Wp/15388/2000 Of Sri Dhanji Ramji Chheda v. Income Tax Department

THE HON’BLE SRI JUSTICE BILAL NAZKI AND THE HON’BLE SRI JUSTICE S.ANANDA REDDY WRIT PETITION Nos. 15388 & 15449 of 2000 08-12-2005Between: Shri. Dhanji Ramji Chheda & another. AND ..... PETITIONERS Income Tax Department, Tax Recovery officer-II, Hyderabad & Others. .....RESPONDENTS THE HON’BLE SRI JUSTICE BILAL NAZKI AND THE HON’BLE SRI JUSTICE S. ANANDA REDDY WRIT PETITION Nos. 15388 & 15449 of 2000 COMMON ORDER:(Per Hon’ble Sri Bilal Nazki, J) Heard learned counsel for the parties. These two writ petitions are disposed of by this common order,as they are inter-connected. Writ petition No.15449 of 2000 was filed by the Bank and themain respondent is The Tax Recovery Officer-II, Income TaxDepartment. Notice of auction of the property of the writ petitioner inwrit petition No.15388 of 2000, is challenged in both the writ petitions. The case of the petitioner in writ petition No.15449 of 2000 isthat the property was mortgaged to the Bank and the Bank hadadvanced loan to the owner as early as on 01.07.1996. The borrowerbecame a defaulter and an O.A. was filed, being O.A.No.237 of 1999by the Bank before The Debts Recovery Tribunal, Bangalore. Thiswas transferred to Hyderabad and was registered as O.A.No.1971 of1999. An order of injunction not to alienate the property, was passedon 31.03.1999. On 21.6.2000, Tax Recovery Officer issued a noticeto the Bank to file objections on or before 27.06.2000 as to why theproperty be not attached, as the owner of the property was in arrearsof Income Tax. Without passing any order, after considering theobjections of the Bank, impugned notice was issued on 06.08.2000. Whether a property, which is mortgaged and a charge iscreated in favour of the Bank, could be sold for arrears of Income Taxor not, would have been the main question ought to have beendecided. In the counter-affidavit, the respondent No.1 has stated thatthe Bank’s objections were received and therefore, in the sale notice,it was stated that the property in question was mortgaged to theBank. That would not amount to deciding the objections made by theBank. The Income Tax authorities were bound to consider theobjections of the Bank, which had an interest in the property, as it hadadvanced huge amounts to the owner by way of loan. In view ofthese submissions in the counter, we feel that the question whetherthe Income Tax authorities could attach and sell the property, whichwas mortgaged to the Bank, may not be necessary to be decided at this stage, as the Tax Recovery Officer has not so far taken adecision over the objections made by the Bank. Therefore, while setting aside the auction notice, we direct therespondent No.1 to dispose of the matter by considering theobjections filed by the Bank. He may pass appropriate orders inaccordance with law within a period of two weeks from the date ofreceipt of a copy of this order, after giving notice to the Bank. Now, coming to writ petition No.15388 of 2000, the petitioner isadmittedly a defaulter with the Bank and also is liable towards theIncome Tax, therefore, we do not consider that he is entitled to anyrelief from this Court. However, since the auction notice has alreadybeen quashed in writ petition No.15449 of 2000, no further orders arenecessary to be passed in this writ petition. Accordingly, writ petition No.15449 of 2000 is allowed, while writpetition No.15388 of 2000 is dismissed. No order as to costs. ___________________ (BILAL NAZKI, J) 8[th] December 2005 _____________________ (S.ANANDA REDDY, J) ajr