Gujarat High Court
Nilesh Popatlal Patel vs Tax Recovery Officer 3 on 12 June, 2019
Author: J. B. Pardiwala
Bench: J.B.Pardiwala, A.C. Rao
C/SCA/15587/2018 JUDGMENT
IN THEHIGHCOURTOF GUJARATAT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 15587 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 15588 of 2018
With
R/SPECIAL CIVIL APPLICATION NO. 15589 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA Sd/-
and
HONOURABLE MR.JUSTICE A.C. RAO Sd/-
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1 Whether Reporters of Local Papers may be allowed NO
to see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy NO
of the judgment ?
4 Whether this case involves a substantial question NO
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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NILESH POPATLAL PATEL
Versus
TAX RECOVERY OFFICER- 3
==============================================================================
Appearance:
MR B S SOPARKAR for the Petitioner(s)No. 1
MRS MAUNA M BHATT with MR KARAN SANGHANI for the Respondent(s)No. 1
==============================================================================
CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR.JUSTICE A.C. RAO
Date: 12/06/2019
COMMON ORAL JUDGMENT
(PER: HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. Since the issues raised in all the captioned writ-
Page 1 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019C/SCA/15587/2018 JUDGMENT applications are selfsame, those were heard analogously and are being disposed of by this common judgment and order.
2. For the sake of convenience, the Special Civil Application No.15587 of 2018 is treated as the lead matter.
3. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs :
".......this Hon'ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction or order and be pleased to :
(a) quash and set aside the impugned order at Annexure-'A' to this petition;
(b) pending the admission, hearing and final disposal of this petition, to stay implementation and operation of the order at Annexure-'A' to this petition.
(c) any other and further relief deemed just and proper be granted in the interest of justice;
(d) to provide for the cost of this petition."
4. The case of the writ-applicant in his own words as pleaded in the writ-application is as under :
Page 2 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019C/SCA/15587/2018 JUDGMENT "1. The petitioner, by way of this petition under Article 226 of the Constitution of India, challenges the order of attachment passed by the Respondent u/s 222 of the Income Tax Act dated 22.11.2017 attaching the property of the petitioner - Plot No.85/1 + 85/2/1, GIDC, Vatva for the failure to pay dues by one M/s Newempire Infrastructure Pvt. Ltd., the same being an act which is bad, illegal, contrary to law and without jurisdiction.
2.1 The petitioner is an individual and citizen of India. The petitioner is, therefore, entitled to the Constitutional rights guaranteed under Articles 14 and 19(1)(g) of the Constitution of India. The respondent is a 'State' within the meaning of Article 12 of the Constitution.
2.2 The petitioner is a Karta of Nilesh Popatlal Patel HUF. The petitioner also runs a company by name of Konark Combustion Private Limited which is situated at Plot No.85/1 + 85/2/1 GIDC, Vatva. The petitioner had entered into a supplementary agreement for transfer of the Plot No.85/1 + 85/2/1 on 22.03.2016 with M/s Newempire Infrastructure Pvt. Ltd. An Office Order by GIDC for transfer of Plot No.85/1 + 85/2/1 was also made in favour of the petitioner on 29.03.2016. Since then the petitioner was recognized as the allottee of the impugned plot of land by the GIDC. The petitioner has been using the plot of land on which the petitioner has a running business. Subsequently, a sale deed was also entered into between the petitioner and sellers dated 01.03.2017. Complete payment as per the sale deed has also been made by the petitioner. The Page 3 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT petitioner was thus enjoying the rightful ownership and possession of the property.
2.3 On 22.11.2017 the respondent passed order of attachment of the property of the petitioner for the dues of M/s Newempire Infrastructure Pvt. Ltd. of Rs.4,79,50,640 + interest. It is submitted that the same property being owned by the petitioner, the order u/s 222 is bad and illegal and therefore deserve to be quashed. The petitioner therefore, has no other alternative but to approach this Hon'ble Court as and by way of the present petition. Hence, this petition."
5. Thus, the chronology of events that can be taken note of from the above is as under :
Date Event 01.11.1980 GIDC allotted the plot to New Empire
Infrastructure Pvt. Ltd. vide Lease deed executed on 1.11.1980.
Licensee applied to the Corporation for transfer of the said plot in favour of Nilesh Popatlal Patel (HUF).
05.03.2016 Permission for transfer was granted by the Divisional Manager, Ahmedabad.
22.03.2016 A supplementary agreement was executed between the Corporation/Lessee and the Transferee.
29.03.2016 The plot stood transferred in the name of Nilesh Popatlal Patel (HUF).
16.05.2016 Torrent Power issued electricity bill in the name of Nilesh Popatlal Patel (HUF).
Page 4 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT
15.06.2016 Airtel issued telephone bill in the name of Nilesh
Popatlal Patel (HUF).
31.12.2016 Assessment Order passed in the case of the New
Empire Infrastructure Pvt. Ltd.
21.02.2017 Notice of Demand served on New Empire
Infrastructure Pvt. Ltd.
01.03.2017 Sale Deed between New Empire Infrastructure Pvt.
Ltd. and Nilesh Popatlal Patel (HUF).
22.11.2017 Order of attachment is passed attaching the plot
of land.
6. Mr.Soparkar, the learned senior counsel appearing for the writ-applicant, vehemently submitted that the Tax Recovery Officer, Ahmedabad, committed a serious error in passing the order of attachment of immovable property by placing reliance on Rule 48 of the Second Schedule to the Income Tax Act, 1961. According to Mr.Soparkar, Rule 48 provides for attachment of the immovable property of the defaulter. Mr.Soparkar submitted that the immovable property in the case on hand in the form of a plot in the estate of the GIDC is no longer of the defaulter, and in such circumstances, there could not have been any attachment of the same.
7. Mr.Soparkar further submitted that the impugned order u/s 222 is patently bad, illegal, contrary to law and in gross violation of the fundamental rights guaranteed to the petitioner under Articles 14 and 19(1)(g) of the Constitution of India. He submitted that the Tax Recovery Officer has erred fundamentally in attaching the property of the petitioner u/s 222. It is Page 5 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT submitted that the petitioner is not declared nor is deemed to be an assessee in default. It is further submitted that Section 222 enables the Tax Recovery Officer to attach the defaulting assessee's immovable property only. It is submitted that the Tax Recovery Officer has erred in believing that the Plot Nos.85/1 + 85/2/1 GIDC, Vatva, belong to the defaulting assessee M/s Newempire Infrastructure Pvt. Ltd. It is submitted that the impugned properties does not belong to M/s Newempire Infrastructure Pvt. Ltd. but to the petitioner and therefore the order u/s 222 is bad and illegal. He also submitted that the Tax Recovery Officer has erred gravely in attaching the property of the petitioner for recovery of the tax dues of M/s Newempire Infrastructure Pvt. Ltd. It is submitted that the petitioner has purchased the impugned property much before passing of the assessment order and raising of demand. It is, therefore, submitted that the attachment is completely bad and illegal. It is further submitted that the Tax Recovery Officer has to examine who is in possession of the property and in what capacity. He can only attach property in possession of the defaulting assessee in his own right, or in possession of a tenant or a third party on behalf of/for the benefit of the assessee. He cannot declare any transfer made by the assessee in favour of a third party as void. If the department finds that a property of the assessee is transferred by him to a third party with the intention to defraud the revenue, it will have to file a suit under Rule 11(6) to have the transfer declared void under Section 281.
8. Mr.Soparkar submitted that the respondent has acted illegally and without jurisdiction in passing the order under Section 222 attaching the property on which the writ-applicant Page 6 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT has right, title and interest. Mr.Soparkar submitted that the respondent has overlooked the fact while attaching the property of the writ-applicant that the same is not owned or possessed by the defaulting assessee. The department has not undertaken any necessary measures to get the transaction of the sale declared as void.
9. Mr.Soparkar also invited the attention of this Court to Annexure-B to this petition at page 12. It is a supplementary agreement in Form No.36 between the GIDC, the defaulting assessee, i.e. the New Empire Infrastructure Private Limited, and the writ-applicant. Mr.Soparkar, thereafter, invited the attention of this Court to the Office Order dated 29th March 2016 passed by the Divisional Manager, GIDC, Ahmedabad. The Office Order reads thus :
"OFFICE ORDER A Plot No.85/1 + 85/2/1, admeasuring 1195.50 + 105 (Road & C.P.) sq.mtrs. was allotted to M/s.New Empire Infrastructure Pvt. Ltd., The Lease Deed was executed on 1.11.80. The Licece had applied to the Corporation for transfer the said plot in favour of Shri Patel Nilesh Popatlal, (HUF). Permission for transfer was given by the Divisional Manager, Ahmedabad as per Letter No.GIDC/DM/ABD/ TFR/VTW/364, Dated 5.3.2016.
The Lessee has paid all dues of the Corporation up to 2015-
16. He has also paid the "Transfer Fee" amounting to Rs.NIL/-. The Supplementary agreement has therefore been Page 7 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT executed on 22.3.16, between the Corporation/Lessee and Transferee. The plot now therefore stands transferred in the name of M/s.Shri Patel Nilesh Popatlal, (HUF) w.e.f. 29.3.2016. This transfer shall not be considered as valid under the building bye-laws of the Corporation, if any unauthorized construction is carried out by the transferor. If any unauthorized construction is carried out, the same shall not be considered that Corporation has regularized the same. Transferee shall have to remove/demolish, violative/non-violative construction or shall have to be got approved from the Corporation. The water requirement as per transfer application is 500 Ltrs. The transferee shall have to get their name transferred in water supply Ledger by executing the Agreement with the concerned Dy. Ex. Engineer immediately.
Sd/-
Divisional Manager G.I.D.C. Ahmedabad."
10. Mr.Soparkar also invited the attention of this Court to the electricity bills issued by the Torrent Power in the name of the writ-applicant, suggesting that the plot has been transferred in the name of the writ-applicant and the writ-applicant is in possession of the same.
11. In the last, Mr.Soparkar invited the attention of this Court to the agreement dated 1st March 2017 between the New Empire Infrastructure Private Limited and the writ-applicant as regards the mode of payment, etc.
12. Mr.Soparkar submits that for no good reason the respondent has brought the title of the writ-applicant over the Page 8 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT property in question under a cloud. If the department has any doubt with regard to the genuineness of the transaction between the GIDC, the New Empire Infrastructure Private Limited and the writ-applicant, then the department should file an appropriate suit in accordance with law and seek appropriate declaration. However, according to Mr.Soparkar, whatever may be the liability of the defaulting assessee, namely the New Empire Infrastructure Private Limited, the same cannot be fastened upon the writ-applicant by attaching the plot in question.
13. In such circumstances referred to above, the learned senior counsel prays that there being merit in this writ-application, the same be allowed and the impugned order be quashed.
14. On the other hand, this writ-application has been vehemently opposed by Mr.Karan Sanghani. Mr.Sanghani submitted that this writ-application may not be entertained only on the ground that if the writ-applicant has any grievance with regard to the action taken by the department, then he should file a claim under Rule 11 of the Second Schedule to the Income Tax Act, 1961. Once such a claim is filed, there would be an inquiry by the Tax Recovery Officer and in the said inquiry the writ- applicant can make his stance clear by adducing necessary evidence. Mr.Sanghani would submit that whatever may be the developments and whatever may be the transactions, the same have no legal footing, and in such circumstances, the authority concerned committed no error in passing the order of attachment.
15. Mr.Sanghani placed strong reliance on the following averments made in the affidavit-in-reply filed on behalf of the Page 9 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT respondent duly affirmed by the Tax Recovery Officer-3, Ahmedabad :
"3. I submit that in the instant case, proceedings in the case of M/s. New Empire Infrastructure Private Limited were initiated under Section 143(2) of the Act. A notice under Section 143(2) of the Act was issued on 5.4.2016 and thereupon, assessment proceedings proceeded further which culminated into an assessment order under Section 143(3) of the Act on 31.12.2016 raising a demand of Rs.4,79,50,640=00. The said demand was certified for recovery to the Tax Recovery Officer - 10 Mumbai for Assessment Year 2014 - 2015 on 17.2.2017. ITCP - 1 was issued and served on the assessee on 21.2.2017. Pursuant to the said ITCP - 1, assessee did not make any payment. Thereupon, a letter was issued to the present respondent i.e. TRO - 3 Ahmedabad under letter dated 8.3.2017 to initiate recovery proceedings for the property in the form of land situated at GIDC, Vatva, Industrial Estate, Vinzol, Ahmedabad. Thereupon this office issued notice in ITCP - 16 on 22.11.2017.
4. At the outset, I humbly submit that in view of the specific provisions of Section 281 of the Act, if during the pendency of any proceeding under the Act or after the completion thereof, any assessee creates a charge on or parts with the possession of any of his assets in favour of any other person, such charge or transfer shall be void, against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the Page 10 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT said proceedings. In the instant case, the assessment year concerned is Assessment Year 2014 - 2015. Thus, if any transfer has been made on or after 1.4.2014, the same would be void against the revenue. In the instant case, assuming without admitting the petitioner's case, the petitioner has purportedly purchased the property in question under a supplementary agreement dated 22.3.2016. It is significant to submit that such a supplementary agreement in the first instance is not registered. Thus, in view of the provisions of Section 281 of the Act as aforesaid as also in view of the fact that the said supplementary agreement is not a registered document, no cognizance thereof can be taken. In the light of the same, it is humbly submitted that the action taken by the respondent is valid in the eyes of law."
16. Mr.Sanghani submitted that the power of this Court in exercise of jurisdiction under Article 226 of the Constitution of India is supervisory and not appellate in nature. He reminded us of the scope of the jurisdiction under Article 226 of the Constitution of India by placing strong reliance on the decision of the Supreme Court in the case of M.Naina Mohammad v. K.A.Natarajan, AIR 1975 SC 1867, wherein the Supreme Court had observed as under :
"The boundaries of the High Court's jurisdiction under Article 226 are clearly and strongly built and cannot be breached without risking jurisprudential confusion. The power is supervisory in nature......"Page 11 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019
C/SCA/15587/2018 JUDGMENT
17. In such circumstances referred to above, Mr.Sanghani prays that as there is an alternative remedy available to the writ- applicant, he should be asked to avail the same and this writ- application may not be entertained.
18. On 8th October 2018, a coordinate bench of this Court passed the following order :
"1. Petitioners have purchased individual industrial plots situated at GIDC, Vatva, which was originally alloted to one Newempire Infrastructure Private Limited, a private limited company by the GIDC. The permission for transfer was granted by GIDC on or around 29.03.2016 in all the cases. According to the petitioners, they are occupying respective plots since then and have also started their industries by setting up their plants and machineries. The respondent-Tax Recovery Officer of the Income Tax department has passed a common order dated 22.11.2017 against the erstwhile owner attaching the properties in exercise of powers under section 222 of the Income Tax Act, 1961 ('the Act' for short). Counsel for the petitioners submitted that the petitioners are bona-fide purchasers for value. On the date of the transfer, there were no income tax dues of the seller outstanding. No attachment was made. The respondent therefore cannot seek to carry out recoveries of the dues of the erstwhile owners through the properties in question.
2. NOTICE, returnable on 19.11.2018. The respondent shall not carry out coercive recoveries of the dues of the erstwhile Page 12 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT owner i.e. Newempire Infrastructure Private Limited through the properties in question. "
19. Before adverting to the rival submissions canvassed on either side, we must look into few provisions of the Act as well as the Rules.
20. Section 221 of the Act, 1961, reads as under :
"221. Penalty payable when tax in default. - (1) When an assessee is in default or is deemed to be in default in making a payment of tax, he shall, in addition to the amount of the arrears and the amount of interest payable under sub-section (2) of section 220, be liable by way of penalty, to pay such amount as the Assessing Officer may direct, and in the case of a continuing default, such further amount or amounts as the Assessing Officer may, from time to time, direct, so however, that the total amount of penalty does not exceed the amount of tax in arrears Provided that before levying any such penalty, the assessee shall be given a reasonable opportunity of being heard :
Provided further that where the assessee proves to the satisfaction of the Assessing Officer that the default was for good and sufficient reasons, no penalty shall be levied under this section.
Explanation :- For the removal of doubt, it is hereby declared that an assessee shall not cease to be liable to any penalty Page 13 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT under this sub-section merely by reason of the fact that before the levy of such penalty he has paid the tax.
(2) Where as a result of any final order the amount of tax, with respect to the default in the payment of which the penalty was levied, has been wholly reduced, the penalty levied shall be cancelled and the amount of penalty paid shall be refunded."
21. Section 222 of the Act, 1961, with regard to the certificate to the Tax Recovery Officer reads as under :
"222. Certificate to Tax Recovery Officer.- (1) When an assessee is in default or is deemed to be in default in making a payment of tax, the Tax Recovery Officer may draw up under his signature a statement in the prescribed form specifying the amount of arrears due from the assessee (such statement being hereafter in this Chapter and in the Second Schedule referred to as "certificate") and shall proceed to recover from such assessee the amount specified in the certificate by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule--
(a) attachment and sale of the assessee's movable property;
(b) attachment and sale of the assessee's immovable property;
(c) arrest of the assessee and his detention in prison;Page 14 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019
C/SCA/15587/2018 JUDGMENT
(d) appointing a receiver for the management of the assessee's movable and immovable properties.
Explanation :- For the purposes of this sub-section, the assessee's movable or immovable property shall include any property which has been transferred, directly or indirectly on or after the 1st day of June, 1973, by the assessee to his spouse or minor child or son's wife or son's minor child, otherwise than for adequate consideration, and which is held by, or stands in the name of, any of the persons aforesaid, and so far as the movable or immovable property so transferred to his minor child or his son's minor child is concerned, it shall, even after the date of attainment of majority by such minor child or son's minor child, as the case may be, continue to be included in the assessee's movable or immovable property for recovering any arrears due from the assessee in respect of any period prior to such date.
(2) The Tax Recovery Officer may take action under sub- section (1), notwithstanding that proceedings for recovery of the arrears by any other mode have been taken."
22. Rule 2 of the Second Schedule to the Act, 1961, reads as under :
"2. Issue of notice.- [When a certificate has been drawn up by the Tax Recovery Officer] for the recovery of arrears under this Schedule, the Tax Recovery Officer shall cause to Page 15 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT be served upon the defaulter a notice requiring the defaulter to pay the amount specified in the certificate within fifteen days from the date of service of the notice and intimating that in default steps would be taken to realise the amount under this Schedule."
23. Rule 11 of the Second Schedule to the Act, 1961, reads as under :
"11. Investigation by Tax Recovery Officer.-- (1) Where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection :
Provided that no such investigation shall be made where the Tax Recovery Officer considers that the claim or objection was designedly or unnecessarily delayed.
(2) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms as to security or otherwise as the Tax Recovery Officer shall deem fit.
(3) The claimant or objector must adduce evidence to show that-Page 16 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019
C/SCA/15587/2018 JUDGMENT
(a) (in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or
(b) (in the case of movable property) at the date of the attachment, he had some interest in, or was possessed of, the property in question.
(4) Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in the possession of the defaulter or of some person in trust for him or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale.
(5) Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim.Page 17 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019
C/SCA/15587/2018 JUDGMENT (6) Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive."
24. Rule 48 of the Second Schedule to the Act, 1961, reads as under :
"48. Attachment of the immovable property of the defaulter shall be made by an order prohibiting the defaulter from transferring or charging the property in any way and prohibiting all persons from taking any benefit under such transfer or charge."
25. Under Section 222 of the Act, 1961, on receipt of a certificate from the Income Tax Officer specifying the amount of arrears due from the assessee, the Tax Recovery Officer can proceed to recover from such assessee the amount specified therein by : (a) attachment and sale of the assessee's movable property, (b) attachment and sale of the assessee's immovable property, (c) arrest of the assessee and his detention in prison, and (d) appointing a receiver for the management of the assessee's movable and immovable properties, in accordance with the rules laid down in the Second Schedule. The word "defaulter" is defined in the Second Schedule to the Act as meaning the assessee mentioned in the certificate. Before proceeding to attach and sell the property of the defaulter, the Page 18 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT Tax Recovery Officer is required to serve a notice on the defaulter requiring him to pay the amount specified in the certificate within 15 days from the date of service of the notice and intimating that, in default, steps would be taken to realise the amount under the Second Schedule. If the amount mentioned in the notice is not paid within the time specified therein or within such further time as the Tax Recovery Officer may grant in his discretion under Rule 4 of the Second Schedule, the Tax Recovery Officer shall proceed to realise the amount by attachment and sale of the defaulter's movable or immovable property or by one or more of the modes referred to therein. The provisions in the Second Schedule to the Act relating to the attachment and sale of immovable properties of the defaulter with which alone we are concerned in these writ applications are in pari materia with those contained in Order 21 of the Code of Civil Procedure. Rules 48 to 51 of the Second Schedule relating to attachment of the immovables correspond to Rule 54 of Order 21 of the Code of Civil Procedure. The claim petitions and the investigation into those claims and orders to be made therein are provided in Rule 11 of the Second Schedule to the Act and to the same effect as in Rules 58 to 61 and 63 of Order 21 of the Code of Civil Procedure. The provisions relating to proclamation of sale, the contents of the proclamation, the mode of making the proclamation, the time of sale and adjournments are contained in Rules 52 to 55 and 15 of the Second Schedule corresponding to Rules 64, 66 to 69 of Order 21 of the Code of Civil Procedure. The provisions in Rules 57 to 68 of the Second Schedule relating to deposit by the purchasers, the procedure to be followed in default of payment, the applications to set aside the sale or confirmation of sales are identically worded as in Rules 83 to 94 Page 19 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT of Order 21 of the Code of Civil Procedure. Thus, it is seen that the entire provisions relating to attachment and sale of immovable properties of the judgment-debtor found in the Code of Civil Procedure are incorporated in the Second Schedule as the procedure to be followed for attachment and sale of the defaulter's properties for the recovery of the arrears of income- tax due from the defaulter.
26. Section 222 of the Income Tax Act, 1961, and Rule 4 of the Second Schedule authorise the Tax Recovery Officer to realise the arrears of tax by attachment and sale of the defaulter's movable or immovable properties. There is no restriction placed on this right of the Tax Recovery Officer so far as the property which he could proceed against. All the properties of the defaulter are liable to be proceeded against. The properties that are exempt from attachment and sale for recovery of tax arrears are set out in Rule 10 which reads as follows :
"(1) All such property as is by the Code of Civil Procedure, 1908 (V 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."
27. The provisions of Rule 11 of the Second Schedule to the Act, 1961, referred to above, correspond to Rules 58 to 61 and 63 of Order 21 of the Code of Civil Procedure. In the enquiry, among other things, the Tax Recovery Officer has to find out Page 20 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT whether the property was not, on the date of service of notice, in the possession of the defaulter or of some person in trust for him or even if it is in the possession of the defaulter at the said date it was so in his own possession not on his own account or as his own property but on account of or in trust for some other person. If he is satisfied that the property, on the relevant date, was in the possession of the defaulter as his own property and not on account of any other person or was in the possession of some other person in trust for him, the claim petition shall have to be dismissed. The objector, thereafter, has a right to institute a suit in a civil court to establish the right or claim, if any, in the property in dispute.
28. In the case on hand, the respondent has issued the impugned notice in the form of an order of attachment of immovable property and the writ-applicant has straightway approached this Court and filed this writ-application. In our considered view, this writ-application is not the proper remedy which the writ-applicant should have availed. In this regard, Rule 11 referred to above is very clear. In terms of Rule 11 if any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection. The procedure for such investigation and the manner in which the proceedings to be conducted are enumerated under Rule 11 of the said Rules. Therefore, if the petitioner's claim is that the property is not liable for such attachment, then the petitioner has to make a claim before the Tax Recovery Officer, and for such reason, the petitioner could Page 21 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT not have approached this Court invoking the jurisdiction under Article 226 of the Constitution of India. Therefore, the Court holds that the petition is not maintainable. However, considering the fact that the Income Tax Act and Rules framed thereunder, especially Rule 11 under the 2nd Schedule, provides for a remedy to the assessee, the petitioner is at liberty to avail such a remedy.
29. In taking the aforesaid view, we are fortified by a decision of the Supreme Court in the case of Isha Beevi and others v. Tax Recovery Officer, Quilon and others, reported in (1975)101 ITR 449 (SC), wherein, in para-5 the following has been observed :
"5. We may point out that the reliefs claimed in the Writ Petitions were Writs of Certiorari, and Mandamus and Prohibition it is clear to us after perusal of those so, called "orders" sought to be quashed that they were only notices of commencement of recovery proceedings by attachment of certain properties. Final orders could only be passed after the appellants have had their opportunities to object under Rule 11 of the 2nd schedule of the 1961 Act because the notices purport to be only preliminary notices under Rule 48 of the 2nd Schedule to the 1961 Act These proceedings could only be quashed even at this stage, if they were entirely without jurisdiction Otherwise, a prayer for quashing proceedings would, obviously, be premature. No occasion for the issue of a writ of Mandamus can arise unless the applicants show non-compliance with some mandatory provision and seek to get that provision enforced because some obligation towards them is not carried out by Page 22 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019 C/SCA/15587/2018 JUDGMENT the authority alleged to be flouting the law. The grievance of the appellants, however is that the tax recovery officer had no jurisdiction whatsoever to start tax recovery proceedings against them. They have, therefore, asked for writs of prohibition. The existence of an alternative remedy is not generally a bar to the issuance of such a writ or order. But in order to substantiate a right to obtain a writ of prohibition from a High Court or from this Court, an applicant has to demonstrate total absence of jurisdiction to proceed on the part of the officer or authority complained against. It is not enough if a wrong section of provision of law is cited in a notice or order if the power to proceed is actually there under another provision."
30. In the result, all the three writ-applications fail and are hereby rejected as "not maintainable" with a direction to the writ-applicants to file a claim before the respondent in terms of Rule 11(1) of the Second Schedule to the Income Tax Act, 1961, within a period of four weeks from the date of receipt of copy of this order. On such claim being filed, the respondent is directed to investigate the same in accordance with law. No order as to costs. Notice stands discharged in all the three writ-applications. Ad-interim relief earlier granted stands vacated.
(J. B. PARDIWALA,J.) (A. C. RAO,J.) /MOINUDDIN Page 23 of 23 Downloaded on : Wed Jul 03 06:39:37 IST 2019