Law:

Section:

Section 220, read with section 293 of the Income-tax Act, 1961 - Corresponding to section 45 read with section 67 of Indian Income-tax Act, 1922 - Collection and recovery of tax - When tax payable and when assessee deemed in default - Assessment year 1947-48, whether provisions of section 45 of 1922 Act concern statutory power on ITO in his discretion to treat an assessee as not being in default and that is sufficient to enable an assessee to obtain stay of recovery after he has preferred an appeal and there is no bar to exercise of that power on ground that recovery certificate has already been issued - Held, yes - Whether where department itself treats assessee as not in default, recovery authorities cannot persist in prosecution of recovery proceedings - Held, yes - Whether where recovery authorities knowing fact that recovery had been stayed, took coercive measures against assessee who was lodged in jail in pursuance of those illegal orders, assessee, in such a situation, was entitled to damages - Held, yes FACTS The assessee (plaintiff) filed appeal against the assessment made by the ITO. On the assessee's application, the IAC ordered that no proceedings be taken for the recovery of the tax assessed under the assessment order till the decision of the appeal, provided the plaintiff deposited certain sum. That amount was also deposited by the plaintiff within time, but, notwithstanding these orders, defendant No. 2 who was then the Tahsildar Magistrate, issued notice to the plaintiff calling upon him to pay the amount of the tax within four days as certificate had been received under section 46 clause (2) of the 1922 Act, through the Collector, for the recovery of the said amount and if the deposit was not made within time steps for recovery would be taken. The plaintiff applied to the Tahsildar Magistrate (Defendant No. 2) and also to defendant No. 1, who was then the Additional District Magistrate, as well as to the District Magistrate, but to no effect. The assessee alleged that by mistake the ITO had issued recovery certificate in spite of the stay by the IAC, but the mistake was rectified when the matter was brought to the notice of the income-tax…

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