Recovery of tax: S/s. 156 and 220: A. Y. 1985-86: Service of demand notice u/s. 156 is condition precedent for recovery proceedings: Demand notice not received by assessee: Recovery proceedings not valid.

For the A. Y. 1985-86, the petitioner did not receive the assessment order and the demand notice u/s. 156. However, the Department served recovery notice. In response to the recovery notice, the petitioner had objected to the initiation of the recovery proceedings pointing out that it had not received the assessment order and the demand notice u/s. 156 of the Act. Thereafter, over the years, from time to time, recovery notices were issued to the petitioner and on each occasion, the petitioner had responded to the notice by requesting the Assessing Officer to serve the assessment order and the demand notice u/s. 156 of the Act on the petitioner. However, the assessment order and the demand notice u/s. 156 was not served on the petitioner.

In the circumstances, the petitioner filed a writ petition before the Gujarat High Court requesting to quash the recovery notices and the recovery proceedings. Gujarat High Court allowed the petition and held as under:

“I) In the absence of service of demand notice u/s. 156 of the Act on the petitioner, which was a basic requirement for invoking the provisions of section 220 of the Act, the petitioner could not have been treated to be an assessee in default. The subsequent proceedings u/ss. 220 to 226 of the Act were without jurisdiction.

ii) The impugned notice and the recovery proceedings are hereby quashed and set aside.”