Rp/886/2016 Of Mohammed Niyas v. The Income Tax Commissioner

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN WEDNESDAY, THE 9TH DAY OF NOVEMBER 2016/18TH KARTHIKA, 1938 RP.No. 886 of 2016 (C) --------------------------------- AGAINST THE JUDGMENT IN W.P(C).NO. 27423/2013, DATED 11.08.2016-------------- REVIEW PETITIONER(S)/PETITIONER IN W.P(C) : ----------------------------------------------------------------------- MOHAMMED NIYAS, AGED 46 YEARS, S/O. LATE YAHIYA KOYA, NIAZ MANZIL, KANNIMELCHERY, KILIKOLLOOR P.O., KOLLAM. BY ADVS. SRI.A.RAJASIMHAN SRI.K.NIRMALAN RESPONDENT(S)/RESPONDENT IN W.P(C) : ----------------------------------------------------------------- 1. THE INCOME TAX COMMISSIONER AAYAAGHAR, KAUDIAR, THIRUVANANTHAPURAM- 695 003. AAYAAGHAR, KAUDIAR, THIRUVANANTHAPURAM- 695 003. 2. THE INCOME TAX OFFICER, CENTRAL CIRCLE INCOME TAX OFFICE, THIRUVANANTHAPURAM- 695 001. CENTRAL CIRCLE INCOME TAX OFFICE, THIRUVANANTHAPURAM- 695 001. 3. THE INCOME TAX RECOVERY OFFICER, INCOME TAX OFFICE, KALAPANA PAYIKKADA ROAD, QUILON- 691 004. INCOME TAX OFFICE, KALAPANA PAYIKKADA ROAD, QUILON- 691 004. 4. HIND SHERIF, D/O. LATE SHAHUL HAMEED, ZAVAD MANZIL, 2ND MILE STONE, KANNIMEL, KILIKOLOOR P.O., KOLLAM- 691 004. D/O. LATE SHAHUL HAMEED, ZAVAD MANZIL, 2ND MILE STONE, KANNIMEL, KILIKOLOOR P.O., KOLLAM- 691 004. 5. ZAVAD SHERIF, S/O. LATE N.H.SERIEF, ZAVAD MANZIL, 2ND MILE STONE, KANNIMEL, KILIKOLOOR P.O., KOLLAM- 691 004. S/O. LATE N.H.SERIEF, ZAVAD MANZIL, 2ND MILE STONE, KANNIMEL, KILIKOLOOR P.O., KOLLAM- 691 004. 6. ANFAZ SHERIF, S/O. LATE N.H.SHERIFF, ZAVAD MANZIL, 2ND MILE STONE, KANNIMEL, KILIKOLOOR P.O., KOLLAM- 691 004. S/O. LATE N.H.SHERIFF, ZAVAD MANZIL, 2ND MILE STONE, KANNIMEL, KILIKOLOOR P.O., KOLLAM- 691 004. 7. FOUSIYA ARSHAD, W/O. ARSHAD, KANNAKARA PUTHENVEEDU, KILIKOLOOR P.O., KOLLAM- 691 004. W/O. ARSHAD, KANNAKARA PUTHENVEEDU, KILIKOLOOR P.O., KOLLAM- 691 004. RP.No. 886 of 2016 (C) --------------------------------- * ADDITIONAL R8 & R9 IMPLEADED 8.K.SOMASUNDARAM, KESAVAVILASOM BUNGLOW, KIDANGIL LANE,RAJADHANI NAGAR-39, MANGAD, KILIKOLLOOR,KOLLAM DISTRICT, PIN- 691 004. 9.S.VENUGOPAL, KESAVAVILASOM BUNGLOW, KIDANGIL LANE,RAJADHANI NAGAR-39, MANGAD, KILIKOLLOOR. ADDITIONAL R8 & R9 ARE IMPLEADED AS PER ORDER DATED 28.10.2016 IN I.A.NO. 491 OF 2016. R1 TO R3 BY ADV. SRI.JOSE JOSEPH, S.C, FOR INCOME TAX R4 TO R7 BY ADV. SRI.JACOB SEBASTIAN THIS REVIEW PETITION HAVING BEEN FINALLY HEARD ON 09-11-2016, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Msd. RP.No. 886 of 2016 (C) --------------------------------- APPENDIX PETITIONER(S)' ANNEXURES : ANNEXURE A1: TRUE COPY OF THE ORDER DATED 09.09.2016 CERTIFIED COPY OF THE JUDGMENT IN W.P(C).NO. 27423 OF 2013DATED 11.08.2016. RESPONDENT(S)' ANNEXURES : NIL //TRUE COPY// P.S.TO JUDGE Msd. K. Vinod Chandran, J -------------------------------------------------------------------- R.P.No.886 of 2016 in W.P.(C) No.27423 of 2013-C ---------------------------------------------------------------------- Dated this the 09[th] day of November, 2016 ORDER R1 TO R3 BY ADV. SRI.JOSE JOSEPH, S.C, FOR INCOME TAX R4 TO R7 BY ADV. SRI.JACOB SEBASTIAN THIS REVIEW PETITION HAVING BEEN FINALLY HEARD ON 09-11-2016, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Msd. RP.No. 886 of 2016 (C) --------------------------------- APPENDIX PETITIONER(S)' ANNEXURES : ANNEXURE A1: TRUE COPY OF THE ORDER DATED 09.09.2016 CERTIFIED COPY OF THE JUDGMENT IN W.P(C).NO. 27423 OF 2013DATED 11.08.2016. RESPONDENT(S)' ANNEXURES : NIL //TRUE COPY// P.S.TO JUDGE Msd. K. Vinod Chandran, J -------------------------------------------------------------------- R.P.No.886 of 2016 in W.P.(C) No.27423 of 2013-C ---------------------------------------------------------------------- Dated this the 09[th] day of November, 2016 ORDER The petitioner, a subsequent purchaser of a property ofa defaulted assessee, under the Income Tax Act, 1961, was beforethis Court challenging the auction sale conducted in pursuance tothe steps for recovery taken under Schedule-II of the Income TaxAct. The petitioner sought interdiction of the confirmation of sale forreason of the default committed by the purchaser in paying theamounts in accordance with Rule 58 of Schedule II of Income TaxAct. This Court found that the sale was bad and in suchcircumstance of the sale having been set aside, the Income Taxauthorities had a charge on the property for which they could haveproceeded with a fresh sale. On equitable consideration, it wasopined by this Court that the petitioner being a subsequentpurchaser from the defaulter under the Income Tax Act if settling theentire dues, could then obtain unencumbered title of the propertywhich was put up for sale. RP.886 of 2016 in WP(C).27423 of 2013 2. The petitioner has now come forth with a contention that the petitioner was not aware of any other outstanding liabilitiesthan that for which the properties were then attached. The writpetition was disposed of and now the petitioner is faced withAnnexure A1 notice, demanding amounts due for the years 1982-83and 1983-84 in addition to that of 1977-78 and 1978-79; which alonewas the defaulted amounts for which attachment was originallymade. The submission of the learned Counsel appearing for thepetitioner is that the petitioner's undertaking was only for the paymentof the dues for which attachment of the property was made and therecould be no further dues mulcted on the property. 3. For one, it has to be noticed that the petitioner had filed the writ petition specifically with prayer No.(iii), which reads as under: “(iii) issue a writ of mandamus or order directing the 2[nd]respondent to permit the petitioner to pay the outstandingincome tax liability by 6 monthly installments”.respondent to permit the petitioner to pay the outstandingincome tax liability by 6 monthly installments”. Hence, the outstanding income tax liability of the defaulter wasundertaken to be paid. The learned Counsel for the petitioner would RP.886 of 2016 inWP(C).27423 of 2013 contend that, what was intended was only the liability for which theattachment was made. However, this Court considered theundertaking and has not restricted it nor can it be so restricted forreason of there being a statutory charge on the property. If the salehad not taken place, then necessarily the subsequent liabilities wouldalso be a charge on the property. If the sale has taken place andthere was balance remaining after adjustment of the dues relating tothe certificate of attachment, the Income Tax authorities would beentitled to recover all dues existing as on the date of sale under Rule8 of Schedule II. 4. In the present case, this Court had merely, on equitable RP.886 of 2016 inWP(C).27423 of 2013 contend that, what was intended was only the liability for which theattachment was made. However, this Court considered theundertaking and has not restricted it nor can it be so restricted forreason of there being a statutory charge on the property. If the salehad not taken place, then necessarily the subsequent liabilities wouldalso be a charge on the property. If the sale has taken place andthere was balance remaining after adjustment of the dues relating tothe certificate of attachment, the Income Tax authorities would beentitled to recover all dues existing as on the date of sale under Rule8 of Schedule II. 4. In the present case, this Court had merely, on equitable consideration, directed payment of the outstanding dues so as toenable the petitioner to get the property. If the petitioner does notclear the outstanding liability, then necessarily the property wouldhave to be put for sale; in which the petitioner would also be entitledto participate. There cannot be any fault found on the Income Taxdepartment seeking for deposit of the entire amounts due from thedefaulter and it is for the petitioner to decide as to whether the RP.886 of 2016 inWP(C).27423 of 2013 payment of the demanded amounts would be worthwhile; withreference to the value of the property and if not, definitely the nextoption is participation in the sale conducted by the department. 5. It has also to be noticed that the review filed is for amodification of the judgment insofar as restricting the liability to onlythat mulcted on the property at the time of sale by virtue of theattachment alone. This would not come within the contours of review,as has been held in State of WB v. Kemal Sengupta [(2008) 8 SCC612]. Further if the property is worth more than that liability and thereare other amounts remaining due from the defaulter, thepredecessor-in-interest, then necessarily the tax authorities would befurther entitled to make a fresh attachment and sale. The review petition fails and it is accordingly dismissed. vku/- Sd/-K.Vinod ChandranJudge. [ true copy ]