9911796707
TMI Blog2000 (11) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner and Sri Chandrasenan. Item No. 1 was an extent of 25.452 cents of land, item No. 2, 6.508 cents, item No. 3, 7.867 cents and item No. 4, 4.69 cents. The first two items were proposed to be sold on February 22, 2000, and the rest, on the following day. The petitioner's husband had objected to the proposal on two grounds, viz., that the sale was bad as the proclamation was not in accordance with rule 53(cc) of the Second Schedule to the Income-tax Act, and there was delay in bringing the properties for sale, and the proceedings were vitiated by limitation. Exhibit P-8 is the letter of objections. By way of reply, it had been pointed out that a corrigendum had been issued in respect of two items of properties. The point of limitation also had been disputed. The text of the letter dated February 16, 2000, marked as exhibit P-9, is reproduced below : "This is to intimate that the contentions raised in your above letter have been carefully considered by this office. Please note that the income included in your total income is by way of your own income as well as the share income from the firm, Three Star Bottling Co. So far as share income is concerned, it has become fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove defect, she has been subjected to undue hardship and loss. (d) The liabilities of Sri Chandrasenan were unrealistically boosted up, and properties far in excess of requirements have been brought to revenue sales, which was illegal. As regards the contention on the issue of limitation, counsel had not made any submissions. Therefore, I am confining myself only as regards the validity of the sale proclamations and the effect thereof on the consequent sale. As noticed earlier, the petitioner confined her submissions to the sale of item No. 3 alone. It was not the first time that the said property had been brought to sale. It is pointed out that the property admeasuring about seven cents lay in the heart of Ernakulam and on a previous occasion the upset price shown in the proclamation was in the region of 1.3 crores of rupees. The petitioner complains that in exhibit P-6 sufficient details had not been shown including the upset price, and there were only two participants in the auction. As a result, the property was auctioned for a ludicrously small amount of Rs. 36.25 lakhs. The suggestion is that this was even less than one-fourth of the market price of the said prime land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, nor could it be negotiated. The real estate prices had marginally come down, but none the less as the sale proclamation did not point out the upset price, the property has now been sold away for a fraction of its real worth, and the reason for the low price could directly therefore be attributable to the defective proclamation, and the oversight of the Department and there is direct violation of rule 53 of the Second Schedule to the Income-tax Act. The senior standing counsel for the Revenue had strongly justified the stand of the Revenue. In view of the default, an attachment of the properties was imperative and the consequential hardship was unavoidable, he submits. Repeated attempts were made to sell away the properties, and because of the objections raised by the petitioner, every time, the sale could not be carried out. It was admitted that on one occasion, honouring the wishes of the defaulter, the upset price of the item was notified as Rs. 120 lakhs. But there were no bidders. The petitioner was to thank herself for the present debacle experienced. The predicament pleaded was nothing new, as a defaulter invited prejudices automatically. He also submitted that the biddi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule prescribing procedure for recovery of tax is drawn in exercise of the mandate given by sections 222 and 276 of the Income-tax Act. Part I of the rules refers to general provisions. Rule 2 speaks about the duty to issue notice. Exhibit P-3 evidently had been issued by the Tax Recovery Officer in exercise of this power. This is dated January 6, 2000. The petitioner in the original petition has referred to it as notice under rule 117B of the Income-tax Rules, but I am of the opinion that it is in fact issued under rule 2 of the Second Schedule. Though not specifically highlighted, on going through the documents produced, I find that a lapse has been committed, vitiating the procedure. Steps to be taken after notice are contemplated by rule 4. If the amount is not paid within the time specified or further time granted, the officer is obliged to proceed to realise the amount by one or more of the modes prescribed. Clause (b), viz., attachment and sale of immovable property has been adopted in this case. The attachment however had already been brought about. Attachment and sale are two distinct and independent steps, though interconnected. The officer while exercising powers has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, the defaulter could not have been denied the benefit of the procedures directed to be followed by the rule. I am aware of rule 61. But nevertheless, since the petitioner had approached this court well before the sale, the procedure prescribed for setting aside the sale, by permitting a deposit may not confer justice on the facts of the case. Also only on the satisfaction of the Tax Recovery Officer the above procedure need be followed. If the justification for proclamation was the certificate of 1995, it can well be contended that irrespective of exhibit P-3, the officer need not have Waited for 15 days. But the above will be highly arbitrary, since the figures shown as arrears specifically refer to the sums drawn up in exhibit P-3 certificate. True, the properties may be under attachment, and what had been added was the interest element which accrued after 1995. But in that case, a fresh certificate might have been superfluous. Obviously, exhibit P-3 is intended to be acted upon, I cannot ignore the impact thereof when it preceded exhibit P-6, and reference thereto had also been made. Now I may also deal within the contention of the petitioner that there is violation of rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lder. The court has, in the said decision, made the observations, which I think are relevant, as extracted hereinbelow : "As observed above, when the court fixes the upset price that fixation is only for facilitating the conduct of the sale and to safeguard the interests of the judgment-debtor by fixing a reserve price. The object of fixing the upset price is to fix the lowest sum for which the property which is being auctioned will be sold or in other words, it is the sum from which the bidding may start. The upset price, therefore, has some relation to the price which the property intended to be sold in the auction is expected to fetch. When the court gives the upset price, it cannot do so merely on the ipse dixit of either the judgment-debtor or the decree-holder. What should be the amount to be fixed as the upset price must, therefore, be determined after an objective consideration of all the relevant facts to which the court must apply its mind, so as to safeguard the interests of the judgment debtor. It is true that for fixing the upset price, no elaborate enquiry may be required to be made, but the upset price cannot also be any figure having no relation whatsoever to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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