Sala Satish Kumar and Others vs Chief Commissioner of Income Tax and Others

S.R. Nayak, J.—Petitioners Nos. 1 to 4, i.e., son, mother, wife and son, respectively, are the legal representatives of the assessee, namely, one Sri S. V. Gopal Rao. On January 27, 1983, a search was conducted in the business premises of S. V. Gopal Rao and that culminated in substantial demands for the assessment years 1982-83 to 1984-85 directing the asses-see, to pay a sum of Rs. 14,50,000 towards Income Tax and Rs. 10,000 towards penalty. The assessee preferred an appeal before the Tribunal and the same was also dismissed on July 17, 1990. Even before the Tribunal disposed of the appeal, in the year 1987, the third respondent passed an order attaching various immovable properties of the petitioners for recovery of the outstanding tax. The petitioners herein filed objections contending that the attached properties are not liable to be attached and they belong to the Hindu undivided family. The objections filed by the petitioners were rejected by the third respondent on March 5, 1990. The sale proclamation was issued and finally the sale was conducted on July 18, 1905. Hence, this writ petition.

In this writ petition a mandamus is sought declaring the action of the third respondent in auctioning the attached immovable properties vide proceedings No. 1/87-88/SIC/IT/VSP dated July 31, 1987, as illegal, void and arbitrary and also the same is barred by limitation and violative of Rule 68B of the Second Schedule to Income Tax Act, 1961 (for short "the Act").

In response to rule nisi, the respondent authorities have filed a counter affidavit opposing the claim of the petitioners. The two contentions placed before us in support of the writ petition by Smt. M. Bhaskara Lakshmi, learned counsel for the petitioners, are that : (i) before the third respondent issued the sale proclamation no notice was served on the petitioners ; (ii) that the sale conducted on July 18, 1995, is barred by limitation having due regard to the provisions of Rule 68B of the Second Schedule to the Act.

We do not find any merit in either of the two contentions. It is a matter of record that all the petitioners filed objections before the third respondent against the attachment order and the objections were considered and rejected. Therefore, it cannot be said that the sale proclamation was issued in violation of the principles of natural justice and fair play in action.

Coming to the second contention, it is apt to notice the relevant provisions of Sub-rules (1) and (3) of rule 68B of the Second Schedule to the Act.

"68B. (1) No sale of immovable property shall be made under this Part after the expiry of three years from the end of the financial year in which the order giving rise to a demand of any tax, interest, fine, penalty or any other sum, for the recovery of which the immovable property has been attached, has become conclusive under the provisions of section 245-I or, as the case may be, final in terms of the provisions of Chapter XX : ...

(3) Where any immovable property has been attached under this Part before the 1st day of June, 1992, and the order giving rise to a demand of any tax, interest, fine, penalty or any other sum. for the recovery of which the immovable property has been attached, has also become conclusive or final before the said date, that date shall be deemed to be the date on which the said order has become conclusive or, as the case may be, final."

The language employed in Sub-rule (3), in our considered opinion, is precise, unambiguous and does not admit of more than one meaning. In the instant case, having due regard to the provisions of Sub-rule (3) the relevant financial year is 1992-93 for the purpose of computation of limitation, and that financial year came to an end by March 31, 1993. If the period of three years was to be reckoned from that date, that period would expire on March 31, 1996, whereas admittedly the sale was conducted on July 18, 1995. Therefore, the contention that the sale was conducted beyond the prescribed period of three years is untenable.

In the result, the writ petition is dismissed. No costs. However, this order shall not preclude the petitioners from instituting a suit as envisaged under Rule 11(6) of the Second Schedule to the Act in accordance with law.