INCOME-TAX OFFICER, KOLAR AND ANOTHER versus SEGHU BUCHIAH SETTY

Citation: [1964] 7 S.C.R. 148 · Decided: 11-03-1964 · Supreme Court of India · Bench: A.K. SARKAR · Disposal: Dismissed

Cited by 2 judgment(s) · see the full citation network in Lexace

Open in Lexace · Ask the AI about this case

Judgment (excerpt)

1964
March 11
148
SUPREl\JE COURT REPORTS
[1964}
INCOME-TAX OFFICER, KOLAR AND ANOTHER
v.
SEGHU BUCHIAH SETTY
'
(A. K. SARKAR, M. HIDAYATULLAH AND J.C. SHAH, JJ.)
Inco'me-iax-Order' of assessment revised in appea!-
Recovery of tax-Proceeding& based on original order of assess.
ment-Continuaiion, witholit fresh notice of demand-·-Lega!iiu
-Indian Income-tax Act, 1922 (11 of 1922). ss. 29, 45, 4.6.
The respondent was assessed to income-tax for the years.
1953-54 and 1954-55 on estimatled incomes of Rs. 61,000/- and
Rs. 1,21,000/- respectively and notices of demand under s. 29
of the Indian Income-tax Act; 1922, were served on him by the
Income-tax Officer for the tax due. On the respondent failing to
comply with the notices of demand within the period specified,
the Income-tax Officer issued certificates under s. 46(2) of the
Act and sent them to the Collector for recovery of the tax,
treating the respondent as in default. In appeals filed by the
respondent against the orders of assessment, the Appellate
Assistant Commissioner reduced the income assess<cd for the
year 1953-54 to Rs. 28,000 and for the year 1954-55 to Rs. 46,000.
The Income-tax Officer did not issue fresh notices of demand
pursuant to the modification in the orders of assessr.1ent made
by the .Appellate Assistant Commissioner, but by a letter
informed the respondent that he had to pay tax as reduced by
the appellate order. The respondent did not pay the amount of
tax demanded, but applied to the High Court of Mysore under
Art. 226 of the Constitution of India for quashing the certificates
issued by tl:e Income-tax Officer.
The High Court. hel<'
that the Income-tax Officer could not, without issuing fresh
notices of demand, after the Appellate Assistant Commissioner
of Income-tax reduced the taxable income, treat the respondent
as a defaulter and that the proceedings of the Collector based
on the certificates issued by the Income-tax Officer were illegal.
Held: (per Sarkar and Hidayatullah, JJ.). The d~cision of
the High Court was right.
Per Sarkar, J.-On the Income-tax Officer's order being
revised in appeal, the default based on it and all consequential
proceedings must be taken to have been superseded and fresh
proceedings have to be started --to realise the dues as found by
the revised order.
Per Hidayatullah, J.-In view of the terms of s. 29 of the
Act, where an order is passed in appeal and the amount of tax
reduced, the Income-tax Officer must intimate to the assessee
the reduced amount of tax and make a demand and give him an
opportunity to pay befoye treating him as a defaulter.
Per Shah, J. (dissenting)-In the absence of any provision
imposing an obligation upon the Income-tax Officer to issue
successive notices of demand from time to time for recovery of
the arrlount due during the process of assessment, it must be
held that the notices of demand issued by th" Income-tax
Officer in exercise of the power under s. 29 must b" enforced in
the manner provided by s. 46 and within the period of limitation
7 S.C.R.
SUPREME COURT REPORTS
149
provided in cl. (7) of s. 46, even after the appeal against th7
lfJG.J
order of assessment by the Income-tax Officer is ~isposed. of, 1,, .. ·,,mllaa: O.fiicer,.
subject to adjustment of the amount to be recovered m the hght J;,,f,tr an<l Anoth"
of the order of the Appellate Assistant Commissioner.
v.
S1:1i, '' B11c'1ial1 Set.ty
CIVIL APPELLATE JUl\lSDICTION: Civil Appeals Nos.
--
221 & 222 of 1963. Appeals by special leave from the iu?g·
Sarka,, J.
ment and order dated April 16, 1959 of the Mysore High
Court in Writ Petitions NDs. 138 and 139 of 1956.
N. D. Kharkhanis and R. N. Sachthey, for the appellants
(in both the appeals).
K. Srinivasan and R. Gopa/akrishnan, for the respondent
(in the appeals).
March 11, 1964. SARKAR J. and HIDAYATULLAH J. de·
livered separate opinions dismissing the appeals. SHAH J. de·
livered a dissenting opinion allowing the appeal.
SARKAR J.-The question in these two appeals is whether
certain proceedings for the recovery of tax from the assessee
under the Income-tax Act, 1922, were invalid and should be
quashed as the assessment order on which they were based had
been revised in appeal. The High Court of Mysore held them
to be invalid and quashed them. The revenue authorities have
now appealed to this Court agajnst that decision.
I think it will be helpful to set out the facts chronologi·
cally. Th

Excerpt shown. Read the full judgment & AI analysis in Lexace.