Allahabad High Court
Subash Chandra Goyal vs Tax Recovery Officer And Ors. on 26 February, 2002
Equivalent citations: [2002]255ITR289(ALL)
Author: R.B. Misra
Bench: R.B. Misra
JUDGMENT R.B. Misra, J.
1. By this writ petition, a prayer has been made for quashing the order dated November 22, 1999 (annexure 16), passed by the Commissioner of Income-tax (Tax Recovery), Agra, purported to have been passed under Rule 86(1) of the Second Schedule to the Income-tax Act, 1961 (in short called "the Act of 1961") .
2. I heard Sri Rajesh Kumar, learned counsel, for the petitioner, as well as Sri A. N. Mahajan, learned standing counsel, for the respondents.
3. The brief facts necessary for adjudication of the case are that for realisation of demand outstanding against the assessee, for the assessment year 1987-88 Rs. 6,10,650, the assessment year 1990-91 Rs. 6,63,506, the assessment year 1991-92 Rs. 17,94,783, the assessment year 1992-93 Rs. 39,002, the TRO-1, Agra (Tax Recovery Officer) auctioned a shop situated in Sanjay Place, Agra, bearing No. 44/2/108 on March 19,1997, for Rs. 2,72,000. Against this auction, the assessee has filed an application to this office on April 1,1997 for cancellation of the auction raising certain objections and prayed that the order of the Tax Recovery Officer be set aside. The Tax Recovery Officer by his order dated July 2, 1997 (annexure 10), passed a detailed order against which the petitioner has preferred an appeal under Rule 86(1) of the Act of 1961 before the Commissioner of Income-tax, Agra, who by his order dated November 22, 1999, dismissed the appeal with the following observation :
"Rule 86(1) provides that appeal against the Tax Recovery Officer's order lies only if the Tax Recovery Officer's order has not become conclusive. In this particular case, it is observed that the order confirming the sale has been passed by the TRO-1, Agra, under Rule 63(1) of the Second Schedule to the Income-tax Act, 1961, on July 2, 1997, and the sale certificate under Rule 65(1) of the Second Schedule to the Income-tax Act, 1961, has also been given on July 2,1997. Therefore, the order of the Tax Recovery Officer has become conclusive and no interference under the law can be done now. In view of the matter, the assessee's appeal is dismissed."
4. Learned counsel for the petitioner, Sri Rajesh Kumar, has contended that the order dated July 2, 1997, passed by the Tax Recovery Officer is not conclusive order but it is an original order against which the appeal lies under Rule 86(1) of the Second Schedule to the Act of 1961. Rule 86 of the Act of 1961 is as below :
"86. (1) An appeal from any original order passed by the Tax Recovery Officer under this Schedule, not being an order which is conclusive, shall lie to the Chief Commissioner or Commissioner.
(2) Every appeal under this Rule must be presented within thirty days from the date of the order appealed against.
(3) Pending the decision of any appeal, execution of the certificate may be stayed if the appellate authority so directs, but not otherwise.
(4) Notwithstanding anything contained in Sub-rule (1), where a Chief Commissioner or Commissioner is authorised to exercise powers as such in respect of any area, then, all appeals against the orders passed before the date of such authorisation by any Tax Recovery Officer authorised to exercise powers as such in respect of that area, or an area which is included in that area, shall lie to such Chief Commissioner or Commissioner."
5. Under Part I of the Second Schedule to the Act of 1961 is provided "10. Property exempt from attachment. --(1) All such property as is by the Code of Civil Procedure, 1908 (5 of 1908), exempted from attachment and sale in execution of a decree of a civil court shall be exempt from attachment and sale under this Schedule.
(2) The Tax Recovery Officer's decision as to what property is so entitled to exemption shall be conclusive."
6. For reference Rules 63 and 65, Schedule II, of the Income-tax Act read as below :
"63. (1) Where no application is made for setting aside the sale under the foregoing Rules or where such an application is made and disallowed by the Tax Recovery Officer, the Tax Recovery Officer shall (if the full amount of the purchase money has been paid) make an order confirming the sale, and, thereupon, the sale shall become absolute.
(2) Where such application is made and allowed, and where, in the case of an application made to set aside the sale on deposit of the amount and penalty and charges, the deposit is made within thirty days from the date of the sale, the Tax Recovery Officer shall make an order setting aside the sale :
Provided that no order shall be made unless notice of the application has been given to the persons affected thereby."
"65. Sale certificate. --(1) Where a sale of immovable property has become absolute, the Tax Recovery Officer shall grant a certificate specifying the property sold, and the name of the person who at the time of sale is declared to be the purchaser.
(2) Such certificate shall state the date on which the sale became absolute."
7. Learned counsel for the petitioner has placed reliance on Balkisandas v. Additional Collector [1977] 106ITR 77 (Bom), where it was held that the terms of Rule 86 of Schedule II to the Income-tax Act, 1961, show that appeals from the orders of the Tax Recovery Officer would lie except from those orders which are conclusive. Though when a sale is confirmed under Rule 63(1) of the Second Schedule by the Tax Recovery Officer, the sale is treated as absolute, it does not make the order itself conclusive. To take away the right of appeal, it should be the order which is conclusive, and not the factum of sale. The right of appeal in terms is provided against orders which are termed as original orders of the Tax Recovery Officer. There could be no doubt that an order confirming the sale would be an original order subject to appeal under the provisions of Rule 86.
8. On the other hand, according to para. 17 of the counter affidavit in reference to the valuation report, it was indicated that the petitioner went on filing objections after objections with regard to the immovable property under question, and on one occasion he objected to ownership of the property and on another occasion he got the objection filed through his son, and respondent No. 1 after, affording opportunities to them decided the objections on December 13, 1996, and February 3, 1997, respectively. Therefore, according to the respondent, the order dated July 2,1997, passed by the Tax Recovery Officer is in accordance with the law.
9. The terms of Rule 86 quoted above are enabling and provide a remedy of appeal. The provisions of Rule 86 show that the appeal would lie except only in cases of those orders which have been given the conclusive by the Rules and one such Rule available in Schedule II is Rule 10. When any question arises, whether, a particular property is exempt from attachment, the Tax Recovery Officer can decide that question and his decision under sub-Rule (2) of Rule 10 holding that a particular property is entitled to exemption from attachment, has been treated as conclusive. It is clear that in the matters of sale of the attached property which is the subject of Rules 52 to 68, no such mention is made nor the order confirming the sale has been made conclusive. Therefore, the terms of Rule 63(1) are to be read along with the other Rules preceding which include the steps by which the property attached can be brought to sale. It is also provided by Rule 56 that the sale has to be made by public auction and it is always subject to confirmation by the Tax Recovery Officer. This process of confirmation is part of Clause (1) of that Rule 63, which provides that where no application is made for setting aside the sale under the foregoing Rules or where such an application is made and disallowed by the Tax Recovery Officer, the Tax Recovery Officer shall, if the full amount of the purchase money has been paid, make an order confirming the sale, and, thereupon, the sale shall become absolute. For reading the Rule 56 along with Clause (1) of Rule 63 together, undoubtedly, there is a necessity of making an order by the Tax Recovery Officer in the matter of confirmation of the sale and that would be clearly an original order. If such an order is made, then the terms of Clause (1) indicate that the sale is treated as absolute. In other words, without the order confirming the sale there is no sale absolute as such under these Rules. The word "absolute" does not make the order itself conclusive. To take away the right of appeal, it should be the order which is conclusive, and not the factum of sale. The right of appeal in terms is provided against the orders which are termed as original orders of the Tax Recovery Officer. Undoubtedly, an order made confirming the sale would be an original order liable to be appealed against by virtue of the provisions of Rule 86.
10. I have considered the submissions of learned counsel for the parties and I have gone through the records and I find that the order of the Tax Recovery Officer dated July 2,1997, is not conclusive in reference to Rule 10 but only the sale has been made absolute and taking it as a conclusive order of the Tax Recovery Officer the appeal under Rule 86 is barred. In my considered view, the order dated July 2, 1997, is an original order against which the appeal under Rule 86(1) of the Second Schedule to the Act of 1961 could be entertained. Therefore, dismissing the appeal by the Commissioner by its order dated November 22,1999, with an understanding that the appeal is not maintainable under Rule 86(1), is legally not correct and, therefore, it is quashed and the case is remanded back with the direction to the Commissioner of Income-tax, Agra, to decide the appeal expeditiously preferably within six weeks from the receipt of this order after giving opportunity to the assessee-petitioner who is expected to give co-operation on his part.
11. The writ petition is disposed of in view of the above observations.