Court overturns auction sale due to irregularities, directs review under rule 61

The court set aside the auction sale of the petitioner's property for tax recovery due to serious irregularities. The Tax Recovery Officer erred in not considering the petitioner's application under rule 61 and rejecting it under rule 60. The court directed a review of the application under rule 61, considering auction sale irregularities. The amount deposited was to be treated as a deposit under rule 61(b). The decision declaring the auction sale final was overturned, and the Tax Recovery Officer was instructed to evaluate the application under rule 61 thoroughly.

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Issues:
1. Validity of auction sale of immovable property for tax recovery.
2. Application of rules 60 and 61 of the Second Schedule to the Income-tax Act, 1961.

Analysis:
1. The petitioner's property was auctioned by the Tax Recovery Officer for recovery of tax arrears. The property was sold for a price significantly lower than the reserve price, leading to the petitioner seeking to set aside the auction sale.

2. Rule 60 of the Second Schedule to the Income-tax Act, 1961 allows the defaulter to apply for setting aside the sale within 30 days by depositing the specified amount with interest and penalty. The petitioner deposited an amount as directed by the Tax Recovery Officer but was informed that the auction sale cannot be set aside as the full arrears were not paid.

3. However, the petitioner had also filed an application under rule 61, citing serious irregularity in the auction sale where the property was sold below the reserve price. The court held that the Tax Recovery Officer erred in not considering the application under rule 61 and rejecting it under rule 60. The Officer should have assessed if the auction sale irregularity warranted setting it aside under rule 61.

4. The court directed the Tax Recovery Officer to review the petitioner's application under rule 61 within four weeks, considering the irregularities in the auction sale and the publication of the sale proclamation. The amount deposited by the petitioner was to be treated as a deposit under rule 61(b).

5. Consequently, the decision declaring the auction sale final was set aside, and the Tax Recovery Officer was instructed to evaluate the application under rule 61 thoroughly based on the judgment's observations.

6. The court made the rule absolute, indicating the binding nature of the judgment, and no costs were awarded in the circumstances of the case.

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