BEHARILAL RAMCHARAN versus INCOME-TAX OFFICER, SPECIAL CIRCLE B WARD, KANPUR AND ANR.

Citation: [1982] 1 S.C.R. 1 · Decided: 21-07-1981 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Case Partly allowed

Judgment (excerpt)

' 
• 
• 
BEHARILAL RAMCHARAN 
v. 
INCOME-TAX OFFICER, SPECIAL CIRCLE 'B' WARD, 
KANPUR AND ANR. 
July 21, 1981 
[P.N. BHAGWATI, A.P. SEN AND E.S. VENKATARAMIAH JJ.J 
Income· Tax Act 1961-Seclion 226(3) (i)-Scope of-Notice issued to osse-
ssee in default did not specify amount of tax payable by hbn-Amount payable was 
within knowledge of assessee in default-Notice if invalid. 
Clause (x) of section 226(3)-Sworn affidavit filed by accountant of assessee 
in default-·z'f valid-Income TCix Officer-Whether bollhd to give opportunity of 
A 
B 
c 
being heard before rejecting aifidavit and declaring him responsible for tax. 
D 
On May 21, 1966 the Income Tax Officer issued a notice to the petitioners 
under section 226 (3) (i) of Income Tax Act, 1961, stating that according to the 
books of accounts of B.R. Sons Ltd. (the assessee) the petitioners owed them 
Rs. 76 thousand odd and that this amount should be paid by them to the Depart· 
ment against arrears of tax due from the assessee. In reply the petitioners stated 
that it was not they who owed the assessee but it was the assessee who owed 
E 
them a large amount. The Income Tax Officer directed the petitioners to file a 
sworn affidavit setting out their pleas. 
In the sworn 1ffidavit filed on their behalf by the accountant of the .peti. 
tioners the above contentions were reiterated. But the Income Tax Officer 
stating that an examination of the assessee's books of account showed that the 
facts stated in the affidavit were false in material particulars held the petitioners 
personally liable to make payment to the extent of their liability to the assessee. 
On January 11, 1967 the Income Tax Officer wrote to the petitioners that since 
they had not furnished any particulars to rebut his conclusion that the affidavit 
was false and also because they had failed to pay up the amount due from 
them to the assessee they were held to be an "assessee in default" within the 
meaning of section 226 (3) (x) of the Act. 
In the petitioner's writ petition seeking to quash the action of the Depart· 
ment to attach their immovable property the High Court held that although 
it was necessary for the Income Tax Officer to have mentioned the amount 
due f1om the petitioners to the assessee, since the petitioners knew what the 
a1nount referred to by the Income Tax Officer was, no prejudice could be said to 
have been caused to them and that the notice issued to them was not invalid on 
that account; and (ii) the Income Tax Officer was justified in treating the peti· 
tioners as "assessee in default" for non-pay1nent of the amount due and owing 
F 
G 
H 
2 
SUPREME COURT REPORTS 
(1982] I S.C.R. 
A 
from them to the assesse, (iii) but since no 1ecovery certificate as required under 
section 222 of'1hc Act had been issued by the Incon1e Tax Officer the recovery 
proceedings were invalid. 
B 
c 
D 
E 
In the appeal lo this Court, 
HELD : I. The view of the High Court that by reason of non-specifica-
tion in the notice dated May 21, 1966 of the amount due from the petitioners to 
the assessee no prejudice had been caused to the petitioners was correct. At no 
time did the petitioners complain that the notice did not specify the an1ount 
alleged to be due from them to the assessee or that it was vague and indefinite. 
In fact they replied to the notice on merits and filed a sworii affidavit. Secondly 
in his letter dated December 31, 1966 the Income Tax Officer pointed out to the 
petitioners that the assessee had a credit balance of over Rs. 8 lakhs as on 
May 24, 1966. Therefore the petitioners had clear notice of what the amount 
alleged to be due from them to the assessee was. [8 G-9C] 
2. (a) It is not nece_<;sary under clause (vi) that the statement on oath 
contemplated in that provision should be made only by the person to whom the 
notice under clause (i) is issued. It is sufficient if the- objection to the requisition 
contained in the notie:e.is.,rnade by the person to whom the notice is sent and 
such objection is suppo~ted on oath by a person competent to make such 
statement. [IO BJ 
(b) Merely because the affidavit was sworn by the accountant of the peti-
tioners it was not open to the Incoine Tax Officer to disregard the affida~ 
vit. The accountant had obviously knowledge of the state of account bet-
We('.n 1he pelitioners and the assessee and .y..-as .competent to make a statement 
on oath in regard to the position of such account. (9 E] 
., 
(c) If the Income Tax Office

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