2000 (11) TMI 103 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Tax Recovery Commissioner, Jalandhar.
2. Legality of the orders passed by the Tax Recovery Officer, Bhatinda.
3. Validity of the sale of the attached property.
4. Application of the principle of promissory estoppel.

Detailed Analysis:

1. Jurisdiction of the Tax Recovery Commissioner, Jalandhar:
The petitioner challenged the order dated January 24, 1983, by the Income-tax Commissioner, Jalandhar, exercising the powers of the Tax Recovery Commissioner, arguing it was illegal and without jurisdiction. The court found merit in this contention, stating that under rule 86 of the Second Schedule, only the officer on whom powers of the Tax Recovery Commissioner have been conferred can hear appeals against the Tax Recovery Officer's orders. The powers had not been conferred on the Income-tax Commissioner, Jalandhar, as no notification by the Central Government was issued appointing him as the Tax Recovery Commissioner. Thus, the order was deemed without jurisdiction and quashed.

2. Legality of the Orders Passed by the Tax Recovery Officer, Bhatinda:
The petitioner sought confirmation of the Tax Recovery Officer's orders (annexures P-6 and P-7) which confirmed the sale and issued a sale certificate. However, the court held that these orders could not stand scrutiny of law as no valid sale had taken place. The Tax Recovery Officer had no authority to grant specific performance of the sale agreement executed by Kanwar Sain Bansal on behalf of M/s. Hari Singh (HUF) and M/s. Sant Singh (HUF). The only legal option was to auction the property after a fresh proclamation, which was not done. Hence, the orders were declared illegal.

3. Validity of the Sale of the Attached Property:
The court observed that M/s. Hari Singh (HUF) and M/s. Sant Singh (HUF) were defaulters and their 1/2 share in the Dal Factory was attached for recovering income-tax dues. The Tax Recovery Officer allowed the defaulters to sell the property privately, and the petitioner undertook to pay the dues. However, the sale deed was not executed by the defaulters, and the Tax Recovery Officer confirmed the sale without an auction, which was beyond his authority. The agreement of sale could only be valid for M/s. Hari Singh (HUF)'s 1/3rd share, not for M/s. Sant Singh (HUF)'s 1/6th share, as Kanwar Sain Bansal was not authorized to sell on behalf of M/s. Sant Singh (HUF). Thus, the sale was invalid.

4. Application of the Principle of Promissory Estoppel:
The petitioner argued that respondents Nos. 4 and 5 were estopped from challenging the sale under the principle of promissory estoppel. However, the court noted that even if the petitioner had submitted to the jurisdiction of the Tax Recovery Commissioner, Jalandhar, he could still raise an objection of lack of jurisdiction as there cannot be any estoppel against the law or statute. The court thus rejected the argument of promissory estoppel.

Conclusion:
The writ petition partly succeeded. The court quashed the order dated January 24, 1983 (annexure P-8) passed by the Income-tax Commissioner, Jalandhar, due to lack of jurisdiction. However, it did not issue a mandamus to confirm the orders of the Tax Recovery Officer, Bhatinda, as the sale was not validly conducted. The orders annexures P-6 and P-7 were declared illegal and set aside.