ORDER UNDER S. 226–Bar under s. 293.
Ratio :
In view of the bar created by section 293 in the
circumstances of the case, direction is given to Tax Recovery
Officer to hear a representative on behalf of assessee society
that the assessee society was not legally served when notice or
order under section 226(3)(x) was received by Mr. `R’ who was
allegedly representative of assessee society.
Held :
Prima facie, there is a bar created by section 293
to challenge the orders under section 226(3) in a civil suit.
This point may not be opined in this case finally as the matter
can be settled otherwise than by challenging the orders before
the civil court. The primary question raised by the
respondent-society, which is the plaintiff in the civil suit, is
that it was not served with the notice/order under section
226(3). Naturally, if it is not served, that order will not bind
the society. On the other hand, the case of the department is
that the society was served as the notice-cum-order under section
226(3) was received by Mr. R for and on behalf of the society.
The case of the society as put forth before me is that Mr. R was
nobody to represent the society or to receive any communication
for and on behalf of the society. Under these circumstances,
directions are given to the Tax Recovery Officer to hear a
representative on behalf of the society (the society is being
represented by a counsel), he may decide the objection of the
society, that the society was not legally served when the notice
was received by Mr. `R’ the dispute would be settled.
Application :
Also to current assessment years.
Income Tax Act 1961 s.226(3)
Income Tax Act 1961 s.293
JUDGMENT
R.S. Mongia, J.
1. Briefly the facts of the case are that an order dated January 24, 1994, was issued by the Tax Recovery Officer purporting to be exercising the power under Section 226(3) of the Income-tax Act, 1961, against respondent No. 1, the Hansi Mohalla Khatikan Co-operative Labour and Construction Society Ltd., Hansi. This order was followed by another order dated May 23, 1994, issued under Section 226(3)(x) of the Act to respondent No. 3, HUDA, directing it to make the payment to the Income-tax Department in respect of any amount that may be due to the society from HUDA. The society filed a civil suit challenging the aforesaid order. Ad interim injunction was prayed for staying the operation of the aforesaid orders. The trial court after holding that it had no jurisdiction as there is a bar of jurisdiction to a civil suit under Section 293 of the Income-tax Act, declined the prayer for ad interim injunction. However, the appellate court has granted the ad interim injunction as prayed for to the plaintiffs (now respondents) which led the Income-tax Department to file the present revision petition.
2. The primary point which is raised in the civil suit is that the aforesaid orders which are the subject-matter of challenge in the civil suit were passed without issuing any notice to the plaintiffs-society (respondent herein), whereas the case of the Income-tax Department is that one Shri Basant Lal Rawal had received the notice-cum-order, dated January 24, 1994, for and on behalf of the respondent-society.
3. Prima facie, I am of the view that there is a bar created by Section 293 of the Income-tax Act, 1961, to challenge the aforesaid orders in a civil suit. Section 293 reads as under :
” 293. Bar of suits in civil courts. — No suit shall be brought in any civil court to set aside or modify any proceeding taken or order made under this Act and no prosecution, suit or other proceeding shall lie against the Government or any officer of the Government for anything in good faith done or intended to be done under this Act.”‘
4. After going through the little details of the case, I am of the view that this point may not be opined in this case finally as the matter can be settled otherwise than by challenging the orders before the civil court. The society is being represented before me. As observed above, the primary question raised by the respondent-society, which is the plaintiff in the civil suit, is that it was not served with the notice/order under Section 226(3) of the Act, dated January 24, 1994. Naturally, if it is not served, that order will not bind the society. On the other hand, the case of the Department is that the society was served as the notice-cum-order under Section 226(3) was received by Mr. Basant Lal Rawal for and on behalf of the society. The case of the society as put forth before me is that Mr. Rawal was nobody to represent the society or to receive any communication for and on behalf of the society. Under these circumstances, I am of the view that if directions are given to the Tax Recovery Officer to hear a representative on behalf of the society (the society is being represented by a counsel), he may decide the objection of the society, that the society was not legally served when the notice was received by Mr. Rawal, the dispute would be settled. In case the objection of the society is upheld, needless to mention, notice-cum-order under Section 226(3) of the Act and the subsequent order, dated May 23, 1994, cannot stand. In case, it is found otherwise that the service of the notice-cum-order on Mr. Rawal was a good service on the society itself, the aforesaid orders would naturally stand subject to the society’s raising any lawful objection that despite service of the order/notice under Section 226(3) on Mr. Rawal for and on behalf of the society, the said notice/orders cannot otherwise stand. Further, I am of the view that if such directions are given, the civil suit itself would stand dismissed as infructuous.
5. Consequently, I dispose of this revision petition by giving directions, as aforesaid. The civil suit filed by the respondent-society shall stand dismissed as infructuous.
6. The parties through their counsel are directed to appear before the Tax Recovery Officer, Hissar, on April 10, 1996, at 10.00 a.m. to get further directions from him. Needless to mention that the Tax Recovery Officer will dispose of the matter expeditiously after hearing the concerned parties by passing a speaking order.
7. A copy of this order be sent immediately to the Tax Recovery Officer, Hissar, and to the trial court (Civil Judge, Junior Division, Hissar) to enable it to pass a formal order dismissing the civil suit as having become infructuous in view of this order. A copy thereof, attested by the Court Secretary, be given to counsel for the parties.