1986 (9) TMI 386 - HC - Income Tax

Summary

Issues Involved:

1. Issuance of recovery certificates
2. Attachment of properties
3. Proclamation and conduct of sale
4. Validity of auction proceedings
5. Service of notices
6. Reduction of tax demand in appeals
7. Jurisdiction and efficacy of alternative remedies

Detailed Analysis:

1. Issuance of Recovery Certificates:

The Inspecting Assistant Commissioner (Assessment), Zone-II, Amritsar, issued recovery certificates under section 222 of the Income-tax Act, 1961, for outstanding tax dues against M/s. Krishna Kapoor and Co. and M/s. Indo Kashmir Carpets and Handicrafts. The Tax Recovery Officer, Zone-II, Amritsar, forwarded these certificates to the Tax Recovery Officer, Zone-I, Jaipur, for execution.

2. Attachment of Properties:

The immovable properties of M/s. Krishna Kapoor and Co. situated at Khavasji ka Bag, Amer Road, Jaipur, were attached on September 28, 1984. The sale proclamation was drawn up on March 21, 1985, and a warrant of sale was issued on December 11, 1985, authorizing public auction to recover the tax dues.

3. Proclamation and Conduct of Sale:

The auction was conducted and closed at Rs. 37,81,000 on January 21, 1986. The petitioner filed objections and an application under rule 61 to set aside the sale, which was dismissed by the Tax Recovery Officer, Jaipur, on March 14, 1986. The petitioner also filed an appeal under rule 86(1)(c) and a review petition under rule 87, both of which were dismissed or not acknowledged.

4. Validity of Auction Proceedings:

The petitioner challenged the entire auction proceedings, including the attachment orders, proclamation of sale, auction, and acceptance of the highest bid, on grounds of illegality, ultra vires, and invalidity. The sale was confirmed by the Tax Recovery Officer, Jaipur, on March 14, 1986, and a sale certificate was issued in favor of the purchaser.

5. Service of Notices:

The petitioner contended that no notice in ITCP No.1 was served, and the procedure laid down by rule 10 of the Income-tax (Certificate Proceedings) Rules, 1962, was not followed. The petitioner argued that notices were not properly served, and the firm and partners should be treated as separate entities for the purpose of recovery.

6. Reduction of Tax Demand in Appeals:

The petitioner argued that the tax demands were reduced in appeals, and the outstanding demand for M/s. Krishna Kapoor and Co. was reduced to Rs. 4,41,761 as of February 4, 1986. The Tax Recovery Officer did not reduce the outstanding demand accordingly, and the sale proclamation did not reflect the reduced demands.

7. Jurisdiction and Efficacy of Alternative Remedies:

The court held that the petitioner had an efficacious alternative remedy under the Income-tax Act and the principal rules. An appeal under rule 86(1)(c) was pending, where all the questions raised by the petitioner could be agitated. The court emphasized that in tax matters, unless the statutory remedies are exhausted, the extraordinary jurisdiction under article 226 of the Constitution should not be invoked.

Conclusion:

The writ petition was dismissed on the ground of availability of an alternative efficacious remedy under the Income-tax Act and the principal rules, with no order as to costs.