Law:

Section:

Section 226 of the Income-tax Act, 1961, read with section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 - Collection and recovery of tax - Other modes of recovery - Assessee-company was registered as a sick industrial company under provisions of SICA - Against a notice issued by revenue under section 226(3), in respect of arrears of income-tax, assessee filed an application submitting that in view of provisions of section 22 of SICA, authorities could not take any action or proceeding in nature of execution, distress or like against any of its properties and prayed for interim relief restraining authorities from enforcing impugned notice - Whether since assessee was registered as a sick company, enforcement of any notice under section 226(3) would amount to coercive recovery - Held, yes - Whether therefore, authorities would be restrained from acting upon impugned notice and also from enforcing upon any notice under section 226(3) without first obtaining consent of BIFR as provided in section 22 of SICA - Held, yes FACTS The assessee-company was registered as a sick industrial company under the provisions of the SICA. The income-tax authorities issued notice under section 226(3) to the assessee. The assessee filed instant application submitting that in view of the provisions of section 22 of SICA the notice issued by the authorities under section 226(3) got exhausted and the said notice could not now be acted upon to prevent the purchasers of the goods to be manufactured by the assessee from paying the sale price thereof to the assessee; that the authorities could not take any action or proceedings in the nature of execution, distress or the like against any of its properties and prayed that interim relief might be granted and the authorities might be restrained from enforcing the impugned notice under section 226(3). HELD Since the assessee was registered as a sick industrial company, it would be entitled to get protection under section 22 of the SICA. The enforcement of any notice under section 226(3) would, prima facie, amount to coercive recovery. When a sick company recovers sales tax from the purchasers of its goods, it is really…

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