Tax recovery certificates should not be issued in cases where the demands have already been paid. - Income Tax - 437/CBDT

INSTRUCTION NO. 437/CBDT Dated: July 12, 1972 Section(s) Referred: 222 ,231 ,226(3) Statute: Income - Tax Act, 1961 Your attention is drawn to Board's Circulars F. No. 16/115/64-IT(B) dated 22-11-65 and F. No. 16/81/66-IT(B) dated 17-9-66 in which clear instructions were issued to the effect that recovery certificates should not be issued in cases where the demands have already been paid and where the assessee claims to have made the payment of the demand covered by the recovery certificate, the certificate may not be enforced till the Certificate Officer hears from the I.T. Officer. The Board is still receiving complaints that the assessees who have paid their taxes are being harrassed with coercive measures. Indeed a question has been asked in Parliament about cases where action was wrongly taken in one State. I am directed to request you to take immediate steps to remedy this situation and to inform the Board what steps you have taken :- (a) To weed out the infructuous certificates. (Will it not be a good idea to arrange the certificates according to the arrear demand in the Demand and Collection Register each ward?) (b) To ensure that taxes paid and or reduced in appeal are properly entered in the Demand and Collection Register and the challans are properly filed. (c) Coercive measures are taken only after ensuring that taxes are really due. (d) To correct the officials who have caused harrassment to honest assessees by their negligence. Specific instances of action taken may be reported to the Board by 31-8-1972. 2. In this connection, it may be mentioned that in order to avoid the issue of too many tax recovery certificates, it will be advisable to resort to section 226 (3) wherever the assessee is known to have a debt due from a Bank or some other person. Such action will not only produce the desired result but also save the limitation provided in section 231 (34 ITR 113 and 40 ITR 506).