Law:

Section:

Section 226 of Income-tax Act, 1961 – Collection and recovery of tax – Other modes of recovery – In respect of income-tax due from a firm, petitioner was served with a notice to pay dues on firm's behalf – She claimed that recovery of amounts due from her on firm being barred by law of limitation, no amount was, legally due and payable by her to firm – Petitioner was however, treated as an assessee in default under section 226(3)(x) and warrant of attachment of her properties was issued under rule 48 of Second Schedule – Tax Recovery Commissioner though found that firm's claim with reference to its dues from petitioner had become time barred, nevertheless held that issuance of tax recovery certificate under section 226 was proper and attachment was valid – Whether section 226(3) did not confer greater power on revenue to recover a liability when right of recovery was lost to creditor under ordinary law – Held, yes – Whether, therefore, proceedings initiated by revenue under section 226(3) were liable to be quashed – Held, yes FACTS In respect of certain income-tax dues from a firm, recovery proceeding were taken against the petitioner under section 226(3) by a notice served on her. The petitioner claimed that as the recovery of amount due from her to the firm was barred under the law of limitation, no amount was legally due and payable by her to the said firm. the petitioner was treated as a defaulter under section 226(3)(x) and a warrant of attachment of her properties was issue under rule 48 of the second Schedule to the Act. on appeal, the Tax Recovery Commissioner having found that the firm's claim with reference to its dues from the petitioner had become time-barred, nevertheless held that the issuance of the tax recovery certificate under section 226 was proper and the attachment was valid. On writ: HELD The proceedings under section 226 are summary proceedings intended for enforcing the existing liabilities. The law of limitation merely bars the remedy without touching the right. This, however does not mean a liability which cannot be recovered in law, can be recovered by the revenue, because such a liability does not exist in law. The proceedings under…

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