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TMI Blog1970 (6) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... n payments and also to allot certain fully paid-up shares in the petitioner-company to the Japanese company. In terms of the said agreement certain amounts in U.S. dollars were remitted to the Japanese company by the petitioner after having obtained the requisite permission from the Reserve Bank of India, Exchange Control Department. Such remittances were as follows : 1954 ... 7,000 paid through the Bank of Bihar Ltd. 2nd February, 1956 ... 3,500 remitted through Lloyds Bank Ltd. 1st December, 1960 ... 1,050 remitted through the Punjab National Bank Ltd. 3rd December, 1955 ... 33 fully paid up shares of the face value of Rs. 16,500 allotted to the Japanese company. As under the said agreement the petitoner had to make further remittanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner was, therefore, required to show cause why necessary deduction of tax should not be made before making any such remittance. By the second impugned letters dated the 19th January, 1966, the respondent-Income-tax Officer requested the petitioner to pay tax on the remittances already made and the value of the shares issued to the Japanese company without further delay. The petitioner was also requested to deduct tax and pay the same for the proposed remittance to Japan. This rule was obtained by the petitioner on the 24th March, 1966, requiring the respondents to show cause why the impugned letter dated the 4th January and the 19th January, 1966, should not be quashed and why the respondents should not be directed to forbear from en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is neither an Indian company nor a company which has made the prescribed arrangement for the declaration and payment of dividends within India any sum chargeable under the provisions of that Act to deduct at the time of payment, unless he was himself liable to pay income-tax and super-tax thereon as an agent, to deduct income-tax and super-tax at the prescribed rates. Sub-section (3A) which has since been repealed, provides for similar deductions in respect of payment of salary to non-resident persons. Section 18(7) enacts that if any person or the principal officer of a company does not deduct tax or after deducting fails to pay the sums deducted as required by or under that section, he or the company, as the case may be, shall, without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r by the said letters. The next contention of Dr. Pal is also of substance. He has submitted that Chapter VI of the 1922 Act deals with recovery of tax and penalties. Section 46 lays down the various modes for the recovery of tax when an assessee is in default in making payment. These various modes are prescribed in sub-sections (2), (3), (4), (5), (5A) and (6) Section 46(7) enacts that no proceedings for the recovery of any sum payable under the Act shall be commenced after the expiration of one year from the last date of the financial year in which any demand is made under this Act. Dr. Pal contends that, even assuming that the tax in respect of the amounts remitted in the past to Japan were recoverable from the petitioner under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of the tax under section 18(3B) for non-deduction at the time of past remittances. He submitted that, apart from the recovery proceedings provided for in the Act the right of the department to recover any arrears of tax by a suit is not affected. Section 232 of the 1961 Act is a clear authority for this proposition. Mr Chowdhury submitted that the two impugned letters did not contain any proposals for starting recovery proceedings to realize the tax due from the petitioner in respect of the past remittances. All that was done by the respondent-Income-tax Officer was to ask the petitioner to show cause why it should not be treated as a defaulter under section 18(3B) in respect of such remittances. The question of recovery would only co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commenced by the respondent-Income-tax Officer. Mr. Chowdhury may be technically correct in saving that the two impugned letters do not show that any recovery proceedings had actually been commenced by the respondent-Income-tax Officer, but the two letters certainly contain a demand for payment of tax in respect of the arrear remittances. As agree with Dr. Pal that in 1966 no determination could have been made of the petitioner being an assessee in default in respect of the remittances already made under section 18(3B), no question of taking any recovery proceedings for such taxes could arise. In any event, such recovery is barred under the provisions of section 46(7) of the old Act and section 231 of the new Act. Undoubtedly, the departme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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