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TMI Blog2019 (7) TMI 1375X X X X Extracts X X X X X X X X Extracts X X X X ..... back in the year 1997. The sale proclamation which was made in February, 2019 was thus, hit by the period of limitation prescribed under such Rule. By virtue of sub-rule (4) of Rule 68B therefore, upon completion of the period of limitation, the attachment would be deemed to have been vacated. The auction sale, therefore, could not have been carried out. In the judgment in the case of Sanjay Khetan [ 2003 (12) TMI 42 - ALLAHABAD HIGH COURT] , of course, the Allahabad High Court has observed that Rule 68B of the IInd Schedule would not apply to the certificates issued prior to 1.6.1992. To this extent, we are unable to persuade ourselves to follow the same line. Sub-rule (3) of Rule 68B makes it clear that the limitation prescribed under sub-rule (1) would apply also to past instances, with necessary modification provided therein which we have already discussed earlier. The consent given by the petitioner to sale the properties will not prevent her from pursuing their petition. Firstly, it was not an unconditional consent. In her letter dated 23.1.2019, she had raised the issue of owner charging of interest and or no-due certificate issued in the past. Her consent was thus sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income Tax Department received the rent of the tenanted properties after the same were placed under attachment. However, such rent was meager and would not cover even a small portion of sizable tax dues of the assesses. The Income Tax Department, therefore, initiated further steps for auctioning the immovable properties for recovery of income tax dues. Most of the heirs appeared to have given their consent for auctioning the said immovable properties. The petitioner herself on 23.1.2019 wrote to the Tax Recovery Officer and gave her consent as under:- 1. In respect to your letter dated 28.11.2018 in respect to Auction of properties of Deceased assesses (Late Shri. S.L. Hendre Late Smt. M.S. Hendre) for recovery of outstanding dues, we have already given our consent by letter dated 7th September, 2018. We further give our consent to the same for auction of properties for recovery of outstanding dues of Deceased assesses (Late Shri. S.L. Hendre Late Smt. M.S. Hendre). 2. In respect to point no. 2 of your letter dated 3.1.2019 there is calculation of huge amount of interest charged under 220(2). We humbly request you to not charge the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner's other grievances leaving it open to be urged in future if need so arises. 5. In the context of such facts, learned counsel for the petitioner took us extensively through the provisions contained in Schedule II referring to recovery of unpaid tax. In particular, our attention was drawn to Rule 68B which was inserted by the Finance Act, 1992 w.e.f. 1.6.1992. It was contended that this rule permits sale of immovable property for recovery of unpaid taxes only within three years from the date of order giving rise to the tax dues, after which, the sale of immovable property would not be permitted. Learned counsel had relied on the objects behind insertion of the said rule and the notes on clauses explaining the said provision contained in the Finance Bill of 1992 in support of his contention. Learned counsel had also relied on the following decisions:- (i) M.U. Joshi Vs. Tax Recovery Officer Ors. [2006] 281 ITR 289 (Bom); (ii) Noorudin Vs. Tax Recovery Officer [2001] 251 ITR 357; (iii) V. Rajendran Vs. Tax Recovery Officer [2000] 246 ITR 812 Learned counsel submitted that the petitioner had not given unconditional cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. Under Rule 49, a copy of the order of attachment shall be served on the defaulter. As per Rule 50, the order of attachment shall be proclaimed at some place on or adjacent to the property attached. Rule 51 provides that where any immovable property is attached under the said Schedule, the attachment shall relate back to, and take effect from the date on which the notice to pay the arrears was served upon the defaulter. Sub-rule (1) of Rule 52 provides that the Tax Recovery Officer may direct that any immovable property which has been attached, or such portion thereof as may seem necessary to satisfy the certificate, shall be sold. Rule 53 pertains to contents of proclamation. This Rule requires proclamation of sale of immovable property and various details including the details of the property to be sold and the reserve price if any below which the property may not be sold. Rule 55 provides that no sale of immovable property under Schedule I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would issue a Sale Certificate of the immovable property specifying the property sold and the name of the person who is declared to be the purchaser. 10. This is broadly the scheme for attachment and sale of immovable property of an assessee in default. Rule 68B which is at the center of the controversy was inserted by the Finance Act, 1992 w.e.f. 1.6.1992 and reads as under:- 68B.(1) No sale of immovable property shall be made under this Part after the expiry of three years from the end of the financial year in which the order giving rise to a demand of any tax, interest, fine, penalty or any other sum, for the recovery of which the immovable property has been attached, has become conclusive under the provisions of section 245-T or, as the case may be, final in terms of the provisions of Chapter XX: Provided that where the immovable property is required to be re-sold due to the amount of highest bid being less 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould stand extended by one year. Sub-rule (2) of Rule 68B provides for exclusion of certain periods while computing the period of limitation. Sub-rule (3) makes special provision for cases where the immovable property is attached before 1.6.1992 and the order giving rise to the demand of tax, interest etc has also become conclusive and final before the said date. In such a situation, the period of limitation as referred to in sub-rule (1) would commence from 1.6.1992. This sub-rule, thus, makes it clear that the limitation provided under sub-rule (1) for sale of immovable property would apply also to the instances of attachment of immovable property and finalization of the tax demand which had occurred prior to 1.6.1992. In such a case, the starting point for computing the period of limitation would be 1.6.1992, that is the date on which the said Rule was inserted. Sub-rule (4) of Rule 68B provides that where the sale of immovable property is not made in accordance with the provisions of sub-rule (1), the attachment order in relation to the said property shall be deemed to have been vacated on the expiry of the time of limitation specified thereunder. 11. The explanatory n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he time limit specified. In the present case, Rule 68B would apply with full force. The attachment of the said immovable properties was ordered way back in the year 1997. The sale proclamation which was made in February, 2019 was thus, hit by the period of limitation prescribed under such Rule. By virtue of sub-rule (4) of Rule 68B therefore, upon completion of the period of limitation, the attachment would be deemed to have been vacated. The auction sale, therefore, could not have been carried out. 13. The learned single Judge of the Madras High Court in the decision in the case of V. Rajendran (supra) had on similar grounds set aside the sale proclamation making following observations:- Though the proclamation of sale was issued prior to March 31, 1996, the sale not having been held pursuant to the proclamation, despite the absence of any order of the court, which prevented the sale being held, no fresh proclamation can now be issued, as none of the circumstances visualized in the proviso to Rule 68B are attracted so as to extend the period. The relief to be granted to the petitioner has now to be moulded in the light of the circumstances as they ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 68B commences from 15.6.1994, then, the sale held on 30.3.2004 being beyond the period of limitation prescribed under 68B becomes invalid. The contention of the revenue that the petition suffers from delay is without any merit because, even before the sale was completed the petitioner had raised the point of limitation, but the same was rejected and the sale was confirmed. The writ petition was filed immediately thereafter on 31.5.2004 and, therefore, it cannot be said that the petition suffers from delay. 18. Accordingly, the petition succeeds. The sale of the immovable property held on 30.3.2004 beyond the period of limitation prescribed under rule 68B of the Second Schedule of the I.T. Act is quashed and set aside. We are not expressing any opinion as to whether the said immovable property can be attached again and sold for recovery of the dues, because, that is not an issue raise in this petition. However, we make it clear that setting aside the sale dated 30.3.2004 shall not affect the right of the revenue to recover its dues by adopting such procedure as is permissible in law. 16. Learned Addl. Solicitor General had, however, relied on certain decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s observed that Rule 68B of the IInd Schedule would not apply to the certificates issued prior to 1.6.1992. To this extent, we are unable to persuade ourselves to follow the same line. Sub-rule (3) of Rule 68B makes it clear that the limitation prescribed under sub-rule (1) would apply also to past instances, with necessary modification provided therein which we have already discussed earlier. 18. The consent given by the petitioner to sale the properties will not prevent her from pursuing their petition. Firstly, it was not an unconditional consent. In her letter dated 23.1.2019, she had raised the issue of owner charging of interest and or no-due certificate issued in the past. Her consent was thus subject to these objections. Further, the question of limitation would go to the root of the matter. If the auction was barred by limitation, the Department was prevented by law from carrying out the same. 19. Under these circumstances, we are of the opinion that by virtue of Rule 68B of the IInd Schedule, the impugned sale proclamation is barred by limitation. The same must be quashed. 20. Under the circumstances, the impugned sale proclamation is quashed. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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