Madras High Court
Maniyan Sureshkumar vs The Tax Recovery Officer on 2 January, 2025
Author: C.Saravanan
Bench: C.Saravanan
W.P.No.27919 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved On 02.09.2024
Pronounced On 02.01.2025
CORAM :
THE HONOURABLE MR. JUSTICE C.SARAVANAN
W.P.No.27919 of 2021
and
W.M.P.No.29471 of 2021
Maniyan Sureshkumar
S/o.K.P.Maniyan ... Petitioner
Vs.
The Tax Recovery Officer-1,
Coimbatore-Main Building,
No.63, Race Course Road,
Coimbatore – 641 018. ... Respondent
Prayer: Writ Petition filed under Article 226 of the Constitution of India for
issuance of a Writ of Certiorarified Mandamus, to call for the records
pertaining to the order of the respondent dated 24.11.2021 DIN and Letter
No.ITBA/COM/F/17/2021-2022/1037186280(1) and quash the same as illegal
and direct the respondent to lift the order of attachment in the residential flat at
No.3B, May Flower Brooke Fields Apartments, Krishnasamy Road,
Coimbatore – 641 002 made by the respondent vide Form No.I.T.C.P.16 dated
27.01.2015 in TR No.14/P15/2013-2014/TRO-1/CBE and Form No.I.T.C.P.16
dated 10.02.2021 having DIN and Document No.ITBA/RCV/S/316/2020-
2021/1030502671(1).
For Petitioner : Mr.S.Anandh
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1/17
W.P.No.27919 of 2021
for Mr.Ravi Kannan
For Respondent : Dr.B.Ramaswamy
Senior Standing Counsel
ORDER
The petitioner is before this Court against the Impugned Order passed by
the respondent / Tax Recovery Officer-1, Coimbatore dated 24.11.2021 for the
Assessment Year 2009-2010.
2. Relevant portion of the Impugned Order dated 24.11.2021 reads as
under:-
“2. As requested by you the copy of extension of time limit
as per Proviso to Rule 68B(1) by the competent
authority is herewith enclosed.
3. The claim made by you in your letter cited above in
respect of exemption from attachment as per Rule 10 of
the Second Schedule is rejected as it is apparent from
the records submitted by yourself to the department
claiming that you are doing business in gold jewellery in
the name and style M/s Lakshmi Jewellery, Coimbatore.
The evidence available with this office is enclosed
herewith for your information and noting.
4. As per the notice issued on 17.11.2021 you were directed
to inform the encumbrances, charges etc., on or before
24.11.2021 on the attached property which you have not
complied. Therefore this office is compelled to proceed
with the public auction of your property to recover the
tax arrears.
5. If you wish to avoid public auction of your property, you
are directed to pay the tax arrears of Rs.46,72,041/- and
interest thereupon without any further delay and co
operate with the recovery proceedings.
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Your petition dated 22.11.2021 stands disposed.”
3. An Assessment Order was passed by the Assessing Officer under
Section 143(3) of the Income Tax Act, 1961 on 07.12.2011 in response to a
Return of Income filed on 24.07.2009. No appeal was filed by the petitioner
against the Assessment Order dated 07.12.2011 under Section 246A of the
Income Tax Act, 1961. The Assessment Order dated 07.12.2011 attained
finality as no appeal was filed. The petitioner was also issued with a Penalty
Order dated 29.06.2012 under Section 271(1)(c) of the Income Tax Act, 1961.
4. Aggrieved by the same, the petitioner has filed an appeal before the
Commissioner of Income Tax (Appeals)-I, Coimbatore. Vide order dated
16.09.2013, the said appeal was also dismissed by the Commissioner of Income
Tax (Appeals)-I. No further appeal has been filed against the said order dated
16.09.2013 of the Commissioner of Income Tax (Appeals)-I, Coimbatore.
5. Thus, both the orders of the Commissioner of Income Tax (Appeals)-I,
Coimbatore dated 16.09.2013 and the order of the Assessing Officer dated
07.12.2011 and 29.06.2012 have attained finality and liability against the
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petitioner stood confirmed.
6. Since the amount that was assessed to be paid by the petitioner had
remained unpaid, the petitioner's property was attached on 27.01.2015.
However, no sale was made pursuant to the aforesaid Attachment Order dated
27.01.2015.
7. A Second Attachment Order came to be passed on 10.02.2021. In
response to the same, the petitioner filed an application before the respondent
with a prayer to drop the proceedings in the light of limitation under Rule 68(B)
of the Second Schedule to the Income Tax Act, 1961.
8. The learned counsel for the petitioner submits that the last date of the
Financial Year in which the proceedings were completed was 31.03.2013 and
31.03.2014 and therefore the limitation expired on 31.03.2015 and 31.03.2017
as per the unamended Rule 68B of the 2nd Schedule to the Income Tax Act,
1961.
9. It is submitted that since the proceedings were initiated for attaching
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the property for the second time on 10.02.2021, the period of limitation under
Rule 68(B) to the 2nd Schedule of the Income Tax Act, 1961 stood expired on
31.03.2022.
10. It is submitted that the prior period was later substituted with effect
from 01.09.2019 and therefore even if the period of limitation is reckoned from
31.03.2012 and 31.03.2014, the limitation would have expired on 31.03.2019
and on 31.03.2021. It is therefore submitted that there is no scope for bringing
the property of the petitioner for sale pursuant to the Impugned Attachment
Notices.
11. That apart, it is submitted that the petitioner is a labourer and
therefore in terms of Rule 10 of the 2nd schedule to the Income Tax Act, 1961
read with Section 60 of the C.P.C. dwelling house of assessee in default cannot
be brought to the sale, it is expected from attachment and sale in Execution of
the decree of the Civil Court and therefore exemption in terms of Rule 10 of
the aforesaid Rule.
12. It is further submitted that the petitioner was running a jewellery
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business in the name of proprietor concerned as “Sri Lakshmi Jewellery Shop”.
The petitioner suffered huge loss and therefore is working as a labour with
other proprietor concerned engaged in gold business. It is therefore submitted
that on this count, the proceedings is liable to be quashed.
13. The learned counsel for the petitioner would submit that the pursuant
to the Order passed by this Court on 23.02.2021 by depositing Rs.10,00,000/-,
the petitioner insofar as deposited a sum of Rs.70,000/- at the rate of
Rs.10,000/- p.m. few months thereafter. It is submitted that in the Impugned
Order dated 24.11.2021, the petitioner may be given a temporary relief to
discharging tax liability.
14. In support of the relief, the learned counsel for the petitioner has
placed reliance on the following decisions:-
i) Sapana Charudatt Ranadive Vs. Assistant
Commissioner of Income Tax 17(3), Mumbai, [2019]
108 taxmann.com 384 (Bombay);
ii) Gauravbhai Hargovindhai Dave vs. Tax Recovery
Officer, (2019) 110 taxmann, com33 (Gujarat).
15. Opposing the prayer, the learned Senior Standing Counsel for the
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respondent would submit that the Income Tax Department has obtained
information negativing that the petitioner is not a labourer, he was a gold trader
and therefore the exemption under Rule 10 of the 2nd Schedule to the Income
Tax Act, 1961 read with Section 60 of the C.P.C. would not come to the benefit
of the petitioner.
16. That apart, it is submitted that as far as limitation is concerned in
Paragraph No.18 of the affidavit filed in support of the present writ petition
filed by the petitioner, a reference was also made to Paragraph Nos.18 to 20 and
24 of the Counter Affidavit read as under:-
18. In response to the petitioner's contention regarding the
expiration of the time limit for recovery proceedings
under Rule 68B, it is imperative to scrutinize the
veracity of their claims. The provided dates of
assessment orders (17/12/2011 and 20/06/2012) and
finalization of tax/penalty orders (31/03/2012 and
31/03/2014), meticulously examined against the
regulatory framework, indicate no deviation from the
prescribed timeline. As the penalty demand was
confirmed/finalized in the FY 2013-14. The time
limit for the attachment and sale of immovable
property extends to 31.03.2021 as admitted by the
petitioner himself in the para no. 18. It is pertinent to
mention here that Uunder second Proviso to Rule
68B, the period shall be extended by one year in case
the property is required to be resold due to amount of
highest bid being less than the reserve price. The
petitioner himself has accepted in the para 11 that
there were no bidders in the public auction
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conducted on 25.03.2021. Therefore, the time limit
got extended by one year up to 31.03.2022 as per
proviso to the Rule 68B. Thus, the provisions of
Rule 68B(1) concerning the time limit for the sale of
attached immovable property are deemed applicable
in this scenario.
19. Regarding the petitioner's assertion concerning the
applicability of Section 60 of the Code of Civil
Procedure to tax recovery matters it is submitted that
Exemption under Section 60 of the Code of Civil
Procedure, 1908 is not applicable to the petitioner as
he was a Gold Trader and not an agriculturist or
labourer during the AY 2009-10, The fact that he
was a Gold Trader, has been confirmed by the
petitioner hinsself in para 2 of the affidavit.
20. In response to the petitioner's communication dated
15/11/2021, wherein they were apprised of the
extension of the time limit due to the absence of
bidders in the public auction held on 25/03/2021, it
is essential to clarify that this extension was
necessitated by procedural considerations to ensure
fairness in the auction process. The subsequent
issuance of a notice for settling a sale proclamation
in Form No. ITCP-17 on 17/11/2021, as indicated by
DIN & Letter No. ITBA/COM/F/17/2021-
22/1037014674(1), was undertaken in conformity
with regulatory requirements to uphold transparency
and compliance with statutory obligations.
24. The petitioner's contention regarding Rule 10(2) of
the Second Schedule to the Income Tax Act 1961 is
acknowledged However, it's crucial to note that
while Rule 10(2) implies the conclusiveness of the
Tax Recovery Officer's (TRO) decision, Section
246(2) of the Income Tax Act, 1961, grants the right
of appeal to aggrieved parties against certain orders,
including those akin to rectifications made by the
TRO. This provision allows taxpayers to challenge
decisions they deem erroneous or unjust through the
appellate process Therefore, despite the appearance
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of conclusiveness under Rule 10(2), the statutory
framework provides avenues for appeal, ensuring
procedural faimess and the protection of taxpayer
rights.
"246. (2) Notwithstanding anything contained in sub-
section (1), any assessee aggrieved by any of the
following orders (whether made before or after the
appointed day) may appeal to the Commissioner
(Appeals) before the Ist day of June, 2000 against
such order"
In light of the judgment by High Court of
Calcutta in the case of Rakesh Kumar Shaw v.
Commissioner of Income-tax, it is evident that
the High Court's jurisdiction to entertain writ
petitions is discretionary, especially when
alternative remedies are available. The
judgment emphasizes that while the court may
possess jurisdiction, the existence of an
alternative remedy influences the exercise of
discretion. The court may decline to invoke its
jurisdiction if adequate alternative remedies are
deemed more efficacious, particularly when
disputed questions of fact are involved.
Moreover, the judgment underscores the
importance of securing the ends of justice and
ensuring that alternative remedies remain open
and effective. Therefore, in the present case,
where the petitioner seeks relief through a writ
petition, despite the availability of an
alternative remedy in the form of an appeal
before the Tribunal, the court may decline to
exercise its jurisdiction. Instead, it may pass
appropriate orders to secure the ends of justice
while ensuring that the alternative remedy
remains open to the petitioner. As quoted by
the Hon'ble court:
"The proposition of law with regard
to alternative remedy is now a settled
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principle. It is not an absolute bar.
But where the alternative remedy is
adequate and efficacious and the
issues to be determined involve
elements of facts, which are
disputed, ordinarily the court is not
supposed to exercise such discretion.
A question involving determination
of facts can be dealt with more
efficaciously by the alternative
forum."
17. The learned Senior Standing Counsel for the respondent would
further submit that the petitioner is having fixed deposit for Rs.60,50,000/- and
having other cash deposits and therefore this Writ Petition is liable to be
dismissed.
18. I have considered the arguments advanced by the learned counsel for
the petitioner and the learned Senior Standing Counsel for the respondent. I
have also perused the records that were made available and I have also perused
the documents filed by the petitioner.
19. There is no dispute that the petitioner has suffered an adverse
Assessment Order dated 07.12.2011. The limitation for filing an appeal before
the Appellate Commissioner expired on 16.01.2012. The petitioner has also
not filed any appeal against the aforesaid Assessment Order dated 07.12.2011.
20. The petitioner thereafter suffered a Penalty Order under Section
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271(1)(c) of the Income Tax Act, 1961 on 29.06.2012. The petitioner's appeal
before the Appellate Commissioner against the aforesaid Penalty Order was
also dismissed on 16.09.2013. The last date for filing an appeal expired on
15.11.2013. Since the petitioner did not file further appeals before the
Appellate Commissioner and the Appellate Tribunal, liability under both the
Assessment Order dated 07.12.2011 and the Penalty Order dated 29.06.2012
stand confirmed against the petitioner.
21. As per Rule 68B of the 2nd schedule to the Income Tax Act, 1961, no
sale of immovable property shall be made under part III after the expiry of 7
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
provisions of chapter XX. Section 245-I of the Income Tax Act, 1961 relates to
order of the Settlement Commission. Chapter XX deals with appeals before the
Appellate Forum.
22. The Appellate Commissioner dismissed the appeal of the petitioner
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on 16.09.2013. Since no further appeal was filed by the petitioner before the
Appellate Tribunal against the aforesaid Penalty Order dated 16.09.2013, the
said order became final on 15.11.2013.
23. As far as the present facts are concerned, the 7 years period from the
end of the financial year of the Assessment Order dated 07.12.2011 would have
expired on 31.03.2019. The 7 years period from the end of the financial year of
the Penalty Order dated 29.06.2012 would have been expired on 31.03.2020.
However, the petitioner had filed an appeal before the Appellate Commissioner
against the Penalty Order dated 29.06.2012.
24. Thus, the limitation under Rule 68B of the 2 nd schedule to the Income
Tax Act, 1961 expired on 31.03.2021, i.e. 7 years from 31.03.2014 being the
end of the financial year in which the Penalty Order dated 16.09.2013 was
passed.
25. In the present case, the immovable property of the petitioner was
attached on 10.02.2021. This was few days before the period expired on
31.03.2021. On 26.02.2021, a proclamation of sale was made for the sale of
immovable property of the petitioner. The auction was fixed to be held on
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25.03.2021. However, there were no bidders during the auction that was held
on 25.03.2021.
26. As per the 1st proviso to Rule 68B of the 2nd schedule to the Income
Tax Act, 1961, the Board may, for the reasons to be recorded in writing, extend
the aforesaid period of 7 years by a further period not exceeding 3 years. In
this case, the aforesaid avenue has not been resorted to as an attempt was made
to bring the property to option by fixing the date of auction as 25.03.2021. This
Court is also not concerned with the situation contemplated in the 1st proviso to
Rule 68B of the 2nd schedule to theIncome Tax Act, 1961.
27. As per the 2nd proviso to Rule 68B of the 2nd schedule to the Income
Tax Act, 1961, an immovable property required to be resold due to the amount
of the highest pay being less than the reserve price or under the circumstances
mentioned in Rule 57 or Rule 58 or at the same is set aside under Rule 61, the
aforesaid period of limitation for the sale of immovable property shall extend
by one year.
28. Since the date of auction was fixed to 25.03.2021, on which date
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there are no bidders, it can be construed that the situation was covered by the
1st instance under 2nd proviso to Rule 68B of the 2nd schedule to the Income
Tax Act, 1961 i.e., where the immovable property is required to be resold due
to the amount of highest pay being less than the reserve price fixed.
29. Therefore, the extension of the period for bringing the immovable
property of the petitioner by one year by the Chief Commissioner of Income
Tax vide order dated 02.11.2021 cannot be questioned as it is in consonance
with the 2nd proviso to Rule 68B of the 2nd schedule to the Income Tax Act,
1961.
30. Therefore, the argument of the petitioner that the respondent Income
Tax Department was not authorised to extend the period of auction by one year
to 31.03.2022 on the ground that the situation contemplated in Rule 57, Rule 58
Rule 61 of the 2nd schedule to the Income Tax Act, 1961 were not attracted
cannot be countenanced.
31. As far as the defence of the petitioner, claiming that the petitioner is a
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labourer and therefore the property of the petitioner was exempted from
attachment by virtue of Rule 10 of the 2nd schedule to the Income Tax Act,
1961 read with section 60 of the Civil Procedure Code, 1908 is concerned, it
has to be examined from the status of the petitioner at the time of the
Assessment Order / Penalty Order which has given rise to the proceedings
under the 2nd schedule to the Income Tax Act, 1961.
32. The change in the status of the petitioner after the rights accrued to
the Income Tax Department to attach the property of the petitioner cannot be
whittled down. Therefore, a reference to Rule 10 of the 2nd schedule to the
Income Tax Act, 1961 cannot come to the rescue of the petitioner.
33. Consequently, the challenge to the Impugned Order dated 24.11.2021
extending the time for bringing the immovable property of the petitioner to sale
by auction by fixing the time till 31.03.2022 cannot be said to be beyond the
period of limitation.
34. In the result, this Writ Petition is liable to be dismissed. It is
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accordingly dismissed. No cost. Connected Writ Miscellaneous Petition is
closed.
02.01.2025
Index: Yes/No
Internet:Yes/No
Speaking Order / Non-Speaking Order
Neutral Citation: Yes/No
arb
To:
The Tax Recovery Officer-1,
Coimbatore-Main Building,
No.63, Race Course Road,
Coimbatore – 641 018.
C.SARAVANAN, J.
arb
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Pre-delivery Order in
02.01.2025
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