2006 (12) TMI 128 - HC - Income Tax

Block assessment demand sought to be recovered by the auction sale of property petitioner trust claiming the owner of the said property made claim u/r 11 revenue has objection that petitioner had no locus standi revenue plea is acceptable since property is not in name of petitioner petitioner cannot be termed as an aggrieved person and therefore the petitioner has no locus standi to file the writ petition

Issues Involved:
1. Lack of proper notice and hearing under Rule 52(1) of Part III of the Second Schedule to the Income-tax Act, 1961.
2. Jurisdictional challenge regarding the proclamation of sale of properties belonging to the petitioner-trust.
3. Adjudication of the petitioner's claim under Rule 11(1) of the Rules before the sale.
4. Barred by limitation for selling the immovable properties under Part III of the Second Schedule.

Issue-wise Detailed Analysis:

1. Lack of Proper Notice and Hearing:
The petitioner contended that Rule 52(1) of Part III of the Second Schedule to the Income-tax Act, 1961, mandates that an order for the sale of immovable property must be made by the Tax Recovery Officer after issuing proper notice and giving an opportunity of hearing to all concerned parties. The petitioner argued that no such order was made, and neither the petitioner-trust nor the fourth respondent received any such notice. The court noted that this contention was central to the petitioner's challenge against the impugned auction sale proceedings.

2. Jurisdictional Challenge:
The petitioner argued that the proclamation of sale was issued in respect of properties belonging to the petitioner-trust to recover the alleged tax dues of the fourth respondent, which was beyond the jurisdiction of the recovery proceedings. The court examined this claim and noted that the properties sought to be sold did not belong to the petitioner-trust, thus questioning the petitioner's standing to challenge the auction.

3. Adjudication of the Petitioner's Claim:
The petitioner claimed ownership of the properties under Rule 11(1) of the Rules and argued that their claim had not been adjudicated by the third respondent before issuing the order under Rule 52(1) or the proclamation under Rule 52(2). The petitioner emphasized that no notice of the proposed sale or attachment was given to them, and until their application under Rule 11 was adjudicated, the properties could not be sold. The court, however, noted that the petitioner's application under Rule 11 was adjudicated, and an order was passed on December 8, 2006, rejecting the petitioner's claim.

4. Barred by Limitation:
The petitioner contended that the proceedings were barred by limitation as the period of three years from the end of the financial year in which the order was passed expired on March 31, 2006. The court considered the respondents' argument that the period of stay between March 23, 2006, and June 21, 2006, should be excluded, and the balance period extended for 180 days from June 21, 2006, making the auction on December 12, 2006, within the limitation period.

Preliminary Objection on Locus Standi:
The respondents raised a preliminary objection regarding the petitioner's locus standi, arguing that the properties sought to be auctioned belonged to the fourth respondent, and any objection should come from the fourth respondent, not the petitioner. The court agreed, noting that the petitioner was not the owner of the properties listed for sale and thus did not have the standing to challenge the auction.

Sympathetic Consideration:
The court acknowledged the petitioner's submission that the auction would affect about 2,000 inmates of the ashram, including destitutes and refugees. Considering this, the court directed that if the properties were sold on December 12, 2006, the confirmation of the sale should be deferred for six weeks to allow the petitioner to seek appropriate remedy under Rule 11(6) of the Rules.

Conclusion:
The writ petition was dismissed on the grounds that the petitioner lacked locus standi and had an alternative remedy under Rule 11(6) of the Rules. The court provided a direction to defer the confirmation of the sale for six weeks to enable the petitioner to pursue the appropriate legal remedy. No costs were awarded, and the connected miscellaneous petition was closed.

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