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2018 (1) TMI 862 - HC - Income TaxProceedings for recovery of the amount due - whether sale is vitiated for the reason of not having been conducted within the time stipulated by law? - Held that - Period stipulated for filing an appeal is 45 days from the date on which the copy of the order is received by him. Therefore the order could become final only after expiry of the period prescribed for filing an appeal. The said period expired only on 13.4.2004. Since the financial year in which the order has become final namely 13.4.2004 has expired only on 31.3.2005 the three year period stipulated by Rule 68B above expired only on 31.3.2008. Admittedly the sale was conducted on 27.11.2007. Therefore the sale was conducted within the time stipulated by Section 68B of the Second and Third Schedules to the IT Act. It is necessary to further notice that the auction proceedings had remained stayed as per the orders of the DRAT as well as this Honourable Court for varying periods. The said periods are also necessary to be excluded going by the terms of Rule 68B. Even without doing that it has to be held that the sale was conducted within the time stipulated by the statutory provision. It is held so. Whether in view of section 29 of the DRT Act all the provisions of the IT Rules would become applicable to proceedings before the DRT? - Held that - The provisions of the IT Act and the Rules are applicable. There was no necessity for attachment thereof before the sale as contended. Though it is contended that there was no proclamation fixation of a reserve price etc. as contemplated by the IT Rules there is no material on record to support any of the said contentions. Therefore the said contentions have to fail. Since we have already found on facts that the sale conducted was within the time stipulated by the statutory provision we do not find any grounds to interfere with the judgment appealed against or to grant any of the reliefs sought for except to clarify that the legal position as indicated by the Apex Court in Paramsivan C.N. v. Sunrise Plaza Tr.Partner (2013 (6) TMI 135 - SUPREME COURT OF INDIA) shall apply.
Issues Involved
1. Validity of the sale proceedings under Rule 68B of the Second Schedule to the Income Tax Act, 1961. 2. Applicability of the Income Tax Rules to the proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. 3. Alleged procedural lapses in the conduct of the sale. Detailed Analysis 1. Validity of the Sale Proceedings under Rule 68B of the Second Schedule to the Income Tax Act, 1961 The appellant challenged the sale of his property on the grounds that it was conducted after the stipulated period of three years as per Rule 68B of the Second Schedule to the Income Tax Act, 1961. The key argument was that the sale, conducted on 21.11.2007, was beyond the permissible period since the order for recovery was passed on 27.2.2004. However, the court clarified that the three-year period starts from the end of the financial year in which the order becomes final. In this case, the order became final on 13.4.2004, making the end of the financial year 31.3.2005. Therefore, the three-year period ended on 31.3.2008, and the sale conducted on 21.11.2007 was within the permissible period. The court also noted that the auction proceedings were stayed by various court orders, which further extended the permissible period. 2. Applicability of the Income Tax Rules to the Proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 The appellant contended that the provisions of the Income Tax (Certificate Proceedings Rules), 1962, including the procedures for attachment, proclamation, and sale, should apply to the proceedings under the Debt Recovery Act. The court referred to the Supreme Court's decision in Paramsivan C.N. v. Sunrise Plaza Tr.Partner, which clarified that the provisions of the Income Tax Rules are applicable "as far as possible" and with necessary modifications. This means that the rules apply except in situations where they are incompatible with the scheme of the Debt Recovery Act. The court concluded that the provisions of the IT Act and Rules are applicable to the extent indicated by the Supreme Court. 3. Alleged Procedural Lapses in the Conduct of the Sale The appellant alleged various procedural lapses, including the absence of attachment, proclamation, and fixation of a reserve price as required by the IT Rules. However, the court found no material evidence to support these contentions. It noted that the property was already mortgaged to the bank, eliminating the need for attachment before the sale. The court also found no evidence to support the claims of lack of proclamation or reserve price fixation. Therefore, these contentions were dismissed. Conclusion The court dismissed the appeal, upholding the sale proceedings as valid and conducted within the stipulated time frame. It also affirmed the applicability of the Income Tax Rules to the extent indicated by the Supreme Court in Paramsivan C.N. v. Sunrise Plaza Tr.Partner. The alleged procedural lapses were found to be unsupported by evidence, and the sale was deemed proper. The legal position as indicated by the Apex Court was applied, and the appeal was dismissed accordingly.
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