Wp/8637/2003 Of S.v.gopala Rao v. The Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE NINTH DAY OF AUGUSTTWO THOUSAND AND FOUR PRESENT THE HON'BLE MR JUSTICE BILAL NAZKI and THE HON'BLE MR JUSTICE S.ANANDA REDDY WRIT PETITION NO : 8637 of 2003 Between: 1. S.V.Gopala Rao, S/o.late Venkata Rao, Aged about 69 years, Occ: Advocate, R/o.7-8, Velama Street, Near Gandhi Statue, Bobbili - 535 558, Vizianagaram Dist 2 S.Satish Kumar, S/o. S.V.Gopala Rao, Aged about 37 years, Occ: Teacher, R/o.7-8, Velama Street, Near Gandhi Statue, Bobbili - 535 558, Vizianagaram Dist 3 S.Venkata Ramana Rao, S/o. S.V.Gopala Rao, Aged about 32 years, Occ: Private employee, R/o.7-8, Velama Street, Near Gandhi Statue, Bobbili - 535 558, Vizianagaram Dist 4 S.Asiyamma, W/o. S.V.Gopala Rao, Aged about 62 years, House wife, R/o.7-8, Velama Street, Near Gandhi Statue, Bobbili - 535 558 Vizianagaram Dist 5 S.Bapayamma, W/o. late Venkata Rao, Aged about 85 years, R/o.7-8, Velama Street, Near Gandhi Statue, Bobbili - 535 558, Vizianagaram Dist ..... PETITIONERS AND 1 The Commissioner of Income Tax, Ayakar Bhavan, Dabagardens, Visakhapatnam. 2 The Tax Recovery Officer, Range-3, I.T. Department, Ayakar Bhavan, Dabagardens, Visakhapatnam. Ayakar Bhavan, Dabagardens, Visakhapatnam. 3 Paluri Satyam Naidu, S/o. Gowrinaidu, Major, Occ: Agriculture, Barli Village - 535 557, Balijipeta Mandal, Vizianagaram Dist Barli Village - 535 557, Balijipeta Mandal, Vizianagaram Dist 4 Tentu Satyanarayana, S/o. Bangarunaidu, Major, MIG-137, Vuda Phase II, Gandhinagar, Pedagantyada Visakhapatnam - 530 044. MIG-137, Vuda Phase II, Gandhinagar, Pedagantyada Visakhapatnam - 530 044. 5 Thummagunta Yamini Krishna S/o. Muralikrishna, Major, 15-25, F-Block Lakshminagar, Gopalapatnam PO, Visakhapatnam- 530 027 15-25, F-Block Lakshminagar, Gopalapatnam PO, Visakhapatnam- 530 027 6 Pogiri Krishna Rao, S/o. Papinaidu, Major, Raovari Street, Bobbili, Vizianagaram District - 535 558 Vizianagaram District - 535 558 7 Kumari Odisela Lakshmi, D/o. Arjuna Rao, Major, 4-181, Harijan Colony, Vidyanagar, Gopalapatnam, Visakhapatnam - 530 027 Visakhapatnam - 530 027 .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in thecircumstances stated in the Affidavit filed herein the High Court will be pleased toissue a writ or order or direction more particularly in the nature of Mandamus bycalling for the records relating to the sale proclamation in Form No. ITCP 13 videproceedings No.SR1/87-88/VZM/IT Dt.6/1/03 issued by the respondent No.2 hereinfor conducting auction on 19-02-2003 in respect of petitioners properties mentionedtherein, and also records relating to the confirmation of sale issued in Form No.ITCP 18 Dt.31/3/2003 in favour of the respondents 3 to 7 herein as auctionpurchasers of the said properties and declare the auction conducted on 19/2/2003by the respondent No.2 in respect of the petitioners properties mentioned in the saidsale proclamation issued in Form ITCP No. 13 vide proceedings No. SR 1/87-88/VZM/IT Dt.6/1/03 as arbitrary, illegal, without jurisdiction, barred by limitation andalso violative of Rule 68-B of Second schedule to the Income Tax Act, 1963, andconsequently declare the confirmation of sales in Form No. ITCP 18 Dt.31/3/2003issued by the respondent No.2 in favour of respondents 3 to 7 as null and void andpass such other order. Counsel for the Petitioner: Mr.N.R.Siva Swamy R-1: (Acknowledgment returned without signatuare.) None appeared Counsel for Respondent No.2: Mr. S.R. Ashok & M. Vijaya Saradhi Reddy.R-3: (Notice sent.) None appeared R-4: (Notice returned unserved.) None appeared Counsel for the Respondent No.5: Mr.D.L.Kiran Prakash R-6 & R-7: (Notice served.)None appeared. Counsel for the Petitioner: Mr.N.R.Siva Swamy R-1: (Acknowledgment returned without signatuare.) None appeared Counsel for Respondent No.2: Mr. S.R. Ashok & M. Vijaya Saradhi Reddy.R-3: (Notice sent.) None appeared R-4: (Notice returned unserved.) None appeared Counsel for the Respondent No.5: Mr.D.L.Kiran Prakash R-6 & R-7: (Notice served.)None appeared. The Court made the following: ORDER:(Per the Hon’ble BILAL NAZKI, J) Heard learned Counsel for both the parties and perused the record. The controversy is very short and mostly the material facts are not atdispute. The petitioners challenge a sale on the ground that the salewas affected beyond time. The dates which are material, as statedabove, are not in dispute. The order became final somewhere in1991-1992 and according to Rule 68-B of the Income Tax Act,1961(for short ‘the Act’), the order had to be deemed to have comeinto force from the end of the financial year in which the order givingrise to a demand of any tax, interest, fine, penalty or any other sumhad been attached and had become conclusive. As such, the timewould start running from 31-03-1993 since Rule 68-B of the Act itselfwas incorporated by the Finance Act, 1992 with effect from 01-06-1992. Therefore, 01-06-1992 was taken as a date for reference. Theassessment, in the present case, has been completed before 01-06-1992. In between, the department tried to auction the property butcancelled the auction because the price procured in such auctionwas not acceptable to the department. Therefore, the departmentclaimed one year’s further time in accordance with proviso to sub-rule 1 of Rule 68-B of the Act. The matter was also pending in the HighCourt and almost for a period of five years the High Court continuedthe stay. Therefore, the Senior Counsel appearing for therespondents submits that the time during which the stay of the HighCourt remain operative has to be excluded. He also contends thatone year’s further time has to be granted because in one of theauctions, the property was not sold. He further contends that therehas been amendment to Rule 68-B of the Act, vide notificationNo.9995 dated 01-03-1996, by which the period of three yearsmentioned in Rule 68-B of the Act has been extended to four years.Therefore, the auction, which was conducted on 19-02-2003 waswithin time, as the order had become conclusive by deemingprovision in Rule 68-B (3) of the Act by 31-03-1993. Learned Counsel for the petitioners does not dispute this factualposition but he contends that the so called amendment to Rule 68-Bby notification No.9995 could not be given effect to as it was ultravirus. He submits that Rule 68-B itself was inserted by the FinanceAct, 1992 by an Act of Parliament. An Act of Parliament could not beamended by any authority whatsoever much less by the Board underits powers under Section 119 of the Act. The Senior Counsel appearing for the respondents, on the otherhand, submits that under Rule 94 of the Act, the Board has power toissue circulars by removing difficulties. We failed to understand what difficulty was removed by theBoard by amending a provision which had been enacted by theParliament. Even otherwise, we have not seen any power underSection 119 of the Act, which gives any power to the Board to issuesuch notifications. Therefore, in our view, Rule 68-B (1) of the Act ason today lays down the period of three years alone and thenotification referred to by the respondents has no effect at all.Therefore, clearly the sale was carried beyond time and as such setaside. The writ petition is allowed. However, the respondents shall have liberty to take steps for recovery, if permissible in law. No order as tocosts. That Rule Nisi has been made absolute as above. Witness the Hon’ble Sri Devinder Gupta, the Chief Justice on this theNinth day the august of Two thousand and four. ________________ (BILAL NAZKI, J) ____________________ (S.ANANDA REDDY, J) Date: 09-08-2004 Ghn/da To The writ petition is allowed. However, the respondents shall have liberty to take steps for recovery, if permissible in law. No order as tocosts. That Rule Nisi has been made absolute as above. Witness the Hon’ble Sri Devinder Gupta, the Chief Justice on this theNinth day the august of Two thousand and four. ________________ (BILAL NAZKI, J) ____________________ (S.ANANDA REDDY, J) Date: 09-08-2004 Ghn/da To 1 The Commissioner of Income Tax, Ayakar Bhavan, Dabagardens, Visakhapatnam. Dabagardens, Visakhapatnam. 2 The Tax Recovery Officer, Range-3, I.T. Department, Ayakar Bhavan, Dabagardens, Visakhapatnam. Ayakar Bhavan, Dabagardens, Visakhapatnam. 3. Two CD copies.