TRANSCO INDUSTRIES Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS matter coming up for orders on I.A. No. I for vacating stay, the main writ petition is taken up for disposal and disposed of by the following order after hearing counsel for the petitioner as well as for the Revenue.

(2.) THE petitioner is aggrieved by the show-cause notice issued as at annexure D purporting to be one issued under section 276C(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). THE notice states that a sum of Rs. 34,754 is outstanding in respect of the assessment years 1984-85 and 1985-86 and it has not been paid despite levy of penalty under section 221(1) of the Act. In that connection, the respondent Income-tax Officer has proposed to launch prosecution under section 276C(2) of the Act for non-payment of the tax arrears if it is not paid within 10 days from the date of receipt of the letter. If further states that necessary challan for payment with interest for reason of delayed payment may be obtained from his office. In the alternative, he is required to send a demand draft in favour of the Reserve Bank of India. THErefore, the petitioner is aggrieved by the demand notice and thereat of prosecution and has approached this court seeking a writ of mandamus restraining the respondent-Income-tax Officer from proceeding to prosecute him on the ground that he is not a defaulter, as he has objected to the assessment for the year 1985-86 under sub-section (2)(a) of section 143 of the Act and the second proviso to the said sub-section. By a fiction, makes him not to be a defaulter as long as his application is pending.

(3.) THE impugned demand notice as at annexure D is quashed in so far as it relates to demand in respect of the assessment year 1985-86 with liberty reserved to the Income-tax Officer to proceed to proceed in accordance with law in the light of the observations made in the course of this order that the application pending must be disposed of on merits or otherwise before recovery proceedings are initiated by any one of the modes known to law. THE petition, therefore, stands allowed to the extent indicated above. For the assessment year 1984-85, demand must be sustained as there is no objection filed under section 143(2) of the Act.