040-NLR-NLR-V-57-KUMATHERIS-APPUHAMY-Appellant-and-COMMISSIONER-OF-INCOME-TAX-Respondent.pdf
Present : Sansoni, J.
KUMATHERIS APPUHAMY, Appellant-, and COMMISSIONEROF INCOME TAX, Respondent
-S. O. 514—M. C. Panttdare, 3S.3S0
Income Tax Ordinance—Proceedings for recovery of tax—Section SO (1)—Applicabilityto an insolvent assesses.
An nssesseo wlio is insolvent and has been adjudicated accordingly i3 notentitled to claim that no proceedings can he taken against him for recoveryof tax under section SO (1) of tho Income Tax Ordinance.
PPEAE, with application in revision, from an order of theMagistrate's Court, Panadure.
//. J Van igat it ngrt, with J. P. li. Cnndappa, for the accused appellant.
Arthur Keunetnan, Crown Counsel, for the respondent.
.Cur. adv. vult.
August 31, 1935. Saxsoxi, J.—..
This is an appeal by an assessee who has been sentenced to six monthssimple imprisonment for failing to pay a sum of Rs. 28,6SS‘02 duo asincome tax. As no appeal lies from an order made by a Magistrateunder S. 80 (1) of tho Income Tax Ordinance, an application for revisionwas also filed. It has been urged for the assessee that lie had beenadjudicated an insolvent on 15th December 1954, and therefore thoMagistrate should not have made tho order in question. The argumentwas that as all tho assets of tho insolvent were under sequestration and
had vested in the assignee, the asscssce was therefore not in a i>ositionto pay the tax. I was also referred to S. 7S of the Ordinance whichprovides that tax in default shall be a first charge upon all the assetsof a defaulter, subject to certain provisos, and it was submitted that inview of these provisions the Commissioner of Income Tax should haveproved his claim in the insolvency proceedings. In suc-h an event howould be entitled to recover the tax due for one complete year of assess-ment as a first charge on the assets, while the remaining arrears of taxwill rank with the other unsecured debts of the insolvent.
I have not been referred to any authority which suggests that annsscssee who is an insolvent and has been adjudicated accordingly' isexempt from action under S. SO (1) of the Ordinance. The procedurelaid down in that section may be taken by the Commissioner wheneverhe is of opinion that recovery of tax in default by' seizure and sale isimpracticable or inexpedient, or where the full amount of the tax liasnot been recovered by seizure and sale. In the case of an insolventnsscssee it is reasonably certain that recovery' of tax in default wouldbo impracticable : in view, therefore, of the fact that the Section vestsa discretion in the Commissioner, I can see no objection to such a courseas is prescribed in S. SO (1) being taken by him where the assessce isinsolvent.
It has been decided by' JYCaartcnsz, A. J., in Commissioner of IncomeTax v. de Vos 1 that the Commissioner is not bound to follow any parti-cular method of recovering the tax from the defaulter. S. 79 (2) providesa method of recovering tax by seizure and sale of movable property' :
S. 79 (3) provides a method of recovering tax by seizure and sale ofmovable and immovable property'; S. SI provides a method of recoveringtax out of monies lying in the hands of third parties for the use of thedefaulter. But S. S3 makes it quite clear that where the Commissioneris of opinion that action under any of these provisions lias failed or islikely to fail to secure payment of the whole of the tax due from anyperson, he may' proceed to recover any' sum remaining unpaid by' any'other means. The discretion is his and he may exercise it as he chooses.
It follows that, the Commissioner need not go against the property ofthe defaulter before he takes action under S. SO (I), and that is what holias done in this case. The application of S. 7$ only' arises in a case wherethe Commissioner seeks to recover the tax out of the assets of tho defaulter,but that is not the case here.
It may be unfortunate that the insolvent is prevented from paying thotax in default by reason of his assets having vested in the assignee, buthe is in no worse position than any other person in insolvent circum-stances upon whom a fine has been imposed by a Magistrate. Tho appealis therefore dismissed and tiio application for revision is rofused.
Appeal disinissed.Application refused.
{1933) 35 -V. L. It. 349.