ANTONITTO Vs. TAX RECOVERY OFFICER

JUDGEMENT

(1.) THE petitioner was ordered to be arrested and detained in civil prison under Rule 76 of Schedule II to the Income-tax Act, 1961. That order is under challenge on the ground that no enquiry as contemplated by Rule 74 was held before ordering the detention subsequent to to the filing of the original petition, exhibit P-4 order was passed, as contemplated by Rule 76 of Schedule II to the Income-tax Act. It was passed in pursuance'of the direction isssued by the Commissioner of Incorne-tax. In the counter-affidavit, it is stated that the Commissioner directed the defaulter to pay at least 50% of the demand to avoid the rigour of detention under the proviso to Rule 76 and that instead of making payment, he has approached this Hon'ble court. Since the Commissioner has taken such a view as is evident from the counter-affidavit, learned counsel appearing for the petitioner submits that exhibit P-4 order if challenged in appeal as contemplated by Rule 86(1)(c) will be an empty formality. On this basis, the petitioner challenges the order passed by the Tax Recovery Officer.

(2.) IT is the admitted case that tax for the assessment years 1976-77 and 1977-78 is outstanding from the petitioner. The amount of tax for the said period comes to Rs. 2,36,448. Since the petitioner did not remit the said tax, a certificate was issued by the Income-tax Officer on March 17, 1981, to the Tax Recovery Officer for realising that amount. The Tax Recovery Officer issued a notice under Rule 73 of Schedule II to the Income-tax Act. In pursuance of that notice, the petitioner appeared before the Tax Recovery Officer with his counsel on February 28, 1985. On that day, according to learned counsel appearing for the petitioner, the Tax Recovery Officer ordered the arrest of the petitioner without holding an enquiry. This fact is disputed by learned counsel representing the Revenue. Consequently, I requested Sri N. R. K. Nair, learned counsel representing the Revenue, to make available to me the entire files relating to the action taken against the petitioner. Accordingly, the files were produced before me. The files contained the following entry which was made on February 28, 1985.

(3.) RULES 73 to 76 of Schedule II to the Income-tax Act are the relevant rules with which I am concerned in this case. Before ordering the arrest and detention of the defaulter, the Tax Recovery Officer has to issue a notice under Rule 73(1) calling upon the defaulter to show cause why he should not be committed to civil prison. The Tax Recovery Officer should have come to a satisfaction regarding the existence of the conditions mentioned in Sub-clause (a) or (b) of Rule 73(1) for issuing the notice. On receipt of the notice, when the defaulter appears under Rule 74, the Tax Recovery Officer should hear the Income-tax Officer and take evidence produced by him in support of execution by arrest. The defaulter should be given an opportunity to show cause why he should not be committed to civil prison. Rule 75 relates to the custody of the defaulter pending enquiry under Rule 74. After the conclusion of the above enquiry, an order under Rule 76 has to be passed.