V.M. Dakshinamoorthy Mudaliar vs Tax Recovery Officer and others

Bakthavatsalam, J.—The petitioner has come up to this court praying for the issue of a certiorarified mandamus to call for the record of the

petitioner on the file of the first respondent TR. Nos. 815 to 819/1984-85 34 to 38/1987-88 and No. 6/11/1989-90 and quash the impugned

order dated December 17, 1991, and consequently, direct the respondents to grant the certificate u/s 230A of the Income Tax Act, 1961.

The petitioner entered into an agreement with his own sons for sale of the ground situate in No. 9, Greenways Road, Madras-28, for a sum of

Rs. 14 lakhs and filed an application u/s 230A of the Income Tax Act requesting them to grant a certificate for the purpose of the Income Tax. On

an earlier occasion, the petitioner, has come up to this court in Writ Petition No. 2895 of 1989. After taking of notice by Mr. C. K. Rajan, learned

counsel for the Income Tax Department, and by consent of both parties, S. Ramalingam J., by order March 22, 1989, in the aforesaid writ

petition, has granted a week''s time to pay a sum of Rs. 5,00,000 (rupees five lakhs) and further ordered that the balance should be paid within a

period of two months from the said date of order and that if there is any default in observing any of the conditions, the Revenue is entitled to

proceed further with the recovery proceedings. In that case, the learned judge has further directed that if the petitioner makes an application u/s

230A of the Income Tax Act, the respondents could pass orders on that application. Later on, the petitioner came up before this court by way of a

writ petition W. P. No. 15207 of 1991 - Sri. V. M. Dakshinamoorty Mudaliar v. Asst. CIT - praying for a writ of mandamus to direct the first

respondent to pass an order on the pending application dated March 7, 1990, for granting a certificate to the petitioner u/s 230A of the Income

Tax Act. In that case, by an order dated October 30, 1991, this court directed the first respondent herein toe consider the application of the

petitioner u/s 230A of the Income Tax Act and pass orders on merits, taking note of the order of Shri S. Ramalingam J., cited supra, on or before

November 30, 1991. The Assistant Commissioner of Income Tax, City Circle-IV(2), Madras, the second respondent herein passed an order on

November 28, 1991, on the application of the petitioner u/s 230A of the Income Tax Act, refusing to grant as the transfer of property will be

prejudicial to the interests of the Revenue for the reasons that there ware huge arrears outstanding and that the petitioner has not complied with the

orders of S. Ramalingam J., dated March 22, 1989, in W. P. No. 2895 of 1989 - V. M. Dhakshinamurthy Mudaliar v. Settlement Commissioner.

This order has become final. When the said property is brought to sale and proclamation is issued under rules 38 and 32(2) of the second

Schedule to the Income Tax Act, 1961, and the date of auction is fixed on January 20, 1992, the petitioner is before me with the aforesaid prayer.

In the affidavit, the petitioner alleges that there are discrepancies with regard to the calculation of arrears. It is pointed out in the affidavit that the

value of the property is fixed at Rs. 16 lakhs on August 31, 1987, and that the property is worth more than Rs. 40 lakhs according to the present

market value. In the affidavit, an undertaking has also been given by the petitioner that he will not sell the property till the writ petition is disposed

of.

Notice of motion has been ordered by me on January 6, 1992. Mr. N. V. Balasubramaniam, junior standing counsel for the Income Tax cases,

appears for the respondents.

Learned counsel appearing for the respondents on instructions brought to the notice of this Court that right from the years 1971-72 to 1988-89,

the assessment of tax due is Rs. 32,93,250 and the interest due under sections 220 and 199 of the Income Tax Act is Rs. 21,57,060 and in all the

total arrears is Rs. 54,40,310.

Mr. P. P. S. Janarthana Raja, learned counsel for the petitioner, contends that, if the respondent-Department gives a certificate u/s 230A of the

Income Tax Act, is will be easier for the petitioner to sell the property and pay the arrears due. According to learned counsel appearing for the

petitioner, it is not necessary for the Government to bring the property to auction; if the property is sold in auction the value of the property will be

very low and, on the other hand, the petitioner can get a very good market value if a certificate is issued u/s 230A of the Income Tax Act.

According to learned counsel, the petitioner is even prepared to mortgage the property and pay the arrears outstanding as on date as stated above.

Learned counsel submits before the court that if the only property of the petitioner is brought to auction and the sale proceeds are allowed to be

taken away by the Income Tax Department, it will be much against the interest of the petitioner and if ultimately the interest levied u/s 220 and 199

of the Income Tax is waived, the petitioner would not have any remedy at all.

I have considered the arguments of Mr. P. P. S. Janarthana Raja, learned counsel for the petitioner, and or Mr. N. V. Balasubramaniam, Junior

standing counsel for the Income Tax Department. I have also perused the statement of accounts produced by learned counsel for the respondent-

Department with regard to the arrears due by the petitioner to the Department. Having given due consideration to the arguments of learned counsel

on both sides and on a perusal of the affidavit and the relevant materials available, I am not able to agree with the argument of learned counsel for

the petitioner than a certificate u/s 230A of the Income Tax Act can be issued at this situation. A reading of the section clearly shows that, unless

the Income Tax Officer is satisfied with certain conditions which are set out in section 230A of the Income Tax Act, this court cannot direct the

respondents-Department to issue a certificate u/s 230A of the Act. When construing the provisions of section 230A of the Act, the observation of

Rowlatt J. in Cape Brandy Syndicate v. IRC [1921] 1 KB 64; [1921] 2 KB 403, has to be kept in mind. In the above mentioned decision,

Rowlatt J. has observed as follows :

. . . . . . in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. Nothing is to be read in and nothing is

to be implied. One can only look fairly at the language used. . . . . .

The above mentioned statement of Rowlatt J., has been approved in many cases by the apex court of this land. So, I am not able to accept the

arguments of learned counsel for the petitioner that the petitioner should be granted a certificate so as to enable him to sell the property. In my

view, such a certificate could not be issued. So, the petitioner herein is praying for an impossibility.

Coming to the merits of the case, the vendee seems to be the son of the petitioner and the agreement of sale will be for Rs. 14 lakhs. I do not

understand how the petitioner is going to clear the entire arrears of Income Tax even if a certificate u/s 230A of the Income Tax Act is issued to

the petitioner. So I am fully satisfied that this court should not interfere with the proceedings at this stage. Learned counsel for the petitioner made a

suggestion before this court that the property can be mortgaged and the mortgagee can be asked to pay the amount directly to the respondents.

Department and that will satisfy the Department in so far as the tax arrears of the petitioner is concerned. The petitioner has come up before this

court in W. P. No. 2895 of 1989 and has got an order dated March 22, 1989, passed by S. Ramalingam J., with certain conditions. As stated in

the earlier portion of this order, the petitioner has not complied with the said conditions and when the Revenue seeks to recover the arrears, the

petitioner, in my view, wriggles out of the situation on some pretext or other. In the interests of the Revenue, it cannot be done. However, when the

aforesaid suggestion made by learned counsel for the petitioner is put to learned counsel appearing for the respondents-Department, he fairly states

that the petitioner can approach the Commissioner of Income Tax, Madras, with his request which is not at all pleaded before this court by the

petitioner in such a manner. Taking into consideration, the facts and circumstances of the case and the fact that there are huge tax arrears to be

paid by the petitioner to the Department and also not to deprive the petitioner from getting the present market value for his property, I am of the

view that the only course open to the petitioner is to approach the Commissioner of Income Tax, after getting hold of a person who agrees to pay

the amount so that once the arrears are paid, the Department may consider the grant of a certificate u/s 230A of the Income Tax Act. A Division

Bench of this court in T.T. Krishnamachari Vs. Income Tax Officer, Collection Branch and Another, , while considering the scope of issuing a

certificate u/s 230A of the Act has held that a person cannot claim clearance from the Income Tax authorities before the sale is concluded. As

such, this should also be taken note of by the respondents-Department when considering the request of the petitioner. As I have already stated, in

the interests of the Revenue as well as to safeguard the interest of the petitioner, a via media can be struck at this point of time, i.e., by asking the

petitioner to approach the Commissioner with a concrete proposal of mortgage and a person who is prepared to pay the entire amount of tax

arrears to the Department. If it is done, I think the respondents-Department can consider the question of granting a certificate u/s 230A of the

Income Tax Act. As such though I am not inclined to set aside the proclamation made in this case, to give some time to the petitioner, I direct the

third respondent herein to consider the proposal of the petitioner, if the petitioner approaches the Commissioner of Income Tax, the third

respondent herein, with the proposal for mortgaging the property, provided the petitioner satisfies the condition of paying the arrears without

disputing the quantum as it stands today. As such, instead of granting the prayer as asked for, since this court can mould the prayer to suit the

occasion, a direction is to issue to the third respondent to consider the proposal of the petitioner if made by the petitioner as stated above, and

pass appropriate orders on or before February 20, 1992. Till then the question of proclamation shall stand stayed; if there is no proposal, it is open

to the respondents to proceed further to realise the arrears. The writ petition is ordered accordingly. However, there will be no order as to costs.