2016 (12) TMI 1193 - HC - Income Tax

Recovery of tax dues - Public auction of attached property - auction notice published in two newspapers - Held that - Making a publication in three Dailies, two in Vernacular and one in English cannot be said to be irregular in terms of Rule 54. It is purely within the discretion of the Recovery Officer to effect publication depending upon the nature of property involved. As far as the expense for publication is concerned, statute clearly provides that the defaulter is under obligation to pay all expenses regarding such publication, in terms of Rule 5 of the Second Schedule. Under such circumstances, we find anything wrong in the demand made pursuant to Ext.P12. Learned counsel for the petitioner seeks for a week s time to pay the said amount.It is made clear that on payment of the said amount, the attachment shall be vacated. Once the attachment is vacated, necessary intimation in that regard shall be given by the Department to the Sub Registrar concerned.

Summary

Issues:
Challenge to notice demanding payment post-assessment and finality of proceedings, validity of property attachment, requirement of publication in newspapers for auction, interpretation of Rule 54 of Income Tax Act 1961, discretion of Recovery Officer in publication, obligation of defaulter to pay publication expenses.

Analysis:
The petitioner challenged a notice demanding payment of ?1,47,887 after completion of assessment and finality of proceedings, claiming the entire liability to the Income Tax Department had been settled. The respondents stated that properties were attached due to unpaid liability, with an auction notice issued and published in English and Malayalam Dailies. The total publication expenses amounted to ?1,47,887, with an additional interest of ?8,930 payable as per a statement provided.

The petitioner's counsel argued that publication in a newspaper was optional, citing Rule 54 of the Income Tax Act 1961, which allows the Recovery Officer to auction property by advertising in the Gazette or "a newspaper." They contended that publication in two newspapers was unnecessary. Conversely, the standing counsel for the department argued that wide publicity was required for public auctions, justifying the publication in both Malayalam and English Dailies to reach a broader audience. They emphasized that the term "a newspaper" did not restrict publication to a single newspaper, and in this case, publication was made in three dailies.

The court opined that publishing in three dailies, two vernacular and one English, did not violate Rule 54, as it was at the discretion of the Recovery Officer based on the property involved. The statute mandated the defaulter to bear all expenses related to such publications, as per Rule 5 of the Second Schedule. Consequently, the court found no issue with the demand made in Ext.P12 and granted the petitioner a week to make the payment, with the attachment to be lifted upon payment. The Department was directed to inform the Sub Registrar upon vacation of the attachment. The writ petition was disposed of accordingly.