before it. There is no restriction in moving the application for stay before the Tribunal even if the application is pending before the Commissioner where the appeal is pending.
In these circumstances, this Court cannot under extraordinary jurisdiction interfere with the recovery proceedings.
The petition is dismissed.
M.B.A./4168/FC???????????????????????????????????????????????????????????????????????????????? Petition dismissed