1992 (3) TMI 54 - HC - Income Tax

Summary

Issues Involved:
1. Competency of appellants to invoke Rule 61 of the Second Schedule to the Income-tax Act, 1961.
2. Interpretation of the term "any person whose interests are affected by the sale" under Rule 61.
3. Validity of the agreement to purchase the attached property under Rule 16.
4. Applicability of the rule of ejusdem generis to Rule 16.
5. Eligibility of appellants to file writ petitions despite ineligibility under Rule 61.

Issue-wise Detailed Analysis:

1. Competency of appellants to invoke Rule 61 of the Second Schedule to the Income-tax Act, 1961:
The appellants sought to set aside the sale of immovable property under Rule 61, which allows the Income-tax Officer, the defaulter, or any person whose interests are affected by the sale to apply for setting aside the sale. The Tax Recovery Officer and the Tax Recovery Commissioner both held that the appellants were ineligible to invoke Rule 61, as the agreement with the third respondent did not confer any right on the appellants due to the provisions of Rule 16(1).

2. Interpretation of the term "any person whose interests are affected by the sale" under Rule 61:
The court examined whether the appellants, who had entered into an agreement to purchase the property, fell under the category of "any person whose interests are affected by the sale." The court concluded that the term "interests" in a fiscal statute must be an interest recognized by law. Since the agreement to purchase the property did not create a legal interest in the property, the appellants were not considered persons whose interests were affected by the sale.

3. Validity of the agreement to purchase the attached property under Rule 16:
Rule 16(1) states that once a notice has been served on a defaulter, the defaulter is incompetent to deal with the property in any manner, including entering into an agreement to sell the property. The court held that the agreement to purchase the property was invalid as it fell within the bar imposed by Rule 16. The defaulter was incompetent to enter into such an agreement, making it liable to be ignored by the Revenue.

4. Applicability of the rule of ejusdem generis to Rule 16:
The appellants argued that Rule 16 should be interpreted using the rule of ejusdem generis, which limits general words to the same kind as the specific words preceding them. However, the court rejected this argument, stating that the words "mortgage, charge, lease or otherwise deal with any property" in Rule 16 do not form a distinct category based on the common characteristic of transferring an interest in the land. The word "otherwise" was interpreted as a word of extension, covering a variety of transactions touching on the property.

5. Eligibility of appellants to file writ petitions despite ineligibility under Rule 61:
The appellants contended that even if they were ineligible to invoke Rule 61, they could still file writ petitions. The court dismissed this argument, stating that rights and liabilities created by statutory provisions cannot be enlarged by recognizing a right to challenge statutory proceedings indirectly through writ jurisdiction. The court emphasized that the appellants' right was purely private and not a matter of public interest.

Conclusion:
The court concluded that a person who has entered into an agreement to purchase an immovable property attached under the provisions of the Second Schedule to the Income-tax Act is not competent to invoke Rule 61 to set aside the sale. Consequently, the writ appeals were dismissed without any order as to costs.