2019 (2) TMI 1594 - HC - Income Tax

Auction sale - attachment of immovable properties of the petitioner s grandparents - Petitioner is daughter of Jagdish Hendre, the son of the late couple who had predeceased his parents - Petitioner s grandparents grandparents had died intestate are the assessee in default - proposed sale is hit by the limitation period prescribed under Rule 68B of the second schedule of the Income Tax Act - There is no clarity about the total dues of the department from the petitioner s grandparents - HELD THAT - We had heard learned Advocates for the parties on the question of interim relief. Having thus heard the Advocates, it would prima facie appear that the auction proceedings are being conducted after several years of the department ordering assessment of the properties. Dues of the deceased assessees had arisen in relation upto the assessment year 1999-2000. A serious question of the action of the department being within the period of limitation under Rule 68B would arise. Prima facie we do not think that the departmental authorities are correct in contending that such period would commence only after the computation of interest and order asking the assessees to pay such interest is passed. In that view of the matter, we would not permit the conduct of the auction. In the result, the petition my be adjourned for further hearing on 7th March, 2019. By way of adinterim relief, the auction of the properties in question is stayed. Petitioner shall ensure service of this order on private respondents.

Summary

Issues:
1. Challenge to auction proceedings based on limitation period under Rule 68B of the Income Tax Act.
2. Lack of clarity regarding total dues of the department from the petitioner's grandparents.

Analysis:

1. The petitioner, granddaughter of late Shri Sudhir Hendre and Smt. Manik Hendre, contends that her grandparents died intestate, and her father, Jagdish Hendre, who predeceased them, also died intestate. The Income Tax Department has raised significant tax, interest, and penalty dues against the grandparents for various assessment years. The department attached six immovable properties of the grandparents and planned to auction them due to unrecovered dues. The petitioner challenges the auction on the grounds that it is beyond the limitation period set by Rule 68B of the Income Tax Act and due to lack of clarity on the total dues.

2. The department argues that the limitation period under Rule 68B starts from the date when interest on tax and penalty dues was computed and ordered for payment. The High Court, after considering arguments from both sides, decided to adjourn the petition for further hearing. The court expressed concerns about the auction being conducted several years after the department assessed the properties, with dues dating back to the assessment year 1999-2000. The court found a serious question regarding the department's compliance with the limitation period under Rule 68B. It disagreed with the department's stance that the period starts only after the computation of interest and order for payment, leading to the stay of the auction as an interim relief.

3. Consequently, the court scheduled further hearing for March 7, 2019, and ordered a stay on the auction of the properties in question as adinterim relief. The petitioner was instructed to ensure the service of the court's order on the private respondents. The parties were directed to act upon a certified copy of the court's order provided by the Associate of the Court.