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TMI BlogPROCEDURE FOR RECOVERY OF TAXX X X X Extracts X X X X X X X X Extracts X X X X ..... to be served upon the defaulter a notice requiring the defaulter to pay the amount specified in the certificate within fifteen days from the date of service of the notice and intimating that in default steps would be taken to realise the amount under this Schedule. When certificate may be executed. 3. No step in execution of a certificate shall be taken until the period of fifteen days has elapsed since the date of the service of the notice required by the preceding rule : Provided that, if the Tax Recovery Officer is satisfied that the defaulter is likely to conceal, remove or dispose of the whole or any part of such of his movable property as would be liable to attachment in execution of a decree of a civil court and that the realisation of the amount of the certificate would in consequence be delayed or obstructed, he may at any time direct, for reasons to be recorded in writing, an attachment of the whole or any part of such property: Provided further that if the defaulter whose property has been so attached furnishes security to the satisfaction of the Tax Recovery Officer, such attachment shall be cancelled from the date on which such security is accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though ostensibly sold to the certified purchaser, on the ground that it is liable to satisfy a claim of such third person against the real owner. 4 [Disposal of proceeds of execution. 8. (1) Whenever assets are realised by sale or otherwise in execution of a certificate, the proceeds shall be disposed of in the following manner, namely : ( a ) they shall first be adjusted towards the amount due under the certificate in execution of which the assets were realised and the costs incurred in the course of such execution; ( b ) if there remains a balance after the adjustment referred to in clause ( a ), the same shall be utilised for satisfaction of any other amount recoverable from the assessee under this Act which may be due on the date on which the assets were realised; and ( c ) the balance, if any, remaining after the adjustments under clauses ( a ) and ( b ) shall be paid to the defaulter. (2) If the defaulter disputes any adjustment under clause ( b ) of sub-rule (1), the Tax Recovery Officer shall determine the dispute.] General bar to jurisdiction of civil courts, save where fraud alleged. 9. Except as otherwise expressly provided in thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale. (5) Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim. (6) Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive. Removal of attachment on satisfaction or cancellation of certificate. 12. Where- ( a ) the amount due, with cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Where a notice has been served on a defaulter under rule 2, the defaulter or his representative in interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer, nor shall any civil court issue any process against such property in execution of a decree for the payment of money. (2) Where an attachment has been made under this Schedule, any private transfer or delivery of the property attached or of any interest therein and any payment to the defaulter of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment. Prohibition against bidding or purchase by officer. 17. No officer or other person having any duty to perform in connection with any sale under this Schedule shall, either directly or indirectly, bid for, acquire or attempt to acquire any interest in the property sold. Prohibition against sale on holidays. 18. No sale under this Schedule shall take place on a Sunday or other general holiday recognised by the State Government or on any day which has been notified by the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the warrant of attachment ( a ) where such produce is growing crop on the land on which such crop has grown, or ( b ) where such produce has been cut or gathered, on the threshing floor or place for treading out grain or the like, or fodder-stack, on or in which it is deposited, and another copy on the outer door or on some other conspicuous part of the house in which the defaulter ordinarily resides, or with the leave of the Tax Recovery Officer, on the outer door or on some other conspicuous part of the house in which he carries on business or personally works for gain, or in which he is known to have last resided or carried on business or personally worked for gain. The produce shall, thereupon, be deemed to have passed into the possession of the Tax Recovery Officer. Provisions as to agricultural produce under attachment. 25. (1) Where agricultural produce is attached, the Tax Recovery Officer shall make such arrangements for the custody, watching, tending, cutting and gathering thereof as he may deem sufficient; 10 [and he shall have power to defray the cost of such arrangements]. (2) Subject to such conditions as may be imposed by the Tax Recovery O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other movable property (except as aforesaid), to the person in possession of the same. (3) A debtor prohibited under clause ( i ) of sub-rule (1) may pay the amount of his debt to the Tax Recovery Officer, and such payment shall discharge him as effectually as payment to the party entitled to receive the same. Attachment of decree. 27. (1) The attachment of a decree of a civil court for the payment of money or for sale in enforcement of a mortgage or charge shall be made by the issue to the civil court of a notice requesting the civil court to stay the execution of the decree unless and until ( i ) the Tax Recovery Officer cancels the notice, or ( ii ) the 11 [Tax Recovery] Officer or the defaulter applies to the court receiving such notice to execute the decree. (2) Where a civil court receives an application under clause ( ii ) of sub-rule (1), it shall, on the application of the 12 [Tax Recovery] Officer or the defaulter and subject to the provisions of the Code of Civil Procedure, 1908 (5 of 1908), proceed to execute the attached decree and apply the net proceeds in satisfaction of the certificate. (3) The 13 [Tax Recovery] Officer shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its, whether already declared or accruing and of any other money which may become due to him in respect of the partnership, and direct accounts and inquiries and make an order for the sale of such interest or such other order as the circumstances of the case may require. (2) The other persons shall be at liberty at any time to redeem the interest charged or, in the case of a sale being directed, to purchase the same. Inventory. 33. In the case of attachment of movable property by actual seizure, the officer shall, after attachment of the property, prepare an inventory of all the property attached, specifying in it the place where it is lodged or kept, and shall forward the same to the Tax Recovery Officer and a copy of the inventory shall be delivered by the officer to the defaulter. Attachment not to be excessive. 34. The attachment by seizure shall not be excessive, that is to say, the property attached shall be as nearly as possible proportionate to the amount specified in the warrant. Seizure between sunrise and sunset. 35. Attachment by seizure shall be made after sunrise and before sunset and not otherwise. Power to break open doors, etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hreshing floor or place for treading out grain or the like, or fodder-stack, on or in which it is deposited: Provided that the Tax Recovery Officer may direct the sale to be held at the nearest place of public resort, if he is of opinion that the produce is thereby likely to sell to greater advantage. (2) Where, on the produce being put up for sale, ( a ) a fair price, in the estimation of the person holding the sale, is not offered for it, and ( b ) the owner of the produce, or a person authorised to act on his behalf, applies to have the sale postponed till the next day or, if a market is held at the place of sale, the next market day, the sale shall be postponed accordingly, and shall be then completed, whatever price may be offered for the produce. Special provisions relating to growing crops. 42. (1) Where the property to be sold is a growing crop and the crop from its nature admits of being stored but has not yet been stored, the day of the sale shall be so fixed as to admit of the crop being made ready for storing before the arrival of such day, and the sale shall not be held until the crop has been cut or gathered and is ready for storing. (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y attached is current coin or currency notes, the Tax Recovery Officer may, at any time during the continuance of the attachment, 16 [direct that such coins or notes shall be credited to the Central Government and the amount so credited shall be dealt with in the manner specified in rule 8]. PART III attachment and sale of immovable property Attachment Attachment. 48. Attachment of the immovable property of the defaulter shall be made by an order prohibiting the defaulter from transferring or charging the property in any way and prohibiting all persons from taking any benefit under such transfer or charge. Service of notice of attachment. 49. A copy of the order of attachment shall be served on the defaulter. Proclamation of attachment. 50. The order of attachment shall be proclaimed at some place on or adjacent to the property attached by beat of drum or other customary mode, and a copy of the order shall be affixed on a conspicuous part of the property and on the notice board of the office of the Tax Recovery Officer. Attachment to relate back from the date of service of notice. 51. Where any immovable property is attached und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en affixed on the property or in the office of the Tax Recovery Officer, whichever is later. Sale to be by auction. 56. The sale shall be by public auction to the highest bidder and shall be subject to confirmation by the Tax Recovery Officer : 19 [ Provided that no sale under this rule shall be made if the amount bid by the highest bidder is less than the reserve price, if any, specified under clause ( cc ) of rule 53.] Deposit by purchaser and resale in default. 57. (1) On every sale of immovable property, the person declared to be the purchaser shall pay, immediately after such declaration, a deposit of twenty-five per cent on the amount of his purchase money, to the officer conducting the sale; and, in default of such deposit, the property shall forthwith be resold. (2) The full amount of purchase money payable shall be paid by the purchaser to the Tax Recovery Officer on or before the fifteenth day from the date of the sale of the property. Procedure in default of payment. 58. In default of payment within the period mentioned in the preceding rule, the deposit may, if the Tax Recovery Officer thinks fit, after defraying the expenses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale of immovable property on ground of non-service of notice or irregularity. 61. Where immovable property has been sold in execution of a certificate, 28 [such Income-tax Officer as may be authorised by the 60 [Principal Chief Commissioner or] Chief Commissioner or 60 [Principal Commissioner or] Commissioner in this behalf], 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 of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by this Schedule or on the ground of a material irregularity in publishing or conducting the sale: Provided that ( a ) no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of the non-service or irregularity; and ( b ) an application made by a defaulter under this rule shall be disallowed unless the applicant deposits the amount recoverable from him in the execution of the certificate. Setting aside sale where defaulter has no salea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant a certificate to the defaulter, authorising him, within a period to be mentioned therein, and notwithstanding anything contained in this Schedule, to make the proposed mortgage, lease or sale: Provided that all moneys payable under such mortgage, lease or sale shall be paid, not to the defaulter, but to the Tax Recovery Officer: Provided also that no mortgage, lease or sale under this rule shall become absolute until it has been confirmed by the Tax Recovery Officer. Fresh proclamation before re-sale. 67. Every re-sale of immovable property, in default of payment of the purchase money within the period allowed for such payment, shall be made after the issue of a fresh proclamation in the manner and for the period hereinbefore provided for the sale. Bid of co-sharer to have preference. 68. Where the property sold is a share of undivided immovable property, and two or more persons, of whom one is a co-sharer, respectively bid the same sum for such property or for any lot, the bid shall be deemed to be the bid of the co-sharer. 29 [ Acceptance of property in satisfaction of amount due from the defaulter. 68A. (1) Without prejudice to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the reserve price or under the circumstances mentioned in rule 57 or rule 58 or where the sale is set aside under rule 61, the aforesaid period of limitation for the sale of the immovable property shall stand extended by one year. (2) In computing the period of limitation under sub-rule (1), the period ( i ) during which the levy of the aforesaid tax, interest, fine, penalty or any other sum is stayed by an order or injunction of any court; or ( ii ) during which the proceedings of attachment or sale of the immovable property are stayed by an order or injunction of any court; or ( iii ) commencing from the date of the presentation of any appeal against the order passed by the Tax Recovery Officer under this Schedule and ending on the day the appeal is decided, shall be excluded : Provided that where immediately after the exclusion of the aforesaid period, the period of limitation for the sale of the immovable property is less than 180 days, such remaining period shall be extended to 180 days and the aforesaid period of limitation shall be deemed to be extended accordingly. (3) Where any immovable property has been attached under this Part before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tax Recovery Officer, or if the arrears are discharged by receipt of such profits and rents or are otherwise paid. PART V ARREST AND DETENTION OF THE DEFAULTER Notice to show cause. 73. (1) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Tax Recovery Officer has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Tax Recovery Officer, for reasons recorded in writing, is satisfied ( a ) that the defaulter, with the object or effect of obstructing the execution of the certificate, has, after 40 [the drawing up of the certificate by the Tax Recovery Officer], dishonestly transferred, concealed, or removed any part of his property, or ( b ) that the defaulter has, or has had since 41 [the drawing up of the certificate by the Tax Recovery Officer], the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same. (2) Notwithstanding anything contained in sub-rule (1), a warrant for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rears, the Tax Recovery Officer may, before making the order of detention, leave the defaulter in the custody of the officer arresting him or of any other officer for a specified period not exceeding 15 days, or release him on his furnishing security to the satisfaction of the Tax Recovery Officer for his appearance at the expiration of the specified period if the arrears are not so satisfied. (2) When the Tax Recovery Officer does not make an order of detention under sub-rule (1) he shall, if the defaulter is under arrest, direct his release. Detention in and release from prison. 77. (1) Every person detained in the civil prison in execution of a certificate may be so detained, ( a ) where the certificate is for a demand of an amount exceeding two hundred and fifty rupeesfor a period of six months, and ( b ) in any other casefor a period of six weeks: Provided that he shall be released from such detention ( i ) on the amount mentioned in the warrant for his detention being paid to the officer-in-charge of the civil prison, or 47 [( ii ) on the request of the Tax Recovery Officer on any ground other than the grounds mentioned in rules 78 and 79. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound there; ( c ) no room, which is in the actual occupancy of a woman who, according to the customs of the country, does not appear in public, shall be entered into unless the officer authorised to make the arrest has given notice to her that she is at liberty to withdraw and has given her reasonable time and facility for withdrawing. Prohibition against arrest of women or minors, etc. 81. The Tax Recovery Officer shall not order the arrest and detention in the civil prison of- ( a ) a woman, or ( b ) any person who, in his opinion, is a minor or of unsound mind. PART VI MISCELLANEOUS Officers deemed to be acting judicially. 82. Every 49 [ 60 [Principal Chief Commissioner or] Chief Commissioner or 60 [Principal Commissioner or] Commissioner], Tax Recovery Officer or other officer acting under this Schedule shall, in the discharge of his functions under this Schedule, be deemed to be acting judicially within the meaning of the Judicial Officers Protection Act, 1850 (18 of 1850). Power to take evidence. 83. Every 50 [ 60 [Principal Chief Commissioner or] Chief Commissioner or 60 [Principal Commissioner or] Commissioner], ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y for the amount due by the defaulter, he may be proceeded against under this Schedule as if he were the defaulter. Penalties. 89. [ Omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 . ] Subsistence allowance. 90. (1) When a defaulter is arrested or detained in the civil prison, the sum payable for the subsistence of the defaulter from the time of arrest until he is released shall be borne by the 55 [Tax Recovery Officer]. (2) Such sum shall be calculated on the scale fixed by the State Government for the subsistence of judgment-debtors arrested in execution of a decree of a civil court. (3) Sums payable under this rule shall be deemed to be costs in the proceeding: Provided that the defaulter shall not be detained in the civil prison or arrested on account of any sum so payable. Forms. 91. The Board may prescribe the form to be used for any order, notice, warrant, or certificate to be issued under this Schedule. Power to make rules. 92. (1) The Board may make rules, consistent with the provisions of this Act, regulating the procedure to be followed by 56 [ 60 [Principal Chief Commissioner,] Chief Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the said proceedings, the Board may issue (whether by way of modification, not affecting the substance, of any rule in this Schedule or otherwise) general or special orders which appear to it to be necessary or expedient for the purpose of removing the difficulty.] Note -------------------- 1. Substituted for [See Section 222] by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. 2. Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Earlier it was amended by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1988. 3. Substituted for When a certificate has been received by the Tax Recovery Officer from the Assessing Officer by the Direct Tax Laws (Amendment) Act, 1989. w.e.f. 1-4-1988. 4. Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Earlier, rule 8 was amended by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1988. 5. Substituted for Assessing by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 6. Words duty filed under this Act omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. 7. Substituted for Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified that the increase in the rate of interest will apply in respect of any period falling after 30-9-1984 and also in cases where the interest became chargeable or payable from an earlier date. Earlier, twelve was substituted for nine by the Finance Act, 1972, w.e.f. 1-4-1972 and nine was substituted for six by the Taxation Laws (Amendment) Act, 1970, w.e.f. 1-4-1971. 27. Words substituted for 26a [ fifteen] per cent per annum by the Finance Act, 2007, w.e.f. 1-4-2008 . 28. Substituted for Assessing Officer by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 29. Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-10-1975. 30. Substituted for Income-tax by the Direct Tax Laws (Amendment) Act, 1989. w.r.e.f. 1-4-1988. 31. Substituted for Commissioner by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 32. Substituted for Income-tax by the Direct Tax Laws (Amendment) Act, 1989, w.r.e.f 1-4-1988. 33. Substituted for Income-tax by the Direct Tax Laws (Amendment) Act, 1989 w.r.e.f. 1-4-1988. 34. Substituted for Income-tax , by the Direct Tax Laws (Amendment) Act, 1989, w.r.e.f. 1-4-1988. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of the certificate by the Assessing Officer to the Tax Recovery Officer by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 52. Substituted by the Direct Tax Laws (Amendment) act, 1987, w.e.f. 1-4-1989. Prior to its substitution, rule 86 was substituted by the Finance Act, 1963, w.r.e.f. 1-4-1962 and Finance (No.2) Act, 1971, w.e.f. 1-1-1972. 53. Substituted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Prior to its substitution, sub-rule (4) was inserted by the Finance (No.2) Act, 1971 w.e.f. 1-1-1972. 54. Substituted for Tax Recovery Commissioner by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Earlier it was inserted by the Finance (No.2) Act, 1971 w.e.f. 1-1-1972. 55. Substituted for Assessing Officer by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 56. Substituted for Tax Recovery Commissioners by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Earlier it was inserted by the Finance (No.2) Act, 1971, w.e.f. 1-1-1972. 57. Substituted for Tax Recovery Commissioners by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989. Earlier it was inserted by the Finance (No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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