There is no provision in Income Tax Act (IT Act) which makes an amount not shown in the income tax returns as irrecoverable u/s 138 of NI Act

Bombay High Court: While dealing with a taxing issue, the Court held that there is no provision in Income Tax Act (IT Act) which makes an amount not shown in the income tax returns as irrecoverable as IT Act ensures that all amounts are accounted for. The Court held that allowing the borrower to refuse to pay the amount simply because of some infraction in the IT Act would not only defeat the purpose of the said Act but also Section 138 of Negotiable Instruments Act, 1881. However, the Court said that if some amounts are not accounted for, the
person would be visited with the penalty or at times even prosecution under the IT Act. Stating that The problem of unaccounted money would be reduced if transactions take place by cheques, the Court said that when a person signs a cheque and delivers it, even if it is a blank cheque or a post dated cheque, presumptions under Section 118(b) and 139 of the Negotiable Instruments Act would have to be raised and would have to be rebutted by the aced, albeit by raising a probability which would help in stopping the unscrupulous individuals go on signing cheques irresponsibly. Hence, the Court held that such amounts should not be made unrecoverable because doing so would push the persons to extra judicial methods of recovery. [Mr. Krishna P. Morajkar v. Mr. Joe Ferrao, Criminal Appeal No.6 of 2012, decided on July 19, 2013]

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