Appeal No 1654 of1967
Appeal from the judgment and
order dated February 1 1967 of the Mysore High Court in Writ Petition No 846 of 1965i 
B Sen R Gopalakrishnan RN Sachthey and BD Bharma for the appellant
K Srinivasan MK Ramamurthi Vineet Kumar and Shyamala Pappu for he respondent
31 The Judgment of the Court was delivered by Ramaswami J
This appeal is brought by certificate on behalf of the II1 Income Tax Officer Mangalore from the judgment of the Mysore High Court dated February 1 1967 in Writ Petition No 846 of 1965 holding that the notice under section 2263 of the Income Tax Act 1961 hereinafter called the new Act  bearing No 770 d60 61 61 62 62 63 and 63 64 issued by the III Income Tax Officer to Ms Rajarajeswari Motor Service Mangalore produced as exhibit VIII with the writ petition was invalid and inoperative in respect of the following items of tax and penalty included therein  1
Tax for the assessment year 1960 61 Rs 705650 2
Tax for the assessment year 1961 62 Rs 48555 3
Penalty for 1962 63 Rs 189000 4
Tax for the assessment year 1963 64 Rs 6430700 and quashing the notice to that extent
The impugned notice was issued under section 226 3  of the new Act
The respondent Sri M Damodar Bhat was in arrears in respect of income tax and penalty levied on him in respect of three or four assessment years
The total amount shown as due in the notice was Rs 7408602 and was made up as follows 1
Tax for the assessment year 1960 61 Rs 705615 2
Tax for the assessment year 1961 62 Rs 48555 3
Balance of tax for the assess ment year 1962 63 Rs 34642 4
Penalty for assessment year 1962 63 Rs 189000 5
Tax for the assessment year 1963 64 Rs 6430790 Rs 7408602 It is necessary at this
stage to set out the relevant provisions of the Income Tax Act 1961 Act 43 of 1961  and of the Income Tax Act 1922 Act 11 of 1922 hereinafter referred to as the old Act 
Section 156 of the new Act is tothe following effect Notice of demand
When any tax interest penalty fine or any other sum is payable in consequence 32 of any order passed under this Act the Income tax Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable
 Sections 220 221 and 222 of the new Act provide 220
When tax payable and when assessee deemed  in default  1  Any amount otherwise than by way of advance tax specified as payable in a notice of demand under Section 156 shall be paid within thirty five days of the service of the notice at the place and to the person mentioned in the notice 2  If the amount SpeCified in any notice of demand under Section 156 is not paid within the period limited  under sub section 1  the assessee shall be liable to pay simple interest at nine per cent per annum from the day commencing after the end of the period mentioned in sub section  1  4 H the amount is not paid within the time limited under sub section 1  or extended  under subsection 3  as the case may be at the place and to the person mentioned in the said notice the assessee shall be deemed to be in default
6 Where an assessee has presented an appeal under Section 246 the Income tax Officer may in his discretion and subject to such conditions as he may think fit to impose in the circumstances of the case treat the assessee as not being in default in respect of the amount in dispute in the appeal even though the time for payment has expired as long as such appeal remains undisposed of 221
Penalty payable when tax in default  1  When an assessee is in default or is deemed to be in default in making a payment of tax he shall  in addition to the mount of the arrears and the mount of interest payable under sub section 2 of Section 220 be liable to pay by way of penalty an mount which in the case of a continuing default may be increased from time to time so however that the total mount of penalty does not exceed the amount of tax in arrears Provided that before levying any such penalty the
33 assessee shall be given a reasonable opportunity of being heard
2  Where as a result of any final order the amount of tax with respect to the default in the payment of which the panalty was levied has been wholly reduced the penalty levied shall be cancelled and the amount of penalty paid shall be refunded
Certificate to Tax Recovery Officer 1 When an assessee is in default or is deemed to be in default in makinga payment of tax the Income tax Officer may forward to the Tax Recovery Officer certificate under his signature specifying the amount of arrears due from the assessee and the Tax Recovery Officer on receipt of such certificate shall proceed to recover from such assessee the amount specified thereto by one or more of the modes mentioned below in accordance with the rules laid down in the Second Schedule a attachment and sale of the assessee s movable property b attachment and sale of the assessee s immovable property c arrest of the assessee and his detention in prison d appointing a receiver for the management of the assessee s movable and immovable properties
2 The Income tax Officer may issue a certificate under sub section 1  notwithstanding that proceedings for recovery of the arrears by any other mode have been taken
 Section 226 states as follows 226
Other modes of recovery  1  Notwithstanding the issue of a certificate to the Tax Recovery Officer under Section 222 the Income tax Officer may  recover the tax by any one or more of the modes provided in this section
 3   i  The Income tax 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 Income tax Officer either forthwith upon the 34 money becoming due or being held or at or within the time specified in the notice not being before the money becomes due or is held so much of the money as is 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 mount
ii A notice under this sub section 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 for the purposes of this sub section the shares of the joint holders in such account shall be presumed until the contrary is proved to be equal
iii A copy of the notice shall we forwarded to the assessee at his last address known to the Income tax Officer and in the case of a joint account to all the joint holders at their last addresses known to the Income tax Officer
iv 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 withstanding any rule practice or requirement to the contrary
v Any claim respecting any property in relation to which a notice trader this sub section has been issued rising after the date of the notice shall be void as against any demand contained in the notice
x If the person to whom a notice under this subsection is sent fails to make payment in pursuance thereof to the Income tax 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 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
35 Section 297 provides as follows 297
Repeals and savings  1  The Indian Income tax Act 1922 11 of 1922 is hereby repealed
2 Notwithstanding the repeal of the Indian Income tax Act 1922  11 of 1922  hereinafter referred to as the repealed Act g any proceeding for the imposition of a penalty in respect of any assessment for the year ending on the 31st day of March 1962 or any earlier year which is completed on or after the 1st day of April 1962 may be initiated and any such penalty may be imposed under this Act j any sum payable by way of income tax supertax interest penalty or otherwise under the repealed Act may be recovered under this Act but without prejudice to any action already taken for the recovery of such sum under the repealed Act      
Section 29 of the old Act reads When any tax penalty or interest is due in consequence of any order passed under or in pursuance of this Act the Income tax Officer shall serve upon the assessee or other person liable to pay such tax penalty or interest a notice of demand in the prescribed form specifying the sum so payable
 Section 6 of the General Clauses Act Act 10 of 1897 states Effect of repeal
Where this Act or any Central Act or Regulation made after the commencement of this Act repeals any enactment hitherto made or hereafter to be made then unless a different intention appears the repeal shall not a revive anything not in force or existing at the time at which the repeal takes effect or b affect the previous operation of
any enactment so repealed or anything duly done or suffered thereunder or 36 c  affect any right privilege obligation or liability acquired accrued or incurred under any enactment so repealed or d affect any penalty forfeiture or punishment incurred in respect of any offence committed against any enactment so
repealed or e affect any investigation legal
proceeding or remedy in respect of any such right  privilege obligation liability penalty forfeiture or punishment as aforesaid and any such investigation legal proceeding or remedy may be instituted continued or enforced and any such penalty forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed
 As regards the second item in the impugned notice viz tax in respect of assessment year 1961 62 to the extent of Rs 48555 the material facts are as follows The assessment proceedings were taken and concluded under the old Act and tax of Rs 294756 was imposed and demanded
Thereafter the respondent preferred an appeal to the Appellate Assistant Commissioner
In appeal the tax liability was reduced to Rs 48555
Thereupon the Income Tax Officer issued a notice to the respondent dated December 11 1963 purporting to be under section 156 of the new Act
The limit of 35 days for payment of the amount expired on January 22 1964
The impugned notice under section 2263 was issued nearly two years thereafter on April 23 1965
The argument on behalf of the respondent was that both the assessment order as well as the appellate order having been made under the old Act the provisions of section 226 of the new Act were not applicable
The High Court has
accepted this contention of the respondent and has held that the notice was invalid to the extent it included the tax of Rs 48555 for the assessment year 1961 62
The contention of the appellant is that the High Court was in error in holding that action under section 226 of the new Act was possible only in the case of an assessee who was in default and that in the case of an assessment under the old Act no notice under section 156 of the new Act was possible and there was no way of taking advantage of the provisions for recovery and collection of tax contained in sections 220 to 234 of the new Act
In our opinion the argument on behalf of the appellant is well founded and must be accepted as correct
In the first place it is necessary to notice that section 2204 of the new Act mentions in what circumstances the assessee shall be deemed to be in default and section 222 provides that when an assessee is in default or is deemed to be in default in making payment of tax the Income Tax Officer may forward to the Tax RecOvery Officer a certificate under his signature 37 specifying the amount of arrears
due from the assessee and the Tax Recovery Officer on receipt
of such certificate shall proceed to
recover from the assessee the amount specified therein by one or more of the modes mentioned in the section
Section 226 however provides for other methods of recovery and there is no reference in section 2263 to any default on the part of the assessee
Section 2263 merely states that the Income Tax Officer may at any time or from time to timeby 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 Income Tax officer either forthwith so much of the money as is 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
In a proceeding under section 226 3  of the new Act therefore it is not necessary that the assessee should be in default or should be deemed to be in default and no such condition or limitation is imposed by the language of that sub section
We are accordingly of the opinion that the Income Tax Officer had authority W issue the notice dated December 11 1963 under section 156 of the new Act with respect to the tax liability of Rs 48555 incurred by the respondent under the old Act
The High Court has expressed the view that in the case of an assessment under the old Act no notice under section 156 of the new Act was possible and there was no way of taking advantage of the provisions for recovery and collection of tax contained in sections 220 to 234 of the new Act
The High Court has based its opinion on the premise that all recoveries are possible only when the stage mentioned in section 2204 was reached namely that the assessee had become or deemed to have been an assessee in default and the action under section 226 could be taken only when an assessee was in default
In our opinion the reasoning adopted by the High Court and the conclusion reached by it is not correct in law
The effect of the judgment of the High Court on this point is that the provisions of section 2972j of the new Act are nullified and declared to be of no consequence
An interpretation of section 2263 of the new Act which leads to such a starting result should be avoided as it is opposed to all sound canons of interpretation
As we have already stated there is nothing in the language of section 2263  of the new Act to warrant the conclusion that the assessee should be in default or should be deemed to be in default before the issue of the notice under that sub section
It is true that the group of sections from section 220 to section 232 of the new Act are placed under the heading Collection and recovery
But in a case falling within section 2972j of the new Act for example in a proceeding for recovery of tax and penalty imposed under the old Act it is not required that all the sections of the new Act relating to recovery and collection should be literally applied but only such 38 of the sections will apply as are appropriate in the particular case and subject if necessary to
suitable modifications
In other words the procedure of the new Act will apply to the cases contemplated by section 2972j of the new Act mutatis mutandis
In this connection it is relevant to refer to the decision of this Court in Kalawati Devi Harlalka vs
CIT West Bengal1 in which it was pointed out that section 6 of the General Clauses Act will not apply in respect of those matters where Parliament had clearly expressed its intention to the contrary by making detailed provisions for similar matters mentioned in that section
For these reasons we are of opinion that the Income Tax Officer had authority to issue the notices under section 156 and section 2263 of the new Act with respect to the liability of the respondent under the old Act
The High Court was therefore in error in holding that the impugned notice was inoperative in regard to the amount of Rs 48555 for the assessment year 1961 62
As regards items 4 and 5 for the assessment years 1962 63 and 1963 64 the argument of the respondent is that the impugned notice issued on April 23 1965 was not legally valid as notices of demand were served on the respondent for payment of these sums and time given in this notice was due to expire on May 21 1965
The impugned notice was issued on April23 1965 nearly a month before that date
As the tax and penalty covered by the notice were not due till May 21 1965 it was  said that notice of attachment under section 2263 of the new Act could not legally  be issued on April 23 1965
In our opinion there is no warrant for this argument
As we have already observed there is nothing in the language of section 2263  of the new Act to suggest that the assessee must be in default before a notice under that subsection could be issued
It is
true that section 220 of the new Act deals with the question as to when the tax is payable and when the assessee is deemed to be in default but so far as section 2263 of the new Act is concerned the question of any default of the assessee is irrelevant
It was argued by Mr Srinivasan on behalf of the respondent that the amount of tax must be due to be paid by the assessee before a notice can be issued under section 2263 of the new Act
It is not disputed in this case that the notices of demand under section 156 of the new Act were served on the respondent before the issue of the notice under section 2263 of the new Act
As pointed out by this Court in Kesoram Industries  Cotton Mills Ltd vs Commissioner of Wealth Tax Central Calcutta a the liability to pay income tax is a present liability though the tax becomes payable after it is quantified in accordance with ascertainable data and therefore the amount of the provision for payment of income tax and super tax in respect of the year of account ending March 31 1957 in that case was a debt owed within the 1 2 19662 SCR 688
39 meaning of section 2m of the Wealth Tax Act and was as such deductible in computing the net wealth
It was further observed in that case that there was a perfected debt at any rate on the last date of the accounting year and not a contingent liability
In the present case there is the additional circumstance that the assessments of tax and penalty have been made against the respondent and demand notices have also been issued under section 156 of the new Act
It is therefore not possible to argue that the amount of tax and penalty for the assessment  years 1962 63 and 1963 64 were
not due by the assessee on April 23 1965 when the notice under section 2263 of the new Act was issued
We are accordingly of the opinion that Mr Srinivasan is unable to make good argument on this aspect of the case
It follows therefore that the impugned notice dated April 23 1965 was validly issued as regards items 4  5 viz Penalty for assessment year 1962 63 ie Rs 1890 and tax for the assessment year 1963 64 ie Rs 6430790
We proceed to consider the next question arising in this appeal viz whether the High Court was right in taking the view that the Income Tax OffiCer did not properly exercise the statutory discretion in issuing the impugned notice with regard to the first item viz tax for the assessment year 1960 61 amounting to Rs 705615
It was argued on behalf of the respondent that there was an appeal pending with the Appellate Assistant Commissioner against the order of assessment and therefore it was incumbent upon the Income Tax Officer to exercise the statutory discretion properly under section 220 6 of the new Act in treating the assessee as being in default
The finding of the High Court is that the Income Tax Officer was not shown to have applied his mind to any of the facts relevant to the proper exercise of his discretion
In our opinion the finding of the High Court cannot be upheld because the respondent has not alleged in his writ petition any specific particulars in support of his case that the Income Tax Officer has exercised his discretion in an arbitrary manner
In paragraph 12b of the writ petition the respondent had merely said that the order of the Income Tax Officer made under section 220 was arbitrary and capricious
No other particulars were given by the respondent in his writ petition to show in what way the order was arbitrary or capricious
In the counter affidavit the allegations of the respondent have been denied in this respect
We are of opinion that in the absence of specific particulars by the respondent in his writ petition it is not open to the High Court to go into the question whether the Income Tax Officer has arbitrarily exercised his discretion
In the result we hold that the respondent is unable to substantiate his case that the impugned notice is in any way defective with regard to item No 1 ie tax for the assessment year 1960 61 amounting to Rs 705615
40 For the reasons expressed we set aside the judgment of the Mysore High Court dated February 1 1967 and order that the writ petition No 846 of 1965 filed by the respondent should be dismissed
We accordingly allow this appeal with costs
RKPS Appeal allowed


Summary:
By a writ petition under Article 226 of the Constitution the respondent challenged the validity of a notice under section 226 3  of the Income tax Act 1961 in respect of tax due from him for the four assessment years from 1960 61 to 1963 64 and penalty for the assessment year 1962 63
For the assessment year 1961 62 the assessment proceedings against the respondent were taken and concluded under the Income tax Act 1922 and as a result of an appeal filed by the respondent the tax liability was reduced by the Appellate Assistant Commissioner
The ITO thereafter issued a notice to the respondent on December 11 1963 under section 156 of the 1961 Act requiring him to make payment within 35 days
This period expired on January 22 1964
The impugned notice under section 2263 was issued much later on April 23 1965
It was contended on behalf of the respondent that both the assessment order as well as the appellate order having been made under the 1922 Act the provisions of section 226 of the 1951 Act were not applicable
As regards the penalty sought to be recovered under the impugned notice for the assessment year 1962 63 and tax for 1963 64 it was contended by the respondent that as notices of demand had been served on him for payment of the two sums and the time given in the notice was due to expire on May 21 1965 the impugned notice dated April 23 1965 issued prior to the expiry of the time given to him was illegally issued furthermore the amount of tax must be due to be paid by the assessee before a notice can be issued under section 2253of the 1961 Act
In respect of the assessment for 1960 61 it was contended before the High Court that the ITO did not properly exercise the statutory discretion vested on him in issuing the impugned notice when there was an appeal pending against the order of assessment before the AppeLlate Assistant Commissioner
The High Court allowed the petition and accepted all the respondent s contentions
It also held that action under section 226 of the 1961 Act was possible only in the case of an assessee who was in default and that in the case of an assessment under the 1922 Act no notice under section 156 of the new Act was possible and there was no way of taking advantage of the provisions for the recovery and collection of tax contained in sections 220 to 234 of the new Act
On appeal to this Court HELD The impugned notice under s 2263 was valid and the writ petition must be dismissed
30 i The Income tax Officer had authority to issue the
notices under section 156 and section 2263 of the new Act with respect to the liability of the respondent under the old Act
The High Court was therefore in error in holding that the impugned notice was inoperative in regard to the amount to be recovered for the assessment year 19 51 62
37 D The High Court had wrongly based its opinion on the premise that all recoveries are possible only when the stage mentioned in section 2204 was reached namely that the assessee had become or deemed to have been an assessee in default and the action under section 226 could be taken only when an assessee was in default
The effect of the reasoning adopted by the High Court on this point is that the provisions of section 2972 of the new Act are nullified and an interpretation of section 2263  of the new Act which leads to such a startling result should be avoided as it is opposed to all sound canons of interpretation
37 E G In a case falling within section 2972j of the new Act for example in a proceeding for recovery of tax and penalty imposed under the old Act it not required that all the sections of the new Act relating to recovery and collection should be literally applied but only such of the sections will apply as are appropriate in the particular ease and subject if necessary to suitable modifications
In other words the procedure of the new Act will apply to the cases contemplated by section 2972j of the new Act routatis mutandis
37 H 3 8 A Kalawati Devi Harlalka vs
CIT West Bengal  referred to
The assessments of tax and penalty for 1962 63 and 1963 64 had been made against the respondent and the demand notices had also been issued under section 156 of the new Act
It was not therefore possible to contend that the amount of tax and penalty were not due from the assessee on April 23 1965 when the impugned notice under section 2263 was issued
38 H 39 B C Kesoram Industries  Cotton Mills Ltd vs Commissioner of Wealthtax Central Calcutta   referred to
iiiThe finding of the High Court that the Income tax Officer was not shown to have applied his mind to any of the facts relevant to  the proper exercise of his discretion in relation to the assessment for the year 1960 61 could not be Upheld as the respondent had
not alleged any specific particulars in his writ petition in support of his case that the ITO had exercised his discretion in an arbitrary manner
39 F