Law:

Section:

Section 201, read with section 231 of the Income-tax Act, 1961 [Corresponding to section 18(7), read with section 46(7) of the Indian Income-tax Act, 1922] - Deduction of tax at source - Consequence of failure to deduct or pay - Assessment years 1941-42 to 1951-52 - ITO passed orders under section 18(7) of 1922 Act in 1965 requiring assessee - HUF to pay tax that ought to have been deducted for relevant assessment years and held that assessee would be deemed to be assessee in default in respect of tax remaining unpaid - Notices of demand under section 156 of 1961 Act were issued on same day - Commissioner dismissed revision application filed by assessee - Meanwhile, in 1967, recovery certificates were issued against assessee - Whether order made by ITO under section 18(7) of 1922 Act must be deemed to have been made under corresponding provision of 1961 Act, as section 297(2)(j) of 1961 Act so requires and assessee must be deemed to be in default under new Act regardless of when defaults infact occurred - Held, yes - Whether in light of rule 10 of Indian Income-tax Rules, 1922 assessee must be deemed to have been in default recurringly on eight day after each such payment was made between assessment year in question and applying second mode of reckoning time prescribed by section 231 of 1961 Act, which mode applied to an assessee 'deemed' to be in default, recovery proceedings taking against assessee in respect of those defaults were barred by time - Held, yes - Whether, therefore, recovery certificates issued were contrary to law and could not be allowed to be stand - Held, yes Words and phrases: Word 'assessment' as occurring in section 297 of the Income-tax Act, 1961. FACTS The assessment of the assessee-HUF for the relevant assessment year had been completed. On 27-8-1965, the ITO made an order under section 18(7) of the 1922 Act requiring the assessee to pay the tax which ought to have been deducted at source from the amounts paid as commission to an employee, and holding that the assessee would be deemed to be an assessee in default in respect of the tax which remained unpaid. Notices of demand were also issued on the same day under section 156 of the…

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