1974 (3) TMI 17 - HC - Income Tax

Summary

Issues Involved:
1. Mention of incorrect amount in the sale proclamation.
2. Jurisdictional validity of the sale.
3. Applicability of Rule 9 versus Rule 61 of the Second Schedule of the Income-tax Act.
4. Requirement of deposit for setting aside the sale under Rule 61.

Detailed Analysis:

1. Mention of Incorrect Amount in the Sale Proclamation:
The petitioner, the managing director of a private company, had his house attached and brought to sale for the recovery of Rs. 66,000. However, the sale proclamation incorrectly mentioned Rs. 1,04,080. Despite the petitioner pointing out the error, he later withdrew his objection and allowed the auction to proceed. The sale was conducted, and the property was sold for Rs. 1,27,000.

2. Jurisdictional Validity of the Sale:
The petitioner argued that the incorrect amount in the sale proclamation rendered the sale void. He cited precedents where sales were vitiated due to similar errors. However, the court disagreed, stating that an error in the figure does not affect jurisdiction if the Income-tax Officer and Tax Recovery Officer are competent to recover arrears. The court emphasized that the defaulter has opportunities to rectify such errors. The court distinguished the present case from previous cases by noting that the error was in the notice of attachment and sale proclamation, not in the certificate itself.

3. Applicability of Rule 9 versus Rule 61 of the Second Schedule of the Income-tax Act:
The petitioner requested his application to be treated under Rule 9, which deals with disputes between the Income-tax Officer and the defaulter. The Tax Recovery Officer and Commissioner held that the application should be under Rule 61, which addresses setting aside a sale due to irregularities. The court agreed, noting that Rule 61 specifically covers errors in the sale proclamation and requires certain conditions to be met, including the deposit of the recoverable amount.

4. Requirement of Deposit for Setting Aside the Sale under Rule 61:
Rule 61 mandates that the defaulter must deposit the amount recoverable to have the sale set aside due to irregularities. The petitioner did not deposit the amount, leading to the dismissal of his application. The court reinforced that applications to set aside sales on grounds covered by Rule 61 must comply with its provisions, and failure to deposit the amount recoverable necessitates disallowance of the application.

Conclusion:
The court dismissed the writ petition, affirming that the mention of an incorrect amount in the sale proclamation was a mere irregularity and did not vitiate the sale. The application to set aside the sale was rightly treated under Rule 61, and the petitioner's failure to deposit the recoverable amount led to the dismissal of his application. The petitioner's arguments based on jurisdiction and the applicability of Rule 9 were rejected, and the sale was upheld as valid. The court awarded costs to the respondent, with an advocate's fee of Rs. 100.