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1998 Supreme(All) 474
High Court Of Allahabad
Ravi S. Dhavan, V.P. Goel, JJ.
Amar Chand Agrawal And Ors.
Vs.
Commissioner Of Income-Tax And Ors.
Civil Miscellaneous Writ 1164 of 1983
Decided on: 25th April, 1998
Advocate Appeared:
V.B. Upadhya, V.B. Singh, M. Katju
The provisions of rule 66 of the Second Schedule to the Income-tax Act, 1961, do not require the Tax Recovery Officer to wait for 30 days before confirming a sale negotiated by the defaulter.
Headnote:
INCOME TAX - Sale of immovable property - Private negotiation - Locus standi of objectors - Appeal - Maintainability - Jurisdiction - Tax Recovery Officer - Confirmation of sale within 30 days - Validity.
Fact of the Case:
The Income-tax Department attached immovable property of the assessee for arrears of income-tax. The public auction failed to fetch the desired price. The defaulters were permitted to negotiate a private sale under rule 66 of the Second Schedule to the Income-tax Act, 1961. The petitioners offered to purchase the property for Rs. 3,50,000. The offer was accepted by the Tax Recovery Officer and the sale was confirmed. Two persons, who had not participated in the negotiations, filed an appeal against the sale under rule 86 of the Second Schedule. The appellate authority set aside the sale.
Finding of the Court:
The court held that the appellants had no locus standi to file an appeal against the sale. They were not persons interested in the property and had no right to object to the sale. The appeal was not maintainable and the appellate authority had no jurisdiction to entertain it. The court also held that the Tax Recovery Officer was not required to wait for 30 days before confirming the sale. Rule 66 of the Second Schedule is a code in itself and is not qualified by any other provision of the Schedule. The sale was complete when the petitioners deposited the purchase price with the Tax Recovery Officer.
Issues: 1. Whether the appellants had locus standi to file an appeal against the sale? 2. Whether the appeal was maintainable? 3. Whether the Tax Recovery Officer was required to wait for 30 days before confirming the sale?
Ratio Decidendi: 1. The court held that the appellants had no locus standi to file an appeal against the sale. They were not persons interested in the property and had no right to object to the sale. The appeal was not maintainable and the appellate authority had no jurisdiction to entertain it. 2. The court held that the Tax Recovery Officer was not required to wait for 30 days before confirming the sale. Rule 66 of the Second Schedule is a code in itself and is not qualified by any other provision of the Schedule. The sale was complete when the petitioners deposited the purchase price with the Tax Recovery Officer.
Final Decision: The court allowed the petition and quashed the appellate order setting aside the sale.
Ravi S. Dhavan, J.
1. This petition has been pending in the High Court for almost 15 years. The issues relate to the controversies under the Income-tax Act, 1961, and to a real estate in Kanpur. The first premises on which those who have addressed the court are agreed and not at issue is that the cause will be seen as when it was brought to the court ; on this aspect the law is clear in Rameshwar v. Jot Ram, AIR 1984 SC 49.
2. On the facts there is no issue between the record as has been presented by the petitioners and the respondents, that is respondents Nos. 1 and 2, being the Income-tax Department. Barring these parties no other person addressed the court. The court was not addressed by respondents Nos. 5 and 4, either.
For arrears of income-tax, the assessees, as at the time, R.P. Bagla, Hindu undivided family karta, B.P. Bagla and H.S. Bagla, the Hindu undivided family karta, S.N. Bagla, were defaulters with the result that their immovable property situate at Kanpur, being several houses, big bungalows and other properties, were attached by the Income-tax Department, as the law so provides, to realise the arrears of income-tax by sale of attached properties. At the relevant time, the gross income-tax arrears stood at Rs. 58,27,534.
3. The subject-matter of this petition relates, specifically, to the property 7/76, Tilak Nagar, Kanpur. The property having been attached by the income-tax authorities, it was attempted to be sold, in the first instance in 1967. The sale did not materialise because the property would not fetch the price which the Income-tax Department was anticipating. The bids offered at the public auction were inadequate and below the reserved price. Consequentially, those who owned the properties, the defaulters, aforesaid, also raised objections, as it was within their right to do so, that the reasonable market price was not forthcoming as a result of the public auction. Their objection was that should the properties fetch a reasonable market price and beyond the bids which were received, their income-tax liability would be reduced. It is accepted by the Income-tax Department that with the objections of the defaulters and there being no issue on the aspect that the public auction did not fetch the price which had been reserved by the Department, due permission was granted to the defaulters, on their applying, to permit the sale of the property by private negotiation so that the amount anticipated by the Department could be raised. To change the scene of sale of property by public auction and permit a sale by the defaulters to raise the amount, the law provides that the defaulter must be invested with a sanction of a specific authorisation to negotiate a sale. The only difference is that the moneys which will represent considerations received on the sale (mortgage or lease not excluded) will not be paid to the defaulters, but to the Income-tax Department. Confirmation of the sale will also be certified by the Department. The law permits such a modality.
4. This is the subject-matter of the controversy on which the arguments have been addressed after common facts were placed by learned counsel arguing for the respective parties. This provision of law which permits change of scene from a public auction to a private negotiation by specific authorisation by the Income-tax Department needs to be noticed. The procedure is provided under the Second Schedule to the Act. It is contained in rule 66 of this Schedule and reproduced :
"66. Postponement of sale to enable defaulter to raise amount due under certificate.-
(1) Where an order for the sale of immovable property has been made, if the defaulter can satisfy the Tax Recovery Officer that there is reason to believe that the amount of the certificate may be raised by the mortgage or lease or private sale of such property, or some part thereof, or of any other immovable property of the defaulter, the Tax Recovery Officer may, on his application, postpone the sale
