Modes of Recovery of Tax [Section 122]

Section-122 provides that in case assessee fails to pay any sum imposed by way of interest, fine, penalty, or any other sum payable under the provisions of this Act, the same shall be recoverable in the manner specified in the Act for the recovery of arrears of tax.

“Tax Recovery Officer” means :

1. A Collector or an Additional collector

2. Any such officer empowered to effect recovery of arrears of land revenue or other public demand under any law relating to land revenue or other public demand for the time being in force in the State as ma be authorized by the State Government , by general or special notification in the Official Gazettee, to exercise the powers of a Tax Recovery Officer.

3. Any Gazetted Officer of the Central or s State Govt. who may be authorized by the Central Govt. by general or special notification in the Officer Gazette, to exercise the powers of a Tax Recovery Office

When an assessee is in default or is deemed to be in default in making a payment of tax, the Tax Recovery Officer may draw up under his signature a statement in the prescribed form specifying the amount of arrears due from the assessee and shall proceed to recover from such assessee the amount specified in the certificate by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule :

1. attachment and sale of the assessee’s movable property ;

2. attachment and sale of the assessee’s immovable property ;

3. arrest of the assessee and his detention in prison ;

4. appointing a receiver for the management of the assessee’s movable and immovable properties.

A- Tax Recovery Officer by whom recovery is to be effected [ Sec. 223 ]

1. The Tax Recovery Officer competent to take action shall be—

1. the Tax Recovery Officer within whose jurisdiction the assessee carries on his business or profession or within whose jurisdiction the principal place of his business or profession is situate, or

2. the Tax Recovery Officer within whose jurisdiction the assessee resides or any movable or immovable property of the assessee is situate,
   Jurisdiction assigned to the Tax Recovery Officer under the orders or directions issued by the Board, or by the Chief Commissioner or Commissioner who is authorised in this behalf by the Board.

2. Where an assessee has property within the jurisdiction of more than one Tax Recovery Officer and the Tax Recovery Officer by whom the certificate is drawn up—

1. is not able to recover the entire amount by sale of the property, movable or immovable, within his jurisdiction, or

2. is of the opinion that, for the purpose of expediting or securing the recovery of the whole or any part of the amount under this Chapter, it is necessary so to do, he may send the certificate or, where only a part of the amount is to be recovered, a copy of the certificate certified in the prescribed manner and specifying the amount to be recovered to a Tax Recovery Officer within whose jurisdiction the assessee resides or has property and, thereupon, that Tax Recovery Officer shall also proceed to recover the amount under this Chapter as if the certificate or copy thereof had been drawn up by him.

B- Other Mode of Recovery of Tax [ Section 226 ]

Where no certificate has been drawn up, the Assessing Officer may recover the tax by any one or more of the modes provided in this section.

Where a certificate has been drawn up, the Tax Recovery Officer may recover the tax by any one or more of the modes provided in this section.

B-1 (i) Deduction from Salary

If any assessee is in receipt of any “Salaries” income, the Assessing Officer or Tax Recovery Officer may approach such person paying salary to deduct arrears of tax from the salary of the assessee, and such person shall comply with any such requisition and shall pay the sum so deducted to the credit of the Central Government or as the Board directs.

But any part of the salary exempt from attachment in execution of degree of a civil court, shall be exempt from any requisition made under this sub-section.

B-2 (ii) Collection from persons who owe money to assesee :

1. The Assessing Officer or Tax Recovery 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 or any person who holds or may subsequently hold money for or on account of the assessee to pay to the Assessing Officer or Tax Recovery Officer (when the money becomes due or is held) the amount which may be sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount.

2. A notice may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and the shares of the joint holders in such account shall be presumed, until the contrary is proved, to be equal.

3. A copy of the notice shall be forwarded to the assessee at his last address known to the Assessing Officer or Tax Recovery Officer, and in the case of a joint account to all the joint holders at their last addresses known to the Assessing Officer or Tax Recovery Officer.

4. Save as otherwise provided in this sub-section, every person to whom a notice is issued under this sub-section shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary.

5. Any claim respecting any property in relation to which a notice under this sub-section has been issued arising after the date of the notice shall be void as against any demand contained in the notice.

6. Where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Assessing Officer or Tax Recovery Officer to the extent of his own liability to the assessee on the date of the notice, or to the extent of the assessee’s liability for any sum due under this Act, whichever is less.

7. The Assessing Officer or Tax Recovery Officer may, at any time or from time to time, amend or revoke any notice issued under this sub-section or extend the time for making any payment insection226 pursuance of such notice.

8. The Assessing Officer or Tax Recovery Officershall grant a receipt for any amount paid in compliance with a notice issued under this sub-section, and the person so paying shall be fully discharged from his liability to the assessee to the extent of the amount so paid.

9. Any person discharging any liability to the assessee after receipt of a notice under this sub-section shall be personally liable to the Assessing Officer or Tax Recovery Officer to the extent of his own liability to the assessee so discharged or to the extent of the assessee’s liability for any sum due under this Act, whichever is less.

10. If the person to whom a notice under this sub-section is sent fails to make payment in pursuance thereof to the Assessing Officer or Tax Recovery Officer he shall be 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.

B-3 (iii) Application to Court for payment of money in court’s custody [ Sec. 226(4)]

The Assessing Officer or Tax Recovery Officer may apply to the court in whose custody there is money belonging to the assessee for payment to him of the entire amount of such money, or, if it is more than the tax due, an amount sufficient to discharge the tax.

B-4 (iv) Distraint and Sale of Movable Property [ Section 226(5)]

The Assessing Officer or Tax Recovery Officer may, if so authorised by the Chief Commissioner or Commissioner by general or special order, recover any arrears of tax due from an assessee by distraint and sale of his movable property in the manner laid down in the Third Schedule.

B-5 (v) Recovery through State Government [ Section 227]

If the recovery of tax in any area has been entrusted to a State Government, the State Government may direct, with respect to that area or any part thereof; that tax shall be recovered therein with, and as an addition to, any municipal tax or local rate, by the same person and in the same manner as the municipal tax or local rate is recovered.