TMI Blog1988 (8) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... of the account books and the promissory notes. Thereafter, two suits were filed by the petitioners, O.S. No. 30 of 1974, by the wife and O. S. No. 32 of 1974, by the husband, seeking a decree for damages and loss said to have been sustained by them as a result of the wrongful retention of the promissory notes ; the decree sought in O. S. No. 30 of 1974, was for Rs. 62,918.32 and in O. S. No. 32 of 1974, was for Rs. 13,783.10. The civil court decreed both the suits. The Income-tax Department carried the matter in appeal. Both the appeals, A. S. No. 208 of 1978, and Transfer A. S. No. 519 of 1980, were allowed by this court by a common judgment dated March 31, 1986, and, consequently, both the suits were dismissed. The common judgment in the aforesaid two appeals thus became final. In the meantime, the income-tax officials finalised the assessments of both the wife and husband. The petitioners preferred appeals against both the assessment orders to the appellate authority and also to the Income-tax Appellate Tribunal unsuccessfully. demand notice dated July 1, 1987, for Rs. 24,848, was issued to the husband in respect of the assessment years 1971-72, 1972-73 and 1973-74. Likewise, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssession, that any person to whom summons have been issued to produce, or cause to be produced, any books of account or documents has omitted or failed to produce, or caused to be produced, the same or any person in possession of any money, bullion, jewellery or other valuable article or thing representing either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Income-tax Act, is authorised to enter and search any building or place where he has reason to believe the books of account or documents, money, bullion, jewellery or other valuable article are kept. He may break open the locks of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred for using the power of search if the keys are not available. He may search any person or seize any books. Sub-section (5) in so far as it is material for the purpose of these two cases reads thus : "Where any money, bullion, jewellery or other valuable article or thing is seized under sub-section (1) or sub-section (1A), the Income-tax Officer, after affording a reasonable opportunity to the person concerned of being heard and making such enquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Commissioner may proceed with such application from the stage at which it was on that day." Section 220 of the Act deals with a situation where tax was payable and when the assessee is deemed to be in default. Section 221 speaks of penalty payable when tax was in default. Section 222 confers power on the Income-tax Officer to forward to the Tax Recovery Officer a certificate specifying the amounts of arrears due from the assessee and the Tax Recovery Officer on receipt of such certificate is required to recover from the assessee the amounts specified in the certificate in one or more of the modes mentioned in the section in accordance with the rules laid down in the Second-Schedule. Section 226 of the Act deals with the "other modes of recovery" and omitting immaterial parts, it reads as follows : "226. (1) Notwithstanding the issue of a certificate to the Tax Recovery Officer under section 222, the Income-tax Officer may recover the tax by any one or more of the modes provided in this section . . . (3) (i) The Income-tax Officer, may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him, in the manner provided in sections 222 to 225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under section 222." From a reading of section 132(5) of the Act, it is clear that where valuables are seized by the Income-tax Officer, he is required to complete the assessment within 120 days of the seizure (at the relevant time the limitation was 90 days) after obtaining the previous approval of the Deputy Commissioner. He is also empowered to retain in his custody the assets which, according to him, are sufficient to satisfy the amounts due by way of tax liable from the person from whom the seizure was effected. Under section 226(3), the Income-tax Officer is empowered to issue notice in, writing requiring any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of assessee, to pay to the Income-tax Officer, within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of recovery contemplated under section 226 of the Act has been resorted to by the Income-tax Officer and, therefore, we cannot accept the contention that it was obligatory on the part of the Income-tax Officer to realise the amounts in the manner contemplated under section 226(3)(x) from the debtors of the assessee who executed the promissory notes which had been seized by the departmental officials in the raid conducted on April 7, 1971. The provisional assessment could not be completed within 90 days in respect of the two petitioners and it appears that the petitioners were themselves responsible for the delay; they filed writ petitions and civil suits only to drag on the proceedings. The departmental officials acted fairly in offering to return the promissory notes and, in fact, 86 promissory notes were taken back by the petitioners. From this it is evident that such of those promissory notes which were found to be useful by the petitioners for recovering the amounts were taken back by them and the others which obviously are time-barred were rejected by the petitioners. In such a situation, it is not open to them to contend that section 226(3)(x) was attracted and an obligatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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