Court sets aside sale order for residential house, directs sale of firm's property for tax recovery. Proportionality emphasized.

The court granted the writ petition, setting aside the orders for the sale of the residential house and directing the sale of the firm's property to recover income-tax dues. Emphasizing proportionality in property sales for recovery purposes, the court referenced legal provisions and judicial precedents, including Order 21, rule 64 of the Civil Procedure Code and a Supreme Court decision in Ambati Narasayya v. M. Subba Rao. The judgment highlighted the necessity of selling only what is required to satisfy the recovery amount, rather than disposing of the entire attached property indiscriminately.

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Issues:
Challenge to the proclamation of sale and order passed by Tax Recovery Officer for auctioning property. Interpretation of rule 86 of the Income-tax Rules, 1962 regarding property attachment and sale.

Analysis:
The petitioner sought a writ to quash the proclamation of sale and order passed by the Tax Recovery Officer for auctioning a property. The petitioner's late husband was involved in a partnership and faced recovery proceedings for undisclosed income-tax dues. The petitioner argued that the recovery amount was not substantial compared to the value of the attached property, suggesting that the property of the firm should be sold first before proceeding to the residential house. Reference was made to rule 86 of the Income-tax Rules, 1962, which governs the sale of attached property. The court emphasized that the recovery authority can only sell a portion of the attached property necessary to satisfy the recovery amount, as per Order 21, rule 64 of the Civil Procedure Code. The court highlighted the importance of selling only what is required to meet the recovery, rather than blindly selling the entire attached property.

The court referred to a Supreme Court decision in Ambati Narasayya v. M. Subba Rao, emphasizing that only the property or portion needed to satisfy the recovery should be sold. Based on this interpretation, the court set aside the orders related to the sale of the residential house and directed the respondents to first sell the property of the firm to realize the income-tax dues. The judgment allowed the petition with directions for the sale of the firm's property, maintaining that the recovery should be proportionate to the amount due, and no further sale of the residential house should occur until necessary.

In conclusion, the court granted the writ petition, setting aside the orders regarding the sale of the residential house and instructing the sale of the firm's property to recover the income-tax dues. The judgment highlighted the importance of proportionality in property sales for recovery purposes, in line with the legal provisions and judicial precedents.

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