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TMI Blog2009 (7) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... er was given liberty to approach the competent civil court for appropriate relief. The Tax Recovery Officer was given 45 days to finalize the sale to enable the petitioner to approach the competent civil court. - 19251/(W)/07 - - - Dated:- 6-7-2009 - BISWANATH SOMADDER J. Judgment: Biswanath Somadder J .- The instant writ petition is directed against an order dated August 6, 2007 passed by the Tax Recovery Officer-I, Hooghly (hereinafter referred to as "the TRO") under rule 11(6) of the Second Schedule to the Income-tax Act, 1961. 2. The impugned order dated August 6, 2007 is in respect of sale of an immovable property situated at 13, Kalipukur Road, Sheoraphully, Hooghly, by auction by the Tax Recovery Officer to recover the income-tax dues of the late Dwarka Prasad Agarwala, said to be the father of the present writ petitioner, for the assessment years 1959-60 and 1961-62. 3. The writ petitioner claims to be one of the legal heirs of late Panna Bai. The writ petitioner has stated that the late Panna Bai, during her life time, became the owner of the property in question. 4. According to the writ petitioner, his mother, the late Panna Bai, purchased the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts were issued by the lady describing herself as "Smt. Panna Devi". 10. The learned senior advocate for the writ petitioner contended that in March, 1989, the Tax Recovery Officer, Chinsurah, served a prohibitory order on Hari Prasad Agarwala, being the tenant as also the uncle of the writ petitioner, restraining him from paying house rent to the father of the writ petitioner in respect of the property in question for recovery of the income-tax dues of Dwarka Prasad Agarwala. Hari Prasad Agarwala objected on the ground that rent was being paid to Panna Devi, who was the owner, and not Dwarka Prasad Agarwala. By a letter dated January 3, 1992, issued by the Tax Recovery Officer, Hooghly, Shri Hari Prasad Agarwala was directed to pay the rent to the Tax Recovery Officer, Hooghly, stating therein that the house property of Dwarka Prasad Agarwala was gifted to Panna Devi, which bears the charge liability of the donor. The said letter dated January 3, 1992 was, however, replied to by Shri Hari Prasad Agarwala by his letter dated January 22, 1992, stating that the said property had been purchased by Smt. Panna Bai from her own property directly from Sri Dwip Chand Ghosh in 1946 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order dated September 11, 2003, the writ petition, being C. O. No. 8094 (W) of 1996, was disposed of with a direction upon the respondents to allow the writ petitioner, being the son of Panna Bai, an opportunity to produce the materials before the Tax Recovery Officer showing that in her income-tax return, Panna Bai, had disclosed the disputed property as her own property or that this very property was assessed under the Wealth-tax Act. The impugned sale was kept in abeyance till the final decision was taken by the income-tax authority holding that the property in question was not shown by Panna Bai in her income-tax return or wealth-tax return and it was established that she was a benamidar of her husband as claimed in the affidavit-in-opposition. The petitioner has also contended that the tax authority was directed by this court to pass a reasoned order after giving an opportunity of hearing within two months from the date of communication of the said order. 17. The writ petitioner has submitted that the Tax Recovery Officer, after examining Panna Bai's original wealth-tax assessment order for the assessment year 1966-67 along with the demand notice, found in his order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a fictitious person. He further submitted that the Tax Recovery Officer had on that basis held that Dwarka Prasad Agarwala acquired the said property in the name of fictitious benamidar Panna Bai, the wife of Dwarka Das Agarwala and enjoyed the income from the property in his life time and after his demise his heirs were in enjoyment thereof. The Tax Recovery Officer had held that Dwarka Prasad Agarwala was the real owner of the said property, which could be auctioned for recovery his dues. 20. The learned senior advocate submitted that in the facts and circumstances of the instant case, the conduct of the respondent authorities have not been above-board. 21. He submitted that the said property was purchased in the year 1946. Admittedly, the income-tax demand against Dwarka Prasad Agarwala were for the assessment years 1959-60 and 1961-62, the assessments for which would have been made even later. The said property was acquired more than ten years before the said assessment years. No motive or device could be read into the transaction of purchase. He further submitted that it was not in dispute that Panna Bai was assessed to income-tax as well as wealth-tax and that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage. 25. He further submitted that it was not in dispute that the property in question was assessed to wealth-tax. The wealth-tax assessment orders themselves described the lady sometimes as Panna Bai and sometimes as Panna Devi. The wealth-tax assessment orders, apart from the said pro-perty, also show other assets including investment in the partnership firm of M/s. Hari Prasad Agarwala and Co., bank balance and jewellery. Even in the Municipal assessment list, the lady was initially described as Panna Bai and subsequently as Panna Devi. The attachment order dated April 15, 1996 described the lady as "Panna Devi (Bai) Agarwala the wife of the late Dwarka Pd. Agarwala". In the schedule of property in the proclamation of sale the said property was described as "H. P. of Smt. Panna Devi Agarwala the wife of the late Dwarka Pd. Agarwala". 26. He further submitted that even in the affidavit-in-opposition, filed by the respondent to the first writ petition, it was accepted that the said property stood in the name of Panna Bai/Panna Devi Agarwala, the wife of Dwarka Prasad Agarwala. He submitted that it does not lie in the mouth of the respondent authorities to now contend that Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stice. Considering the inconsistent stands adopted by the respondent authorities from time to time, he submitted that no credence could be lent to the new controversy now sought to be raised as regards identity. 29. Relying on the judgment of the Supreme Court rendered in the case of TRO v. Gangadhar Vishwanath Ranade (Decd.) reported in [1998] 234 ITR 188 (SC), he submitted that the provisions of rule 11 of the Second Schedule to the Income-tax Act, 1961, are analogous to those of Order XXI, rules 58 to 61 and 63 of the Code of Civil Procedure as it stood prior to the amendment in 1976. He submitted that the jurisdiction of the Tax Recovery Officer relates to examining possession, and only incidentally, any question of right to possession as claimed by the objector and the Tax Recovery Officer cannot go into intricate the questions of law as to title of the property. 30. He also relied on a judgment of the Supreme Court rendered in the case of Sawai Singhai Nirmal Chand v. Union of India reported in AIR 1966 SC 1068 and submitted that the scope of enquiry under rule 11, which is akin to Order XXI, rule 58 of the Code of Civil Procedure (as it stood prior to the 1976 amendment) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also submitted that the Tax Recovery Officer proceeded to adjudicate upon the matter in terms of the directions given by the High Court on June 9, 2006, in W. P. No. 12187 (W) of 2006, whereby the High Court had been pleased to set aside the earlier order of the Tax Recovery Officer, passed in purported compliance with the direction given by the High Court on September 11, 2003 in C. O. No. 8094 (W) of 1996. He submitted that the Tax Recovery Officer, in pursuance to the order of the High Court dated June 9, 2006, sent notices to all parties and had duly considered the issues raised and came to the conclusion, inter alia, that the facts were indicative that the purchase money for the property in question had come from the real owner of the property, Dwarka Prasad Agarwala and the ostensible owner, "Panna Bai", the wife of "Dwarka Das Agarwala", was a fictitious person and she could not provide the consideration of the property at the time of purchase. In such circumstances the Tax Recovery Officer had come to a categorical finding that it had been undoubtedly proved that the property in question at Sheoraphully, Hooghly, was purchased in the name of a fictitious person "Panna B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... W) of 1996. The directions given by the High Court in that writ petition were clear. The Tax Recovery Officer had, however, proceeded to adjudicate upon the matter without giving any opportunity of hearing to Kanhaiya Lal Bhagat, and had passed cryptic and/or unreasoned order dated January 23, 2004, for which Bhagat, who had actually purchased the property, had to file the subsequent writ petition, being W. P. No. 12187 (W) of 2006, which was disposed of by the court on June 9, 2006, laying the foundation of the order dated August 6, 2007, being the impugned order passed by the Tax Recovery Officer. He further submitted that the mala fide intention of the writ petitioner in filing the present writ petition, at the instance of the loser in the auction sale, Hari Prasad Agarwala, claiming to be the attorney-holder of the writ petitioner who happens to be one of the sons of the deceased assessee, is very clear since the other sons and daughters of the assessee are neither interested nor have they got any grievance in respect of the auction sale of several properties, including the present one, for realization of dues of the deceased assessee. 35. He submitted that the auction sale, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact of the benami of the property was investigated in detail and the authority issued notices to the heirs of the assessee for attendance at the hearing, in order to prove that the property was not benami, as per directions given by Jayanta Kumar Biswas J. in the order dated June 9, 2006, but the writ petitioner had hopelessly failed to discharge the same. He submitted that upon perusing the impugned order it would be apparent that the authority had duly discharged its duty and/or the burden of proving that the property in question was a benami. He further submitted that under section 157 of the Evidence Act as well under rule 11 of the Second Schedule to the Income-tax Act, 1961, the Tax Recovery Officer was duly competent to adjudicate the issue. He submitted that the investigation undertaken by the Tax Recovery Officer was only for the purpose of coming to a correct finding that the property was a benami of Dwarka Prasad Agarwala, being the assessee-in-default. Referring further to the impugned order he submitted that pursuant to the direction given by the writ court on June 9, 2006, the Tax Recovery Officer had determined that the property in question was a benami of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to whether Panna Bai had shown the property in question in the wealth-tax return or not, the Tax Recovery Officer concluded that Panna Bai residing at 24B, Nimtoala Ghat Street, Calcutta-6, had shown the property in the wealth-tax return for the assessment year 1966-67 furnished on June 30, 1966. He, however, observed that the order could not be verified for non-availability of the records in the Department. With regard to the question as to whether Panna Bai was the benamidar of Dwarka Prasad Agarwala or not, the Tax Recovery Officer held that without doubt the transaction was benami and the real owner of the property at 13, Kalipukur Lane (Road), Sheoraphully, Hooghly, was Dwarka Prasad Agarwala and Panna Bai, wife of Dwarka Das Agarwala, was the ostensible fictitious owner. The Tax Recovery Officer further held, inter alia, that Dwarka Prasad Agarwala had acquired the property in the name of fictitious benamidar Panna Bai, the wife of Dwarka Das Agarwala. The Tax Recovery Officer also held that a registered deed was prepared and executed after considerable deliberation and the name of Panna Bai, the wife of Dwarka Das Agarwala, was expressly shown as the purchaser or the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer acting under rule 11 of the Second Schedule to the Income-tax Act, 1961 did not have any authority to go into or adjudicate the question of benami. In my opinion, this contention raised by the writ petitioner is wholly without basis since the writ petitioner himself had earlier moved the writ petition, being C. O. No. 8094 (W) of 1996, which was disposed of by the court on September 11, 2003. It is clear from the order dated September 11, 2003 passed by the writ court in C. O. No. 8094 (W) of 1996 that the writ petitioner (Vishwanath Agarwala) was given an opportunity to produce materials before the Tax Recovery Officer showing that in her income-tax return, Panna Bai, had disclosed the disputed property as her own property or that this very property was assessed under wealth-tax. The writ court had further directed that the impugned sale was to be kept in abeyance till final decision was taken by the income-tax authority holding that 13, Kalikapukur Lane was not shown by Panna Bai in the income-tax return or wealth-tax return and it was further established that she was a benamidar of her husband, as claimed in the affidavit-in-opposition. 41. In my view, the above direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion that the auction sale in favour of the petitioner was not fit for confirmation. The order is grossly vitiated for these reasons. The authority was under the obligation to record reasons in support of his order. For these reasons I set aside the impugned order dated January 23, 2004 and allow this writ petition to this extent. I order that the Tax Recovery Officer shall hear the matter once again. Before giving the reasoned decision, the authority shall give notice to the petitioner and the fourth respondent and also to other persons who may be affected by the order. The noticed persons shall be given reasonable opportunity to produce materials in support of their respective cases. They will be entitled to submit their representations narrating their respective cases. After considering the materials produced and after giving the petitioner and the fourth respondent and other noticed parties opportunity of hearing, the Tax Recovery Officer shall make the fresh order in the matter. The fresh order shall be made within eight weeks from the date of receipt of a copy of this order by the Tax Recovery Officer." 42. Consequent thereto, the Tax Recovery Officer passed the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as preferred by way of special leave before the Supreme Court. In the facts of that case it may be briefly noticed that initially on October 23, 1972 an immovable property, being a residential house of the assessee, was attached by the Tax Recovery Officer. The assessee objected by stating that he had executed a mortgage of the property on December 2, 1967 in favour of the Bank of Maharashtra and further had executed a trust deed in respect of the property on February 21, 1969 in favour of his wife and daughter. Objection was filed on behalf of the wife and daughter of the assessee claiming that the title to the said property vested in them as full owners and they were in possession of the said property. Objection was also filed by Bank of Maharashtra. It was contended by the assessee as well as his wife and daughter that on the day when notice was issued under rule 2 of the Second Schedule to the Income-tax Act and also on the date when the said property was attached by the Tax Recovery Officer, the property was of the ownership of the wife and daughter of the assessee who were also in possession of the property. Hence, the property was not liable to be attached for the dues of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Dwarka Prasad Agarwala was enjoying the income from the said property standing in the fictitious name of Panna Bai, the wife of Dwarka Das Agarwala, who was actually the creation and benamidar of Dwarka Prasad Agarwala. The Tax Recovery Officer, thereafter, concluded that the property could be auctioned for recovery of the outstanding demand of Dwarka Prasad Agarwala and proceeded to reject the claim of the writ petitioner, Vishwanath Agarwala, by passing the order under rule 11(6) of the Second Schedule to the Income-tax Act, 1961. The judgment of the Supreme Court rendered in Gangadhar Vishwanath Ranade (Decd.) [1998] 234 ITR 188, therefore, has no manner of application at all in the facts and circumstances of the instant case. 44. The judgment of Supreme Court in Sawai Singhai Nirmal Chand AIR 1966 SC 1068 was on the point of law as to whether a suit filed in pursuance of Order 21, rule 63 of the Code of Civil Procedure, 1908, attracted the provisions of section 80 of the Code. The Supreme Court, while proceeding answer the point took into consideration the limited scope of enquiry under Order 21, rule 58 of the Code of Civil Procedure, confining to the question of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding arrived at by the Tax Recovery Officer with regard to whether Panna Bai was the benamidar of Dwarka Prasad Agarwala or not, was duly intimated to the writ petitioner, Vishwanath Agarwala by letter dated May 28, 2007 and he was requested to explain within June 1, 2007 why Panna Bai should not be treated as the benamidar of Dwarka Prasad Agarwala on the basis of the evidence gathered by the Tax Recovery Officer. The authorised representative of Vishwanath Agarwala requested the Tax Recovery Officer to grant time to give reply and finally on July 9, 2007, Vishwanath Agarwala submitted his reply. Upon considering his reply, the Tax Recovery Officer observed, inter alia, "Practically he (Vishwanath Agarwala) did not answer to this vital issue". It is, therefore, not open to the writ petitioner to contend that the materials based on which the Tax Recovery Officer formed his opinion were not made available to him or that he was not afforded an opportunity to or deal with the same. All these clearly goes to show that the impugned order was passed by the Tax Recovery Officer adhering to all known principles of natural justice. 46. I am in agreement with the submission made by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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