STAY & RECOVERY STAY & RECOVERY OF INCOME-TAXOF INCOME-TAX

Sanjay Jhanwar, AdvocateSanjay Jhanwar, AdvocateCHIR AMRIT LAW CHAMBERS CHIR AMRIT LAW CHAMBERS

JAIPURJAIPUR

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Assessee in Default (Section Assessee in Default (Section 220)220)

o Amount demanded u/s 156 to be paid in Amount demanded u/s 156 to be paid in 30 days.30 days.

o Such 30 days period can be reduced with Such 30 days period can be reduced with the previous approval of JC, if allowing 30 the previous approval of JC, if allowing 30 days is believed to be detrimental to days is believed to be detrimental to revenue.revenue.

o AO has power of extension of time or AO has power of extension of time or allowing payment in installments on allowing payment in installments on application of assessee.application of assessee.

o If amount due not paid within due date, If amount due not paid within due date, assessee to be treated in default.assessee to be treated in default.

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Interest & Penalty on Default Interest & Penalty on Default in Payment (Sec. 220(2) & in Payment (Sec. 220(2) &

221)221)o Interest at 1% p.m. which can be Interest at 1% p.m. which can be

reduced/waived by CCIT/CIT in certain reduced/waived by CCIT/CIT in certain circumstances.circumstances.

o Penalty subject to maximum of amount in Penalty subject to maximum of amount in default.default.

o Interest & Penalty also recoverable as tax.Interest & Penalty also recoverable as tax.

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Consequences of default: Consequences of default: Modes of Recovery & Exercise of Modes of Recovery & Exercise of

Powers by TROPowers by TROo Jurisdiction of TRO (Section 222 to 225).Jurisdiction of TRO (Section 222 to 225).o Other Modes of Recovery (Section 226):Other Modes of Recovery (Section 226):

o Requisition of salary due.Requisition of salary due.o Requisition of money due/may become due from any Requisition of money due/may become due from any

person.person.o Requisition of amount in custody of Court.Requisition of amount in custody of Court.o By distraint & sale of movable property.By distraint & sale of movable property.

o Recovery through State Govt. (Section 227) if Recovery through State Govt. (Section 227) if entrusted to the State Govt.entrusted to the State Govt.

o Cross country recoveries through Tax Treaties Cross country recoveries through Tax Treaties (Section 228A).(Section 228A).

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TRO’s JurisdictionTRO’s Jurisdictiono Upon drawing the certificate of Upon drawing the certificate of Arrears, Arrears, TRO gets jurisdiction.TRO gets jurisdiction.o Competent TRO:Competent TRO:o Where assessee carries on business or has Where assessee carries on business or has

principal place of business.principal place of business.o Where assessee’s properties are situated.Where assessee’s properties are situated.

o AO cannot exercise jurisdiction for AO cannot exercise jurisdiction for recovery, recovery, when TRO has drawn up when TRO has drawn up certificate.certificate.

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TRO’s PowersTRO’s Powerso attachment and sale of the movable attachment and sale of the movable property;property;o attachment and sale of the immovable attachment and sale of the immovable property;property;o arrest and detention in prison;arrest and detention in prison;o appointment of a receiver for the appointment of a receiver for the management management of the movable & immovable of the movable & immovable properties.properties.

However, these powers can be exercised in However, these powers can be exercised in terms of rules provided in Rules of Schedule terms of rules provided in Rules of Schedule II.II.

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Procedure of Attachment of Procedure of Attachment of Movable PropertyMovable Property

Warrant

Service of Warrant

ATTACHMENT OF VARIOUS PROPERTIES BY VARIOUS MODES:-By Actual Seizure (Movable property, Negotiable Instrument)-By Affixing Copy of Warrant (Agriculture Produce)-By Written Prohibition Order (Debt & Shares)-By Notice (Decree, Share in movable property, In Custody of Court/Public Officer)

-As per Code of Civil Procedures Rules (Salary of Govt. Servants)

Preparing an Inventory

Attachment not to be Excessive

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Procedure of Sale of Movable Procedure of Sale of Movable PropertyProperty

Sale of Attached Property

Issue of Proclamation specifying Time & Place of Sale

Sale after 15 days except in case of speedy and natural decay or where expense of holding it is higher

Sale to be by Public Auction (One or more lots)

Irregularity not to vitiate sale, but any person injured may sue

Sale of negotiable instrument and share in a corporation through Broker

Order payment of Coin or Currency Notes

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Procedure of Procedure of Attachment ofAttachment of

Immovable PropertyImmovable PropertyAttachment by a Prohibiting Order

Service of Notice of Attachment

Proclamation of Attachment

Attachment to relate back from the date of Service of Notice

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Procedure of Sale of Immovable Procedure of Sale of Immovable PropertyProperty

Sale of Attached Property

Issue of Proclamation specifying:-Time & place of sale-Property to be sold-Revenue (if any) assessed upon the property or any part-Amount of recovery for which sale is ordered-Reserve price (if any)-Any other material thing for purchaser

No sale without consent of defaulter, before 30 days from date of affixing proclamation on the property

Sale by public auction and not below reserve price. Where salepostponed for want of bid, AO (if authorised) can bid on behalf of Govt.

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Application (within 30 days) to set aside sale on depositing the amount

Application (within 30 days) to set aside sale on ground of non-service of notice or material irregularity

Confirmation of sale and granting sale certificate

TRO may, on application of defaulter, postpone thesale to enable him to raise amount due under certificate

In case of sale of share in undivided property, bid of co-sharer have preference

No sale after expiry of 3 years from end of FY in which the demand order became conclusive and

in case of re-sale or set aside, the period extends by 1 year

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Properties exempt from Properties exempt from Attachment (Rule 10 read with Attachment (Rule 10 read with

Section 60 of CPC)Section 60 of CPC)o Salary: First 1000 + 2/3Salary: First 1000 + 2/3rdrd of remaining of remainingo Personal ornaments of women as per Personal ornaments of women as per

religious usagereligious usageo Stipend + gratuities allowed to pensionersStipend + gratuities allowed to pensionerso Compulsory deposits + Other sums in or Compulsory deposits + Other sums in or

derived form PF Act, 1925 or PPFderived form PF Act, 1925 or PPFo Money payable under Policy of Insurance Money payable under Policy of Insurance

of lifeof life

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Arrest & Detention Arrest & Detention (Part V of Schedule II)(Part V of Schedule II)

o Show Cause Notice necessaryShow Cause Notice necessaryo Satisfaction of TRO to be recorded:Satisfaction of TRO to be recorded:

o Assessee has dishonestly transferred, Assessee has dishonestly transferred, concealed or removed any property concealed or removed any property after drawing up of Certificate, or after drawing up of Certificate, or

o Assessee has means to pay the Arrears Assessee has means to pay the Arrears but refuses to neglects to paybut refuses to neglects to pay

o Where assessee does not appear in Where assessee does not appear in reference to TRO’s notice, he can be reference to TRO’s notice, he can be arrested and produced before TROarrested and produced before TRO

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Remedies against AO’s ActionRemedies against AO’s Actiono Application u/s 220(3) for extension Application u/s 220(3) for extension

of time /allowing payment in of time /allowing payment in installment.installment.

o Application u/s 220(6) for not Application u/s 220(6) for not treating the Assessee to be in treating the Assessee to be in default.default.

o Application before the Appellate Application before the Appellate Authority where appeal is pending.Authority where appeal is pending.

o Writ petition under Article 226 Writ petition under Article 226 against the Rejection Order.against the Rejection Order.

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CBDT’s Instruction No. 96 [F. No. CBDT’s Instruction No. 96 [F. No. 1/6/69-ITCC], dated 21st August 1/6/69-ITCC], dated 21st August

19691969

Where the income determined on Where the income determined on assessment was substantially higher than assessment was substantially higher than the returned income, say, twice the latter the returned income, say, twice the latter amount or more, the collection of the tax in amount or more, the collection of the tax in dispute should be held in abeyance till the dispute should be held in abeyance till the decision on the appeals, provided there decision on the appeals, provided there were no lapse were no lapse on the part of the assessee.on the part of the assessee.

Followed by the Madhya Pradesh High Court Followed by the Madhya Pradesh High Court in the case of M.G.M. Transports (Madras) in the case of M.G.M. Transports (Madras) (P) Ltd. vs. ITO & Anr. (2008) 303 ITR 15 and (P) Ltd. vs. ITO & Anr. (2008) 303 ITR 15 and also in Jain Cycle Spares and Co. vs. CIT also in Jain Cycle Spares and Co. vs. CIT (2004) 267 ITR 60.(2004) 267 ITR 60.

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Circular No. 530 dated 6th March, Circular No. 530 dated 6th March, 1989 1989

Circular No. 589 dated 16th Jan. Circular No. 589 dated 16th Jan. 19911991The Board has clarified that the AO will exercise his The Board has clarified that the AO will exercise his

discretion u/s 220(6) where demand:discretion u/s 220(6) where demand:

(i) arises because AO had adopted an interpretation (i) arises because AO had adopted an interpretation of of law in respect of which, there exist conflicting law in respect of which, there exist conflicting decisions of one or more High Courts or, the High decisions of one or more High Courts or, the High Court has adopted a contrary interpretation but the Court has adopted a contrary interpretation but the Department has not accepted that judgment, orDepartment has not accepted that judgment, or

(ii) relates to issue that have been decided in (ii) relates to issue that have been decided in favour of favour of the assessee in an earlier order by an the assessee in an earlier order by an appellate appellate authority or Court in assessee’s own authority or Court in assessee’s own case.case.

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Followed by the Orissa High Court in the case of Followed by the Orissa High Court in the case of Bhubaneshwar Stock Exchange vs. Union of Bhubaneshwar Stock Exchange vs. Union of India (2006) 283 ITR 562 and by India (2006) 283 ITR 562 and by Gujarat High Gujarat High Court in the case of Court in the case of Gujarat State Fertilizers & Gujarat State Fertilizers & Chemicals Ltd. vs. Dy. Chemicals Ltd. vs. Dy. CITCIT (1997) 226 ITR (1997) 226 ITR 270.270.

In respect of cases not covered by the aforesaid In respect of cases not covered by the aforesaid criteria, the AO, while considering the situation for criteria, the AO, while considering the situation for treating the assessee to be not in default, would treating the assessee to be not in default, would consider all relevant factors having a bearing on consider all relevant factors having a bearing on the demand raised and communicate his decision the demand raised and communicate his decision to the assessee in the form of a speaking order.to the assessee in the form of a speaking order.

o CBDT’s letter F.No. 404/132/70-ITCC dated CBDT’s letter F.No. 404/132/70-ITCC dated 1414thth Sept. 1970 Sept. 1970 Further clarified that these discretionary powers Further clarified that these discretionary powers are to be exercised in respect of disputed taxes are to be exercised in respect of disputed taxes only.only.

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Remedies against TRO’s ActionRemedies against TRO’s Action

o Objections before TRO to the attachment Objections before TRO to the attachment or sale of any property.or sale of any property.

o Appeal before CCIT/CIT u/r 86 of Schedule Appeal before CCIT/CIT u/r 86 of Schedule II against non-conclusive orders.II against non-conclusive orders.

o Writ Petition under Article 226 against Writ Petition under Article 226 against conclusive orders:conclusive orders:o If full, firm & adequate investigation into If full, firm & adequate investigation into

objections not carried out by TROobjections not carried out by TROo On Other groundsOn Other grounds

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Important JudgementsImportant Judgements-Modes of Recovery--Modes of Recovery-

K.A. Veerichetty & Sons vs. ITO & Anr. K.A. Veerichetty & Sons vs. ITO & Anr. (1976) 102 ITR 225 (Kar):(1976) 102 ITR 225 (Kar):

o Money must be due or may become due to the Money must be due or may become due to the assessee.assessee.

o Or he must hold or may subsequently hold Or he must hold or may subsequently hold money on account of assessee.money on account of assessee.

Where assessee in default is an AOP and a Where assessee in default is an AOP and a person owes, to the member of AOP, then not person owes, to the member of AOP, then not justified to invoke section 226(3) against that justified to invoke section 226(3) against that person.person.

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Important JudgementsImportant Judgements -Modes of Recovery- -Modes of Recovery-

Bhishma Pithamaha Vs. TRO (2009) Bhishma Pithamaha Vs. TRO (2009) 316 ITR 63 (Kar):316 ITR 63 (Kar):In case of wrongful sale of attached In case of wrongful sale of attached properties, where the department could not properties, where the department could not recognize the succession, there is no recognize the succession, there is no provision under the Act which confers the provision under the Act which confers the power to the Department to proceed power to the Department to proceed against a person who wrongfully sells the against a person who wrongfully sells the property of the assessee and recover the property of the assessee and recover the monies from him, merely because they monies from him, merely because they have attached the properties.have attached the properties.

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Important JudgementsImportant Judgements -Modes of Recovery- -Modes of Recovery-

K.M. Adam vs. ITO (1958) 33 ITR 26 K.M. Adam vs. ITO (1958) 33 ITR 26 (Mad):(Mad):

o There must be a debt to be attached.There must be a debt to be attached.o An unutilized overdraft account does not render the An unutilized overdraft account does not render the

bank a debtor in any sense.bank a debtor in any sense.o Therefore, bank does not fall within the expression Therefore, bank does not fall within the expression

“person from whom money may become due”.“person from whom money may become due”.o ITO cannot make a garnishee order in respect of ITO cannot make a garnishee order in respect of

difference between the overdraft limit allowed by difference between the overdraft limit allowed by the banker to the assessee and the amount of the banker to the assessee and the amount of overdraft drawn by the assessee.overdraft drawn by the assessee.

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Important JudgementsImportant Judgements -Modes of Recovery- -Modes of Recovery-

Administrator of the Specified Undertaking of Administrator of the Specified Undertaking of UTI vs. B.M. Malani & Ors. (2008) 296 ITR 31 UTI vs. B.M. Malani & Ors. (2008) 296 ITR 31 (SC):(SC):

o Where certain amount has been invested by a Where certain amount has been invested by a assessee in UTI units having lock-in period.assessee in UTI units having lock-in period.

o Untill assessee did not exercise the option of Untill assessee did not exercise the option of repurchase of units, no money becomes due to him.repurchase of units, no money becomes due to him.

o In such a case, UTI cannot pay such amount to the In such a case, UTI cannot pay such amount to the deptt. in compliance of notice u/s 226(3) issued to it.deptt. in compliance of notice u/s 226(3) issued to it.

o UTI is not authorised to dispose the units on its own UTI is not authorised to dispose the units on its own without any notice to the holder of the units.without any notice to the holder of the units.

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Important JudgementsImportant Judgements -Modes of Recovery- -Modes of Recovery-

P.K. Trading Company vs. ITO (1970) 78 ITR P.K. Trading Company vs. ITO (1970) 78 ITR 427 (Cal):427 (Cal):o A garnishee order can only be issued on a debtor A garnishee order can only be issued on a debtor

of the assessee.of the assessee.o By treating some other person as benamidar of By treating some other person as benamidar of

the assessee firm or the partners of the assessee the assessee firm or the partners of the assessee firm, ITO is not entitled to issue notice u/s 226(3).firm, ITO is not entitled to issue notice u/s 226(3).

o Also notice cannot be issued on the debtor of the Also notice cannot be issued on the debtor of the alleged benamidar.alleged benamidar.

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Important JudgementsImportant Judgements-Modes of Recovery--Modes of Recovery-

Ezy Slide Fastners Ltd. vs. Joint CIT (2004) 269 ITR Ezy Slide Fastners Ltd. vs. Joint CIT (2004) 269 ITR 548 (Guj):548 (Guj):o An assessee registered as a sick industrial company by An assessee registered as a sick industrial company by

BIFR is entitled to protection u/s 22 of the Sick Industrial BIFR is entitled to protection u/s 22 of the Sick Industrial Companies Act, 1985 in respect of arrears of income tax.Companies Act, 1985 in respect of arrears of income tax.

o However, deptt. can obtain consent from BIFR for recovery However, deptt. can obtain consent from BIFR for recovery that it proposes to mathat it proposes to ma ke.ke.

o Accordingly, interim relief granted restraining the IT Accordingly, interim relief granted restraining the IT authorities from enforcing any notice u/s 226(3).authorities from enforcing any notice u/s 226(3).

o They first have to obtain consent of BIFR as provided in They first have to obtain consent of BIFR as provided in section 22(1) of the said Act.section 22(1) of the said Act.

This view has been affirmed by Hon’ble Supreme This view has been affirmed by Hon’ble Supreme Court in case of Tata Davy Ltd. vs. State of Orissa & Court in case of Tata Davy Ltd. vs. State of Orissa & Ors. AIR (1998) SC 2928 & Gram Panchayat vs. Ors. AIR (1998) SC 2928 & Gram Panchayat vs. Shree Vallabh Glass Works Ltd. AIR (1990) SC 1017.Shree Vallabh Glass Works Ltd. AIR (1990) SC 1017.

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Important JudgementsImportant Judgements-Modes of Recovery--Modes of Recovery-

o However, Hon’ble Supreme Court has taken a different However, Hon’ble Supreme Court has taken a different view in the case of Dy. CTO & Ors. Vs. Corromandal view in the case of Dy. CTO & Ors. Vs. Corromandal Pharmaceuticals & Ors. AIR (1997) SC 2027.Pharmaceuticals & Ors. AIR (1997) SC 2027.

o The sickness of an industrial company is no bar for the The sickness of an industrial company is no bar for the collection and recovery of the moneys due towards collection and recovery of the moneys due towards taxes especially when such moneys have been taxes especially when such moneys have been collected which are payable to the Government.collected which are payable to the Government.

o Accordingly, any liability towards sales-tax which had Accordingly, any liability towards sales-tax which had become payable after the sanction of the scheme of become payable after the sanction of the scheme of rehabilitation by BIFR would be liable to be paid.rehabilitation by BIFR would be liable to be paid.

o The company cannot take shelter under section 22(1) The company cannot take shelter under section 22(1) of SICA.of SICA.

o Although the judgment had been rendered in the Although the judgment had been rendered in the context of sales-tax, the same ratio would apply for context of sales-tax, the same ratio would apply for excise, customs and allied taxes.excise, customs and allied taxes.

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Important JudgementsImportant Judgements-CIT does not have Jurisdiction -CIT does not have Jurisdiction

u/ 220(6)-u/ 220(6)-Mrs. N. Savithri Sam vs. ITO (1969) 72 ITR 730 (Mad);Mrs. N. Savithri Sam vs. ITO (1969) 72 ITR 730 (Mad);

Pradeep Ratanshi vs. Asstt. CIT (1996) 221 ITR 502 (Ker)Pradeep Ratanshi vs. Asstt. CIT (1996) 221 ITR 502 (Ker)

o ITO’s jurisdiction u/s 220(6) is quasi judicial.ITO’s jurisdiction u/s 220(6) is quasi judicial.o Exclusively entrusted to him by statute.Exclusively entrusted to him by statute.o In question of grant of stay, his decision is not guided In question of grant of stay, his decision is not guided

or controlled by the higher administrative authority or controlled by the higher administrative authority including CIT.including CIT.

o Although CIT is higher in hierarchy, he cannot give Although CIT is higher in hierarchy, he cannot give any direction to ITO with respect to a quasi judicial any direction to ITO with respect to a quasi judicial function.function.

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Important JudgementsImportant Judgements-Power of Appellate Authority to grant -Power of Appellate Authority to grant

Stay of Recovery Proceedings is Stay of Recovery Proceedings is Independent of Section 220(6-Independent of Section 220(6-

Tin Manufacturing Co. of India vs. CIT & Ors. (1995) Tin Manufacturing Co. of India vs. CIT & Ors. (1995) 212 ITR 451 (All);212 ITR 451 (All);

Kesav Keshew Company vs. Dy. CIT (1994) 210 ITR Kesav Keshew Company vs. Dy. CIT (1994) 210 ITR 1014 (Ker)1014 (Ker)

o Power of Appellate Authority to stay recovery Power of Appellate Authority to stay recovery proceedings is independent of section 220(6).proceedings is independent of section 220(6).

o Not necessary for an assessee to approach AO Not necessary for an assessee to approach AO u/s 220(6) before moving the appellate authority u/s 220(6) before moving the appellate authority for invoking the inherent jurisdiction to stay the for invoking the inherent jurisdiction to stay the recovery of demand in respect of appeal pending recovery of demand in respect of appeal pending before him.before him.

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Important JudgementsImportant Judgements-Power of Appellate Authority to grant -Power of Appellate Authority to grant

Stay of Recovery Proceedings is Stay of Recovery Proceedings is Independent of Section 220(6)Independent of Section 220(6)

SHIV SHAKTI RUBBER & CHEMICALS WORKS vs. SHIV SHAKTI RUBBER & CHEMICALS WORKS vs. ITAT & ORS. (1995) 213 ITR 299 (All)ITAT & ORS. (1995) 213 ITR 299 (All)

o Tribunal has implied powers to grant stay.Tribunal has implied powers to grant stay.o Should consider the stay application on merits.Should consider the stay application on merits.o Wrong to observe that stay would not solve any Wrong to observe that stay would not solve any

problem.problem.o Need to consider all aspects of the matter in Need to consider all aspects of the matter in

order to determine that the requirements for order to determine that the requirements for grant of stay are fulfilled.grant of stay are fulfilled.

o Assessee can move second stay application Assessee can move second stay application which the Tribunal should consider on merits.which the Tribunal should consider on merits.

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Important JudgementsImportant Judgements-Mere fact of Pendency of -Mere fact of Pendency of

Appeal does not operate as a Appeal does not operate as a Stay-Stay-If the assessment is taken as non - existent with the If the assessment is taken as non - existent with the

filing of the appeal, this provision becomes filing of the appeal, this provision becomes meaningless. meaningless.

Vikrambhai Punjabhai Palkiwala vs. S.M. Ajnabi, Vikrambhai Punjabhai Palkiwala vs. S.M. Ajnabi, Recovery Officer & Ors. (1990) 182 ITR 413 (Guj)Recovery Officer & Ors. (1990) 182 ITR 413 (Guj)MMere filling of an appeal or an application for stay in such an ere filling of an appeal or an application for stay in such an appeal will not ipso facto grant stay of further proceedings in appeal will not ipso facto grant stay of further proceedings in a tax recovery matter.a tax recovery matter.

Union of India vs. B.C. Nawn & Ors. (1972) 84 ITR Union of India vs. B.C. Nawn & Ors. (1972) 84 ITR 526 (Cal)526 (Cal)There is nothing in the Act to show that the assessed sum There is nothing in the Act to show that the assessed sum becomes not recoverable during the pendency of appeal if becomes not recoverable during the pendency of appeal if filed or with the filing of the appeal. filed or with the filing of the appeal.

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Important JudgementsImportant Judgements-Power coupled with -Power coupled with

responsibility-responsibility-M.L.M. Mahalingam Chettiar vs. Third M.L.M. Mahalingam Chettiar vs. Third ITO & Anr. (1967) 66 ITR 287 (Mad)ITO & Anr. (1967) 66 ITR 287 (Mad)o Not a naked and arbitrary power.Not a naked and arbitrary power.o The officer has to take all facts & The officer has to take all facts &

circumstances into consideration.circumstances into consideration.o Make an appropriate order.Make an appropriate order.o The request cannot be merely rejected on The request cannot be merely rejected on

the basis that the power is with him but the basis that the power is with him but that he is not bound to exercise it. that he is not bound to exercise it.

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Important JudgementsImportant Judgements-Specific opportunity of -Specific opportunity of

hearing-hearing-Golam Momen vs. Dy. CIT & Ors. (2002) 256 Golam Momen vs. Dy. CIT & Ors. (2002) 256 ITR 754 (Cal)ITR 754 (Cal)o In proceedings initiated by assessee for stay u/s In proceedings initiated by assessee for stay u/s

220(6), the AO, cannot refuse to give specific 220(6), the AO, cannot refuse to give specific opportunity of being heard.opportunity of being heard.

o On the ground that the same has been granted On the ground that the same has been granted in the assessment proceedings.in the assessment proceedings.

o It is completely a different consideration.It is completely a different consideration.o The opportunity of hearing is implicit in the The opportunity of hearing is implicit in the

provision itself.provision itself.

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Important JudgementsImportant Judgements-Discretion to be exercised -Discretion to be exercised

Judiciously-Judiciously-Shivangi Steels (P) Ltd. vs. Asstt. CIT (2004) Shivangi Steels (P) Ltd. vs. Asstt. CIT (2004) 266 ITR 62 (All)266 ITR 62 (All)o Asstt. CIT rejected application of assessee Asstt. CIT rejected application of assessee

u/s 220(6), after one year on the ground u/s 220(6), after one year on the ground that he had not deposited the amount that he had not deposited the amount even after expiry of more than one year.even after expiry of more than one year.

o Without giving any reasons.Without giving any reasons.o Exercise of discretion was not judicious Exercise of discretion was not judicious

and liable to be set aside.and liable to be set aside.

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Important JudgementsImportant Judgements-Payment of whole amount not -Payment of whole amount not

a precondition-a precondition-Maruti Udyog Ltd. vs. Additional CIT (2003) Maruti Udyog Ltd. vs. Additional CIT (2003) 264 ITR 487 (Del)264 ITR 487 (Del)o Direction to pay whole amount in dispute.Direction to pay whole amount in dispute.

o As a precondition for stay of recovery of As a precondition for stay of recovery of demand at the stages when the first demand at the stages when the first appeal is pending is not reasonable.appeal is pending is not reasonable.

o Directed not to take coercive steps for Directed not to take coercive steps for recovery till disposal of appeal on recovery till disposal of appeal on assessee’s depositing specified sum by assessee’s depositing specified sum by the specified dates.the specified dates.

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Important JudgementsImportant Judgements

ITO vs. K.A. GOVINDASWAMY & ORS. (1978) ITO vs. K.A. GOVINDASWAMY & ORS. (1978) 113 ITR 593 (MAD)113 ITR 593 (MAD)

o Rule of priority in favour of Department for Rule of priority in favour of Department for realization of dues can prevail only against realization of dues can prevail only against unsecured creditors and not secured unsecured creditors and not secured creditors.creditors.

o Department could not have prior charge Department could not have prior charge over the claim of secured creditor out of the over the claim of secured creditor out of the sale proceeds of property in the hands of sale proceeds of property in the hands of official assignee of property of defaulter.official assignee of property of defaulter.

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Important JudgementsImportant Judgements

Pappu Reddiar & Anr. Vs. Union Of India Pappu Reddiar & Anr. Vs. Union Of India (1962) 46 ITR 825 (MAD):(1962) 46 ITR 825 (MAD):

o Where money was brought in Court in a suit Where money was brought in Court in a suit for administration of the estate of the for administration of the estate of the deceased.deceased.

o The Government would have a preferential The Government would have a preferential claim in respect of its income-tax dues.claim in respect of its income-tax dues.

o Notwithstanding that other creditors had Notwithstanding that other creditors had taken enormous trouble in bringing the taken enormous trouble in bringing the money to Court.money to Court.

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