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TMI Blog2012 (11) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... defaulter, at various stages, has right either to intervene, pay off the tax or question the very proclamation i.e under Rule 60 he can apply to set aside the sale of immovable property upon deposit of the amount of tax dues, of course before the confirmation of sale. He also has a right to question any order that the Tax Recovery Officer may have passed under the schedule. Rule 86(1) provides for a statutory appeal against any such order before the Chief Commissioner or the Commissioner. Sub-rule (3) empowers the appellate authority, pending its final decision in appeal, to stay the execution of the certificate. It was in exercise of such statutory right of appeal that the respondent No.3 carried order of the Tax Recovery Officer before the Commissioner and questioned the very proclamation of sale. When such appeal was filed, the auction was not even conducted. The petitioner was nowhere in picture. In such appeal, it is unable to find as how at least at the outset the petitioner could have been made a party. The question of joining the petitioner as a respondent in such an appeal at a later stage also would not arise since by merely being the highest bidder in a public auction, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Recovery Officer retained the right to accept or reject any offer. 1.3 On 10.02.2000, however, the Recovery Officer issued a corrigendum in which the dues of respondent No.3 were shown to be Rs. 15,06,76,539/-. Yet another correction came to be issued through a public notice dated 28.02.2000, wherein the outstanding amount was changed to Rs. 4,06,35,000/- and the date of auction was shifted to 31.03.2000. 1.4 On 31.03.2000, the petitioner participated in the auction proceedings. His offer was found highest and accepted by respondent No.1 with respect to plot of land No.9. Accordingly, the petitioner deposited 25% of the bid amount and additional 1% towards the fees. As per the terms of the advertisement, the petitioner had fifteen days of time to deposit the balance 75% of the amount. 1.5 It appears that in the meantime, respondent No.1 was disputing the action of the Income Tax Department to auction his properties for recovery of tax dues on various grounds. On 04.03.2000, respondent No.3 had petitioned to the Commissioner of Income Tax, Rajkot and challenged the very action of the Tax Recovery Officer in issuing the public advertisement for auction of his lands. He had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this appeal, execution of the recovery certificate issued in the above case, is hereby stayed till further orders." 1.7 By a separate notice also issued on 31.03.2000, the Commissioner of Income Tax, Rajkot provided as under: Notice "Shri S.D. Jadeja of Jamnagar, has filed a petition before the Commissioner of Income Tax, Rajkot on 4th March 2000, objecting to the auction of his immovable property located at Jamnagar, by the Tax Recovery Officer, Jamnagar, for recovery of his tax dues. This petition is pending before the Commissioner of Income Tax, Rajkot. The auction being conducted by the Tax Recovery Officer, Jamnagar is subject to confirmation under Rules 61 & 63 of the Second Schedule to the Income Tax Act, 1961, by the Tax Recovery Officer, and the disposal of appeal, if any, against the same, by the Commissioner of Income Tax, Rajkot, under Rule 86 of the Income Tax Act, 1961. 2. This is for the information of the general public." 1.8 Since the Tax Recovery Officer, who was in charge of the public auction, was communicated such orders, he could not thereafter accept any further sums from the petitioner. The opinion of the Commissioner of Income Tax, Rajkot by his offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would vitiate the proclamation since requirement of Rule 53 of Second Schedule to specify as fairly and accurately as possible the amount of recovery for which the sale was ordered, was not satisfied. He also noted that proceedings were pending before the Gujarat High Court where respondent No.3 had prayed for settlement under KVSS scheme. He, therefore, recorded that in respect of the demands, the disputes still exist. On such grounds, the appeal under Rule 86 of the Second Schedule came to be allowed. 2. We may notice that the present petitioner was not a party to such proceedings and the Commissioner of Income Tax principally considered the objections of respondent No.3 to the auction proclamation and allowed such appeal. Be that as it may, the department conveyed such a decision of the Commissioner to the petitioner under communication dated 22.05.2001. The petitioner was requested to attend the office within a week on receipt of the letter and collect the amount paid by him during the auction proceedings. 3. It is the case of the petitioner that during the pendency of the proceedings with the Commissioner and even thereafter, the petitioner went on making requests for supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held way back in the year 2000. In the meantime, the land prices have gone up. If the petitioner is not granted benefit of his highest bid, irreparable injury would be caused to him. 8. Mr. Shah drew our attention to the communication dated 09.03.2000 made by the Tax Recovery Officer, Jamnagar to the Commissioner of Income Tax, Rajkot, in which he pointed out various reasons why the appeal of respondent No.3 should be rejected. In such communication, Tax Recovery Officer had pointed out various efforts made for tax recovery of such respondent and the fact that such dues had remained outstanding for years together. 9. On the other hand, learned counsel, Mr. Soparkar for respondent No.3 submitted that even before the date of auction, the respondent No.3 had preferred a statutory appeal to the Commissioner. In such appeal, the very basis of the sale proclamation was questioned. The petitioner, who was at the time of filing of the appeal not in the picture, was neither necessary nor a proper party. 10. In support of such contention, counsel drew our attention to an order dated 11.02.2009 passed by this Court in Misc. Civil Application No. 2593 of 2009 in Special Civil Applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner by the department under communication dated 22.05.2001. The present petition came to be filed only on or around 15.04.2002. The petitioner has not explained such delay. Counsel submitted that subsequently, respondent No.3 had succeeded in persuading this Court to require the settlement commission to entertain the request of the respondent No.3 for a settlement. Such request was entertained and appropriate order was passed. Respondent No.3 had also made payments in terms of such order. He submitted that though there are still disputes remaining with respondent No.3 and the Department with respect to filing settlement of accounts, the entire basis on which the proclamation of sale was made has now changed. 14. Learned counsel, Mr. Pranav Desai for the department, in addition to adopting the submissions of the private respondent's counsel further submitted that the department had as early as in May 2001 conveyed to the petitioner to collect his 25% of the amount paid. He took no steps in respect of the same for several years. He cannot claim such amount back, at any rate with interest. 15. Having thus heard the learned counsel for the parties, we may briefly recapitulate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale, on his depositing:- (a) the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, with interest thereon at the rate of [one and one-fourth per cent for every month or part of a month], calculated from the date of the proclamation of sale to the date when the deposit is made; and (b) for payment to the purchaser, as penalty, a sum equal to five percent of the purchase money, but not less than one rupee. (2) Where a person makes an application under rule 61 for setting aside the sale of his immovable property, he shall not, unless he withdraws that application, be entitled to make or prosecute an application under this rule." 18. Rule 61 pertains to application to set aside the sale of immovable property on ground of non-service of notice or irregularity. Rule 62 pertains to setting aside sale where defaulter has no saleable interest. Rule 63 deals with confirmation of sale and reads as under: "63. (1) Where no application is made for settin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s included in that area, shall lie to such Chief Commissioner or Commissioner." 22. From the above rule position it can be seen that proclamation of sale and holding a public auction are only the initial steps towards sale of immovable property of a tax defaulter to recover such amount through sale of his properties. The highest bidder, whose offer is accepted, during such public auction, has the responsibility to deposit 25% of the purchase money on spot, failing which, the acceptance of offer stands revoked. However, before the sale can be confirmed in favour of the highest bidder, several steps are to be completed and intervening factors to be taken into account. For example within fifteen days from the date of public auction, the purchaser has to pay remaining 75% of the amount. Even then the sale is subject to confirmation and the tax defaulter, at various stages, has right either to intervene, pay off the tax or question the very proclamation. For example, under Rule 60 he can apply to set aside the sale of immovable property upon deposit of the amount of tax dues, of course before the confirmation of sale. He also has a right to question any order that the Tax Recovery Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale is confirmed and sale certificate issued in favour of the applicants by Income Tax Department the applicants would merely be offerers whose offer may or may not be accepted by Income Tax Department. In the circumstances, it is not possible to accept the contention that the applicants are persons who are directly affected by the outcome of the dispute between the tax defaulter, whose property is put up for auction sale, and the Income Tax Department." 25. Additionally, we also find that though the Commissioner's impugned order was conveyed to the petitioner on 22.05.2001, the petitioner took considerable time in moving the present petition. This in isolation may not have been the sole consideration for us to reject the petition on the ground of delay. However, along with other relevant facts noted above, such delay also would be an additional ground not to entertain the petition. 26. Though full facts are not on record, as pointed out by the counsel for respondent No. 3, several developments have taken place. Respondent No.3 had succeeded before this Court in requiring the settlement commission to entertain his application for settlement on which certain demand orders wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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