Facts of the Case

The petitioner approached the Delhi High Court challenging attachment orders issued during recovery proceedings. During the hearing, the Tax Recovery Officer appeared before the Court and stated that if the petitioner filed an affidavit confirming that it had no dealings with M/s Neva Finance and Leasing Private Limited and that no amount was payable by the said company to the petitioner, the impugned attachment orders would be withdrawn.

The petitioner accepted the proposal and agreed to submit the required affidavit before the Tax Recovery Officer on the same day.

Issues Involved

  1. Whether the attachment orders could continue when the petitioner asserted that it had no dealings with M/s Neva Finance and Leasing Private Limited.
  2. Whether withdrawal of attachment orders was justified upon submission of an affidavit clarifying the absence of any financial relationship or outstanding dues.
  3. Whether the Tax Recovery Officer could withdraw attachment orders upon verification of the petitioner’s affidavit.

Petitioner’s Arguments

  • The petitioner submitted before the Court that it was willing to file an affidavit before the Tax Recovery Officer.
  • The affidavit would confirm that there were no dealings with M/s Neva Finance and Leasing Private Limited.
  • The petitioner further undertook to clarify that no amount was due from the said company to the petitioner.
  • On that basis, the attachment orders should be withdrawn.

Respondent’s Arguments

  • The Tax Recovery Officer appeared in person before the Court.
  • He stated that upon filing of an affidavit by the petitioner confirming:
    • absence of dealings with M/s Neva Finance and Leasing Private Limited; and
    • absence of any amount payable by the said company to the petitioner,

the impugned attachment orders would be withdrawn.

  • The Revenue therefore agreed to resolve the dispute through verification of the affidavit rather than continuing the attachment proceedings.

Court Findings / Order

The Delhi High Court recorded the statement made by the Tax Recovery Officer and the undertaking given by the petitioner.

The Court observed that the petitioner would file the necessary affidavit before the Tax Recovery Officer during the course of the day. Upon filing of the affidavit, the Tax Recovery Officer would withdraw the attachment orders.

Accordingly, the writ petition was disposed of in those terms. A copy of the order was directed to be supplied to the parties.

Important Clarification

  • The Court did not adjudicate upon the merits of the recovery proceedings.
  • The dispute was resolved on the basis of a statement made by the Tax Recovery Officer.
  • Withdrawal of attachment was made conditional upon filing of an affidavit.
  • The order emphasizes that attachment proceedings may be withdrawn where a third party satisfactorily establishes that it has no dealings or financial liability connected with the tax defaulter.
  • The decision highlights the practical approach adopted by courts in tax recovery matters when factual clarification is sufficient to resolve the dispute.

Sections Involved

  • Second Schedule to the Income-tax Act, 1961 (Recovery Proceedings)
  • Provisions relating to Attachment and Recovery of Tax Dues
  • Powers of Tax Recovery Officer (TRO)

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Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2000:DHC:11376-DB/65306042000CW14502000_113421.pdf

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