M. Neelakantan and Others vs Tax Recovery Officer and Others

K.A. Swami C.J.

This is a case, in which the appellants have failed to comply with Clause (b) of the proviso to Rule 61 of the Second Schedule to the Income

Tax Act, 1961, relating to procedure for recovery of tax (hereinafter referred to as ""the rules of the Second Schedule""). The house property

bearing door No. 15, Kanda Filial Street, now known as Kandan Street, Chetpet, Madras-31, belonging to the late M. Natesan was attached and

sold in public auction on April 26, 1985, towards the realisation of the tax arrears of the aforesaid late M. Natesan. The widow of the late M.

Natesan filed an application under Rule 61 of the rules of the Second Schedule for setting aside the sale. However, she did not deposit the amount

recoverable from her late husband, M. Natesan, in the execution of the certificate. Therefore, the application was rejected by the Tax Recovery

Officer-V, Madras, in his proceedings T. R. No. 3020 of 1972-73, dated June 13, 1985. Hence, she approached this court in W. P. No, 7088 of

1985 (see DEVAKI AMMAL (DECD.) AND OTHERS Vs. TAX RECOVERY OFFICER AND OTHERS., , under Article 226 of the

Constitution, challenging the aforesaid order of the Tax Recovery Officer.

During the pendency of the writ petition, the petitioner, Devaki Ammal died. Therefore, the appellants herein were brought on record as her

legal representatives.

The learned single judge (see DEVAKI AMMAL (DECD.) AND OTHERS Vs. TAX RECOVERY OFFICER AND OTHERS., by the

order under appeal dismissed the writ petition on the ground that the requirement of Clause (b) of the proviso to Rule 61 of the rules of the Second

Schedule as to depositing the amount recoverable from the defaulter in execution of the certificate, had not been complied with. The learned single

judge (see DEVAKI AMMAL (DECD.) AND OTHERS Vs. TAX RECOVERY OFFICER AND OTHERS., also held that depositing the

amount of tax recoverable as per the tax recovery certificate from the late Natesan during the pendency of the writ petition could not be held to be

in accordance with Clause (b) of the proviso to Rule 61 of the Second Schedule, and, accordingly, dismissed the writ petition. Hence, this appeal.

Before us also it is submitted that during the pendency of the writ petition, the appellants have paid the entire arrears of Income Tax and the

same has been received by the Department; therefore, in equity, the first respondent should be directed to consider the application filed by the late

Devaki Ammal for setting aside the sale. Rule 61 of the rules of the Second Schedule provides for filing an application to set aside the sale of

immovable property on the ground of non-service of notice or irregularity. It reads thus :

Where immovable property has been sold in execution of a certificate, such Income Tax Officer as may be authorised by the Chief

Commissioner or Commissioner in this behalf, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty

days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that notice was not

served on the defaulter to pay the arrears as required by this Schedule or on the ground of a material irregularity in publishing or conducting the

sale :

Provided that-

(a) no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by

reason of the non-service or irregularity ; and

(b) an application made by a defaulter under this rule shall be disallowed unless the applicant deposits the amount recoverable from him in

execution of the certificate.

Thus, as per the aforesaid rule, if an immovable property is sold in execution of the certificate, the defaulter or any person, whose interests are

affected by such sale, is entitled to make an application within 30 days from the date of the sale, before the Tax Recovery Officer to set aside the

sale of the immovable property, either on the ground that notice was not served on the defaulter to pay the arrears as required by the Second

Schedule, or, that there was material irregularity in publishing or conducting the sale. The proviso thereto further imposes certain limitations on the

power of the Tax Recovery Officer to set aside the sale, and also prescribes a condition to be satisfied by the applicant seeking setting aside of the

sale. Clause (a) of the proviso states that no sale can be set aside unless the Tax Recovery Officer is satisfied that the applicant seeking setting

aside of the sale has sustained substantial injury by reason of non-service of notice on the defaulter to pay the arrears as required by the Second

Schedule or that the material irregularity, in publishing or conducting the sale has resulted in causing substantial injury to the applicant, who may be

the defaulter or any person whose interests are affected by the sale. Clause (b) of the proviso imposes a condition on the applicant that he should

deposit the amount recoverable from the defaulter in the execution of the certificate. The condition prescribed by Clause (b) of the proviso has to

be fulfilled before the application for setting aside the sale comes up before the Tax Recovery Officer for consideration. In the instant case, the late

M. Natesan/defaulter/predecessor-in-title of the applicants was in arrears of Rs. 9,66,750. The immovable property in question was attached and

sold for a sum of Rs. 79,500 in public auction, which was concluded in favour of the third respondent. The applicant did not deposit the amount

recoverable from the defaulter in the execution of the certificate, even on the date of disposal of the application for setting aside the sale, by the Tax

Recovery Officer. Though Rule 61 prescribes the period of 30 days from the date of sale for making an application to set aside the sale, it does

not in specific terms state that such an application should be accompanied by the deposit of the amount recoverable from the defaulter in execution

of the certificate. The words used in Clause (b) of the proviso to Rule 61 are that ""an application"" shall be disallowed unless the applicant deposits

the amount recoverable from him in the execution of the certificate. Therefore, it is not necessary that the amount should be deposited along with

the application. It is permissible to deposit the amount before the application is taken up for the first time for consideration. However, in the instant

case, the deposit of the amount recoverable from the defaulter in the execution of the certificate was not deposited before the application was

taken up for consideration. Therefore, it was dismissed for not complying with the condition as to the deposit of the amount. The amount has come

to be deposited only during the pendency of the writ petition. Such a deposit cannot be considered to be in conformity with the requirement of

Rule 61 of the Second Schedule so as to enure to the benefit of the applicant. Hence, we see no reason to interfere with the order of the learned

single judge (see DEVAKI AMMAL (DECD.) AND OTHERS Vs. TAX RECOVERY OFFICER AND OTHERS., . The appeal is,

accordingly, rejected. The C. M. Ps. are also rejected. No order as to costs.