Wp(Md)/7268/2014 Of S.sebastine v. The Commissioner Of Income Tax

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 22.04.2022CORAM: THE HONOURABLE MR.JUSTICE C.SARAVANAN W.P.(MD) No.7268 of 2014and S.Sebastine ... Petitioner 1.The Commissioner of Income Tax, Madurai. 2.The Joint Commissioner of Income Tax, Income Tax Office, 3[rd] Floor, 19-A, West Great Cotton Road, Thoothukudi 628 001. 3.The Tax Recovery Officer, Income Tax Office, Thoothukudi. ... Respondents PRAYER:Writ Petition filed under Article 226 of the Constitution ofIndia for issuance of Writ of Certiorari, calling for the recordsrelating to the impugned sale proclamation notice issued by the 3[rd]respondent dated 28.03.2014 and the consequential auction salenotice published on 21.04.2014 and quash the same. for M/s.Polax Legal Solutions ORDER The petitioner has challenged the impugned auction notice dated21.04.2014 on the strength of Rule 68B of the IInd Schedule to theIncome Tax Act, 1961. Rule 68B of the IInd Schedule to the IncomeTax Act, 1961 reads as under:- "68B.1) No sale of immovable property shall be madeunder this Part after the expiry of three years from the endof the financial year in which the order giving rise to ademand of any tax, interest, fine, penalty or any other sum,for the recovery of which the immovable property has beenattached, has become conclusive under the provisions ofsection 245-T or, as the case may be, final in terms of thehttps://hcservices.ecourts.gov.in/hcservices/provisions of Chapter XX: Provided that the Board may for reasons to be recordedin writing extend the aforesaid period for a further periodnot exceeding three years Provided that where the immovable property is requiredto be re-sold due to the amount of highest bid being lessthan the reserve price or under the circumstances mentionedin rule 57 or rule 58 or where the sale is set aside underrule 61, the aforesaid period of limitation for the sale ofthe immovable property shall stand extended by one year. (2) In computing the period of limitation under sub-rule (1), the period (i) during which the levy of the aforesaid tax,interest, fine, penalty or any other sum is stayed by anorder or injunction of any court; or (ii) during which the proceedings of attachment or saleof the immovable property are stayed by an order orinjunction of any court; or (iii) commencing from the date of the presentation ofany appeal against the order passed by the Tax RecoveryOfficer under this Schedule and ending on the day the appealis decided, shall be excluded: Provided that where immediately after the exclusion ofthe aforesaid period, the period of limitation for the saleof the immovable property is less than 180 days, suchremaining period shall be extended to 180 days and theaforesaid period of limitation shall be deemed to beextended accordingly. (3) Where any immovable property has been attachedunder this Part before the 1st day of June. 1992, and theorder giving rise to a demand of any tax. interest, fine,penalty or any other sum, for the recovery of which theimmovable property has been attached, has also becomeconclusive or final before the said date, that date shall bedeemed to be the date on which the said order has becomeconclusive or, as the case may be, final. (4) Where the sale of immovable property is not made inaccordance with the provisions of sub-rule (1), theattachment order in relation to the said property shall bedeemed to have been vacated on the expiry of the time oflimitation specified under this rule.". 2.At that time, when the cause of action arose, there was alimitation of three years within which sale of immovable propertywas to be made from the end of the financial year, in which theorder giving raise to demand of any tax, interest, fine, penalty orhttps://hcservices.ecourts.gov.in/hcservices/ (4) Where the sale of immovable property is not made inaccordance with the provisions of sub-rule (1), theattachment order in relation to the said property shall bedeemed to have been vacated on the expiry of the time oflimitation specified under this rule.". 2.At that time, when the cause of action arose, there was alimitation of three years within which sale of immovable propertywas to be made from the end of the financial year, in which theorder giving raise to demand of any tax, interest, fine, penalty orhttps://hcservices.ecourts.gov.in/hcservices/ other some for recovery of each immovable property had beenattached. This provision has been subsequently amended. As per theamended provision, the period of 3 years has been now enhanced to 7years with a further grace period of 3 years for reasons to berecorded in writing by the Board. 3.The facts of the case are that there was a survey on07.07.1999 in the business premises of the petitioner and thepetitioner's father, which culminated in a block assessment orderdated 27.06.2011. As per the block assessment order dated27.06.2011, the petitioner along with his father and the partnershipfirm were due for a sum of Rs.6,03,842/- as detailed below:- “The above defaulters are in tax arrears as under:- T.R.No.32011M/S Prabhat Chamber Bricks WorksRs.7,82,134/- T.R.No.32010Late.C.Sudalaimani Nadar Rs.13,50,761/- ” 4.The petitioner also appears to have paid a substantial amountof the tax due as detailed below:- 1Name of the assesseeS.Sebastin, Tuticorin 2Assessment YearBlock Period Ended 07.07.19993Amount of ArrearRs.2,88,802/- 4Tax paidRs.1,00,000/-5Period on which interest is01.03.2022 to 30.11.2013charged 6Amount of interest charged Rs.4,15,040/- 5.As per the proceedings of the 3[rd] respondent/the Tax RecoveryOfficer dated 20.11.2013 bearing Ref.T.R.No.31016/TRO/TTN, thepetitioner has paid the substantial amount of the tax that was duefrom the petitioner. However, the petitioner was liable to payinterest in terms of sub-Section 2 of Section 220 of the Income TaxAct, 1961. 6.The case of the petitioner is that the property was attachedon 17.02.2004 and therefore, the sale of the attached propertyshould have been made within three years from the date specified inRule 68b of the IInd schedule to the Act, whereas the impugnedattachment order is dated 28.03.2014 in ITCP-13. In this connection,the learned counsel for the petitioner has placed reliance on thedecision of this Court in the case of T.Subramanian Vs. Tax RecoveryOfficer, Ward-I (3), Tuticorin reported in (2017) 83 taxmann.com 229(Madras). https://hcservices.ecourts.gov.in/hcservices/ 7.The learned Senior Standing Counsel for the respondentssubmits that during the interregnum, the petitioner had the goldenopportunity to settle the case under the Vivad Se Vishwas Scheme,2020. However, the petitioner failed to take advantage of the sameand therefore, the petitioner is bound to pay interest. 8.The learned Senior Standing Counsel for the respondentsrelies on the same decision, wherein this Court has also observedthat even if the Department cannot proceed with the attachmentnotice, which was impugned therein, the petitioner therein was stillliable to pay tax and therefore, the rights of the Income TaxDepartment to recover the tax from the defaulting assessee by anyother notes cannot be curtailed. https://hcservices.ecourts.gov.in/hcservices/ 7.The learned Senior Standing Counsel for the respondentssubmits that during the interregnum, the petitioner had the goldenopportunity to settle the case under the Vivad Se Vishwas Scheme,2020. However, the petitioner failed to take advantage of the sameand therefore, the petitioner is bound to pay interest. 8.The learned Senior Standing Counsel for the respondentsrelies on the same decision, wherein this Court has also observedthat even if the Department cannot proceed with the attachmentnotice, which was impugned therein, the petitioner therein was stillliable to pay tax and therefore, the rights of the Income TaxDepartment to recover the tax from the defaulting assessee by anyother notes cannot be curtailed. 9.The learned Senior Standing Counsel for the respondentssubmits that in the reply affidavit filed in support of the presentwrit petition also, the petitioner has undertaken to pay the taxie., due from the petitioner. Therefore, there is no bar under theIncome Tax Act, 1961 on the Department from issuing a fresh order ofattachment in terms of Rules 4 and 48 of the IInd Schedule to theIncome Tax Act, 1961. It is further submitted that there is noembargo placed on the respondents from initiating fresh proceedingsfor recovery of arrears of tax due from the petitioner. In thisconnection, a reference was made to Rule 4 of the IInd Schedule tothe Income Tax Act, 1961. 10.I have considered the arguments advanced by the learnedcounsel for the petitioner and the learned Senior Standing Counselfor the respondents. 11.The facts are not in dispute. The property which was soughtto be attached is the property, which has come in the hands of thepetitioner pursuant to a partition deed dated 23.10.2000. This wasafter the search on 07.07.1999. The tax that was demanded from thepetitioner is for the block assessment period ie., from 08.07.1999to 23.10.2000. 12.Rule 4 of the IInd Schedule to the Income Tax Act, 1961makes it clear one of the alternate method for recovering the tax.Apart from attaching the property and bringing the property forsale, the Department can also arrest the defaulters and detain suchperson in prison or appoint a Receiver for the management of thedefaulter’s property both movable and immovable property. The taxliability of the petitioner does not get effaced by efflux of time.The Department can attach the property under Rule 48 r/w Rule 60 andbring the same property for sale in terms of the provisions of theIInd schedule to the Income Tax Act, 1961. 13.Even if Rule 68(b) contemplates no sale beyond the period oflimitation specified therein ie., 3 years during the period when thehttps://hcservices.ecourts.gov.in/hcservices/impugned proclamation of sale was issued on 28.03.2014 in Form ITCP- 13 does not mean that the Department cannot issue a fresh order ofattachment of the property. There are also other methods availableunder the Rules for recovering the tax due together with interest.Therefore, while I am inclined to allow this writ petition in thelight of the limitation prescribed in Rule 68(b) of the IIndschedule to the Income Tax Act, 1961, while giving liberty to therespondents to initiate proceedings to recover the tax due and theinterest thereon from the petitioner in terms of the otherprovisions of the aforesaid Rules including a fresh proceeding forattaching the subject property. 14.The writ petition stands allowed, in terms of the aboveobservation. No costs. Consequently, connected miscellaneouspetition is closed. Sd/-Assistant Registrar (CS-III) // True Copy // / /2022Sub Assistant Registrar(CS) mmTo 1.The Commissioner of Income Tax, Madurai.2.The Joint Commissioner of Income Tax, Income Tax Office, 3[rd] Floor, 19-A, West Great Cotton Road, Thoothukudi 628 001. 3.The Tax Recovery Officer, Income Tax Office, Thoothukudi. +1 CC to M/s.POLAX LEGAL SOLUTIONS, Advocate ( SR-20646[F] dated22/04/2022 ) 14.The writ petition stands allowed, in terms of the aboveobservation. No costs. Consequently, connected miscellaneouspetition is closed. Sd/-Assistant Registrar (CS-III) // True Copy // / /2022Sub Assistant Registrar(CS) mmTo 1.The Commissioner of Income Tax, Madurai.2.The Joint Commissioner of Income Tax, Income Tax Office, 3[rd] Floor, 19-A, West Great Cotton Road, Thoothukudi 628 001. 3.The Tax Recovery Officer, Income Tax Office, Thoothukudi. +1 CC to M/s.POLAX LEGAL SOLUTIONS, Advocate ( SR-20646[F] dated22/04/2022 ) W.P.(MD) No.7268 of 201422.04.2022 https://hcservices.ecourts.gov.in/hcservices/