Tax recovery sale invalid where auction proceeded on an unrevised and inflated arrears certificate.

Recovery of immovable property for tax arrears is valid only where arrears are actually due. Because the demand had already been reduced in appeal before the auction, the recovery certificate continued to reflect an inflated and non-existent arrears figure, so the assessee could not be treated as liable for that amount. A later modification or withdrawal of the certificate under section 225(4) could not cure a sale already conducted on the basis of the mistaken certificate. The auction sales were therefore without jurisdiction and invalid, though the Department remained free to proceed in accordance with law.

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Issues: Whether the sale of the assessee's immovable property in recovery of income-tax and wealth-tax arrears was valid when the demand had already been reduced in appeal and the recovery certificate proceeded on an inflated and non-existent arrears figure.

Analysis: The Department's own records showed that the tax demand for several years had been substantially reduced much before the auction, yet the recovery certificate was not modified and the sale was held on the basis of the unrevised figure. The power to attach and sell immovable property under section 222 of the Income-tax Act, 1961 arises only where there are arrears actually due. Once the demand had been reduced, the assessee could not be treated as in arrears of the amount stated in the certificate. A later alteration or withdrawal of the certificate under section 225(4) could not cure the defect in a sale already conducted on a mistaken certificate.

Conclusion: The sale was without jurisdiction and invalid; the auction sales were quashed, while the Department was left free to proceed in accordance with law.

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