Law: Income Tax Act, 1961

Section: 156,225(3),Sched.II,Rr.56,60,61.,62&63

(a) Income-tax-Notice of demand---Service---Mandatory---Failure to serve notice of demand--- Recovery proceedings not valid---Indian Income Tax Act, 1961, S.156. (b) Income-tax--- ----Recovery of tax---Certificate of recovery---Attachment and sale of property--- Confirmation of sale---Not redundant or automatic---Tax Recovery Officer ---Information coming to knowledge going to root of matter---Duty to refuse to confirm sale of property---Indian Income Tax Act., 1961, S. 225(3), Sched. II, Rr. 56, 60, 61., 62 & 63---[Mohan Wahi v. CIT (2000) 246 ITR 144 reversed]. A house property owned by B, devolved on his four sons, P, S, R and K, under his will, which-'was probated in 1965. P and S started a business in partnership which failed in 1967. Ex parte assessments were made on the firm for tile assessment years 1967-68 to 1969-70. Pursuant to recovery -certificates, the Tax Recovery Officer attached the house property and issued a proclamation for its sale setting out a demand of Rs.30,82,000 and fixing the upset price of the property at Rs.1,70,000. In the public auction respondent No. 3 made a bid to purchase the property for the upset price of Rs.1,70,000 and the ?rid was accepted. Respondent No.; deposited Rs.42,500 on. January 11, 1980, and the balance of Rs.1,27,500 on January 25, 1980, within the prescribed period. The widow of R, who was not a partner in the firm, filed a suit for interim restraint on the sale claiming that the shares of R and K (who were not partners in the firm) in the property could not have been attached and advertised for sale. The Civil Court granted an injunction against confirmation of the sale. The ad interim injunction continued. On different dates in 1989, as a result of appellate and other proceedings, all the demands against the firm stood wiped out and reduced to nil and in 1990 the Income-tax Officer wrote to the Commissioner that the demands against the firm were reduced to nil. On November 22. 1996, the assessee firm wrote to the income-tax Officer that the demands had been cancelled and the Tax Recovery Officer might be informed accordingly and a copy of the letter was sent to the Tax Recovery Officer. In the…

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