Private sale under recovery proceedings confirmed under the Second Schedule requires forwarding of the sale certificate to the Registering Officer.

A sale of attached immovable property by private negotiation under paragraph 66 of the Second Schedule to the Income-tax Act, 1961 is a sale under the Schedule once authorised and confirmed by the Tax Recovery Officer. The Second Schedule is not confined to public auction, and a confirmed private sale attracts the same sale certificate procedure. Rule 21 of the Income-tax (Certificate Proceedings) Rules, 1962 requires the Tax Recovery Officer to send a copy of the sale certificate to the Registering Officer, and the reference in section 89(4) of the Registration Act, 1908 to public auction does not defeat that duty on these facts. The notice proposing cancellation of the certificate was unsustainable and was quashed.

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Issues: Whether a sale of attached immovable property by private negotiation under paragraph 66 of the Second Schedule to the Income-tax Act, 1961 is to be treated as a sale under the Schedule for the purposes of issuance and forwarding of the sale certificate, and whether the Tax Recovery Officer is bound to send a copy of that certificate to the Registering Officer.

Analysis: The property had been attached in recovery proceedings under the Second Schedule to the Income-tax Act, 1961. On the defaulter's request, the Tax Recovery Officer postponed the proposed auction sale and authorised sale by private negotiation under paragraph 66. The sale was thereafter confirmed by the Tax Recovery Officer and a sale certificate was issued. The Court held that the Second Schedule does not confine itself to public auction alone, because paragraph 66 also permits private sale subject to confirmation by the Tax Recovery Officer. Once such a sale is authorised and confirmed, it is a sale under the Schedule. Rule 21 of the Income-tax (Certificate Proceedings) Rules, 1962 casts a duty on the Tax Recovery Officer to send a copy of the sale certificate to the Registering Officer, and the reference in section 89(4) of the Registration Act, 1908 to public auction does not defeat that obligation in the facts of the case. The show-cause notice proposing cancellation of the certificate on the footing that such a certificate could issue only in case of public auction was therefore unsustainable.

Conclusion: The sale by private negotiation was held valid for purposes of the Second Schedule, and the Tax Recovery Officer was required to forward the sale certificate copy to the Registering Officer; the notice seeking cancellation was liable to be quashed.

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