Property could not be the subject matter of auction in a recovery proceeding under Income Tax Act, 1961. - Income Tax - 1103/CBDT

INSTRUCTION NO . 1103/CBDT Dated : September 28, 1977 Section(s) Referred: 222 Statute: Income - Tax Act, 1961 The Commissioner of Income-tax, Kanpur has reported that the Urban Land (Ceiling and Regulation) Act, 1976 which came into operation with effect from 17th February, 1976 has created certain doubts in the minds of the Tax Recovery Officers, with regard to the auction of the attached immovable properties and confirmation of sale of properties sold already as per provisions of Second Schedule to the Income-tax Act, 1961. 2. The matter has been examined in consultation with the Ministry of Law. The Board are advised that the restrictions on transfer of lands imposed by sub-section (3) of section 5 (and similarly in by sub-section (4) of section 10) of the Urban Land (Ceiling and Regulation) Act apply only to voluntary sales and not to involuntary sales like acquisition proceedings under Chapter XXA of the Income-tax Act, 1961. Since the restriction on transfer of land imposed by the Urban Land Ceiling Act is not applicable to the sale effected by the Tax Recovery Officer under the provisions of the Second Schedule to the Income -tax Act, 1961, it is not necessary to give notice or to apply for permission to the competent authority under section 26 or 27 of the Urban Land Ceiling Act. However, sale under the Second Schedule of the Income-tax Act by the Tax Recovery Officer should be made and the possession of the relevant property should be handed over to the auction purchaser before the notification vesting the property in the State Government under section 10(3) of the Urban Land Ceiling Act is issued. Once the notification is issued under the said section, the land would be vested in the State Government and in consequence of this vesting, it would cease to be the property of the owner/transfer. The property could not then be the subject matter of auction in a recovery proceeding under the Income-tax Act, 1961.