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2024 (5) TMI 301 - HC - Income TaxRecovery proceedings - recourse to other provisions/alternate method for recovery of the dues from the petitioner - attaching the property and bringing the property for sale - notice of public auction/proclamation of sale of the property of the petitioner - period of limitation as per provision of Rule 68B of the Schedule II of the Income Tax Act, 1961 - time limit of a period of three years now seven for sale of attached immovable property - whether the impugned sale notice dated 27.03.2019 and the attachment is barred by limitation under Rule 68B of the Schedule II of the Income Tax Act, 1961? - HELD THAT - A bare reading of the provision of Rule 68B of the Schedule II of the Income Tax Act, 1961, clearly shows that no sale of immovable property shall be made after the expiry of seven years (earlier three years) from the end of the financial year in which the order giving rise to a demand of any tax, interest, fine, penalty or any other sum, for the recovery of which the immovable property has been attached, has become conclusive under the provisions of section 245-I or, as the case may be, final in terms of the provisions of Chapter XX. Sub Rule-(ii) of Rule-68B provides for exclusion of certain periods while computing the period of limitation. Sub Rule-(iii) of Rule-68B provides that special provision for cases where any immovable property has been attached before 01.06.1992 and the order giving rise to a demand of any tax, interest, etc has also become conclusive or final before the said date. In such a situation the period of limitation as referred by Sub-Rule-I would commenced from 01.06.1992, this Sub-Rule (1), thus, makes it clear that limitation provided under Sub Rule-I for sale of immovable property would appear also to be attachment of immovable property and finalisation of tax demand which have occurred where from 01.06.1992. In such a case, computing the period of limitation would be 01.06.1992, i.e. the date on which the said rule was inserted. Sub-Rule (IV), of Section-68 provides that where the sale of immovable property is not made in accordance with the provisions of sub-rule (1), the attachment order in relation to the said property shall be deemed to have been vacated on the expiry of the time of limitation. It provides for a time limit of a period of three years for sale of attached immovable property starting from the end of the financial year in which the order giving rise for demand of tax, interest etc. has become conclusive. Sub-Rule-IV of the Rule-68B provides for the consequence of the immovable property not being sold within such time. As per the Sub-Rule-IV, the attachment order in the relation to the said property would be deemed to have been vacated on the expiry of the time limit as provided. Thus as Rule-68B would apply. The attachment of the said immovable property was made on 20.12 2018 and the notice of proclamation of sale/auction was made on 27.03.2019 from the end of the financial year in which the order giving rise to a demand of tax etc, has become conclusive in the year 2010. Thus, hit by the period of limitation prescribed under the said rule. By virtue of Sub-Rule-(IV) of Rule-68B, upon completion of the period of limitation, the attachment would be deemed to have been vacated. Thus by virtue of Rule-68B of the schedule II of Income Tax Act, 1961, the impugned notice of proclamation of sale is barred by limitation and as such is deserve to be set aside and quashed. Accordingly, the impugned notice of proclamation of sale is set aside. Consequently, attachment over the immovable property of the petitioner is also set aside.
Issues Involved:
1. Legality and validity of the impugned sale notice dated 27.03.2019. 2. Validity of the attachment order dated 20.12.2018 under Rule 68B of Schedule II of the Income Tax Act, 1961. Summary: 1. Legality and Validity of the Impugned Sale Notice: By filing this writ petition, the petitioner has challenged the legality and validity of the impugned sale notice dated 27.03.2019. The petitioner contends that the sale notice is barred under Rule 68B of Schedule II of the Income Tax Act, 1961, which provides a three-year limitation period (now seven years, amended in 2019) from the end of the financial year in which the order giving rise to a demand of any tax, interest, fine, penalty, or any other sum has become conclusive. The petitioner argues that since the order became conclusive in 2010, the sale notice issued in 2019 is barred by limitation. Mr. R. Dubey, learned counsel for the petitioner, submits that the impugned orders have been issued after the lapse of three years and thus are barred by Rule 68B (1) of Schedule II of the Income Tax Act, 1961. He supports his submission with decisions from the High Court of Judicature at Madras and the High Court of Bombay. Dr. B.N. Gogoi, learned Standing Counsel for the Income Tax Department, concedes that the impugned order is indeed barred under Rule 68B (1) but argues that the authorities should have the liberty to take recourse to other provisions of the Act for recovery of dues. The court concludes that the impugned sale notice dated 27.03.2019 is barred by limitation as prescribed in Rule 68B of Schedule II of the Income Tax Act, 1961. Consequently, the notice of proclamation of sale is set aside. 2. Validity of the Attachment Order:The petitioner also challenges the attachment order dated 20.12.2018, arguing that it is barred by Rule 68B of Schedule II of the Income Tax Act, 1961. The court notes that Rule 68B provides that no sale of immovable property shall be made after the expiry of seven years (earlier three years) from the end of the financial year in which the order giving rise to a demand has become conclusive. The court finds that the attachment order dated 20.12.2018 and the notice of proclamation of sale issued on 27.03.2019 are beyond the limitation period and thus invalid. By virtue of Sub-Rule (IV) of Rule 68B, upon completion of the period of limitation, the attachment is deemed to have been vacated. Therefore, the court sets aside the attachment order over the immovable property of the petitioner. Conclusion:The court concludes that the impugned notice of proclamation of sale is barred by limitation and sets it aside. Consequently, the attachment over the immovable property of the petitioner is also set aside. However, the respondent authorities are granted liberty to proceed for recovery of the dues against the petitioner as permissible under the provisions of the Act and Rules. Disposition:The Writ Petition stands allowed and disposed of with no order as to cost.
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