An appellate order reducing the assessment supersedes the original order and its consequences, including the default and the certificate issued under S. 46(2) of the Act.

Judgment

SARKAR, J. : The question in these two appeals is whether certain proceedings for the recovery of tax from the assessee under the Income-tax Act, 1922 were invalid and should be quashed as the assessment order on which they were based had been revised in appeal. The High Court of Mysore held them to be invalid and quashed them. The revenue authorities have now appealed to this Court against that decision.

2. I think it will be helpful to set out the facts chronologically. The tax sought to be realised became due under two assessment orders passed by an Income-tax Officer on March 23, 1955, in respect of the years 1953-54 and 1954-55 finding that the assessee s income for the earlier year was Rs. 61,000/- on which a tax of Rs. 19,808-1-0 was due and that for the other year was Rs. 1,21,000/- 1474 creating a tax liability of Rs. 66,601-3-0. Notices of demand under S. 29 of the Act were issued in respect of these dues. The assessee filed appeals to the Appellate Assistant Commissioner against the assessment orders but did not pay the tax as demanded by the notices. On such failure to pay, the Income-tax Officer sometime in September 1955 sent certificates to the Deputy Commissioner, Kolar under Section 46(2) of the Act for recovery of the tax as arrears of land revenue and the latter in the course of the same month attached various properties of the assessee under the Revenue Recovery Act. Thereafter on December 17, 1955, the appeals filed by the assessee which were till then pending were decided by the Appellate Commissioner. He reduced the assessable income of the assessee to Rs. 27,000/- for the year 1953-54 and to Rs. 45,000/- for the year 1954-55 and directed the Income-tax Officer to recompute the tax on the basis of the reduced income and to refund the excess if any collected. It appears that thereafter on February 19, 1956, the Income-tax Officer informed the assessee that his tax liability for 1953-54 had been reduced to Rs. 4,215-9-0 and for 1954-55 to Rs. 13,346-8-0 and called upon him to pay these amounts at once into the local treasury. The assessee filed further appeals against the orders of the Appellate Commissioner and asked that the recovery proceedings might be stayed pending decision of these appeals and on that request being rejected moved the High Court of Mysore by two petitions under Art. 226 of the Constitution for quashing the recovery proceedings as invalid with the result earlier mentioned. We are not concerned with the appeals filed by the assessee from the appellate orders and no further reference to them will be made in this judgment.

3. The contention of the assessee is that in view of the orders of the Appellate Commissioner the earlier orders, notices of demand and certificates must be deemed to have been superseded and the attachments therefore ceased to be effective from the date of the appellate orders and could no longer be proceeded with. He contends that the Income-tax Officer had to start afresh by serving a new notice of demand and taking the necessary further steps thereon for realisation of the tax which then was due only under the appellate orders. These contentions were accepted by the High Court. The revenue authorities on the other hand, contend in short that the Act does not provide for any such supersession.

4. Now, the scheme of the Income-tax Act for realisation of moneys becoming due under it appears to be this. The tax becomes due on the making of an assessment order or an order imposing penalty or requiring interest to be paid. Thereafter a notice of demand in respect of that amount has to be served. This is provided by S. 29 which is set out below.

Section 29. - 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.

The form mentioned