2016 (4) TMI 1439 - HC - Income Tax

Challenge to certificates of demand of tax, interest, penalty, the consequent steps taken by the Revenue in treating him as an assessee in default to auction his property, the sale proclamation and the auction sale notice - Tax Recovery Officer had made a statement giving particulars of reserve prices against individual plots - HELD THAT - The omission has caused accrual of a right in favour of the assessee inasmuch as such rectification proceeding cannot be initiated today. Hence, the actual aggregate demand for the said assessment year is also wrong. All this has been taken into account for the purpose of declaring his client as an assessee in default to proceed to sell his properties. There is no indication as to how such separation of valuations attributed to individual plots was made by the Recovery Officer, either from the documents of valuation on record or from the statement itself. Petitioner submits that there should be interference by reason of both counts of challenge being upheld. The appropriate reliefs should be granted to the petitioner. Mr. Bhattacharyya, learned advocate appearing on behalf of the auction purchaser who is the petitioner wants to make his submissions. His submissions will be heard after submissions made on behalf of the Revenue are heard and in the event this Court forms the opinion that the challenge cannot be upheld. Mr. Bhattacharyya informs this Court that in the event the assessee is successful, his client would want an adjudication regarding interest to be paid on the refund thereby becoming due to them. List these writ petitions on 18th April, 2016.

Summary

Issues:
Challenge to certificates of demand of tax, interest, penalty, and consequent steps taken by Revenue; Incorrect calculation of interest under Section 215 and Section 220(2) for assessment years 1981-82 and 1982-83; Alleged errors in penalty imposition under Section 271(1)(a) for assessment year 1983-84; Challenge to sale of properties due to clubbing of properties for auction; Discrepancies in reserve prices and auction sale notice; Legal interpretation of clubbing recovery certificates for auction.

Analysis:
The petitioner challenged certificates of demand of tax, interest, penalty, and Revenue's actions treating him as an assessee in default. The dispute primarily focused on interest calculations for assessment years 1981-82 and 1982-83 under Sections 215 and 220(2). The petitioner argued that actual demands exceeded permissible amounts, impacting subsequent interest computations. Referring to relevant Income Tax Act provisions, the petitioner contended that interest was wrongly increased without proper orders, contravening the Taxation Laws Act, 1964. The petitioner also disputed penalty imposition for assessment year 1983-84, citing errors and lack of rectification proceedings by the Revenue.

Regarding the sale of properties, the petitioner objected to the clubbing of properties for auction, including joint properties with his brother. Discrepancies in reserve prices and auction sale notices were highlighted, indicating improper valuation and clubbing of properties. The petitioner argued that the auction process was flawed, citing a Division Bench decision emphasizing the separation of recovery certificates for individual defaulters in sale proclamations. The petitioner sought relief based on these challenges.

The petitioner's counsel raised concerns about the auction purchaser's potential interest on refunds if the challenge succeeded. The Court scheduled further hearings to consider submissions from all parties involved. The petitioner's arguments, supported by legal interpretations and factual discrepancies, formed the basis for challenging the certificates of demand, interest calculations, penalty imposition, and the auction process. The case highlighted procedural errors, improper valuations, and legal principles governing recovery proceedings, necessitating a detailed review and potential relief for the petitioner.