Mandatory time limit for sale of attached immovable property in tax recovery proceedings: attachment vacates if not completed within the prescribed period.

Rule 68B of the Second Schedule to the Income-tax Act requires sale of immovable property in recovery proceedings to be completed within three years from the end of the financial year in which the demand order becomes final. The provision is mandatory, and if the sale is not completed within that period, sub-rule (4) deems the attachment vacated. On the stated facts, the relevant order became final on 10.08.2010 and the prescribed period expired on 31.03.2014, so continuation of the attachment beyond that date was inconsistent with the statutory scheme. The attachment therefore stood vacated and the challenge succeeded.

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Issues: Whether the attachment of immovable property in tax recovery proceedings could continue after expiry of the period prescribed under Rule 68B of the Second Schedule to the Income-tax Act, 1961.

Analysis: Rule 68B prescribes that sale of immovable property in recovery proceedings must be completed within three years from the end of the financial year in which the order giving rise to the demand becomes final. The provision is mandatory and, by sub-rule (4), if the sale is not made within that period, the attachment is deemed to be vacated. On the facts, the relevant order became final on 10.08.2010 and the prescribed period expired on 31.03.2014. Continuation of the attachment beyond that date was contrary to the statutory scheme.

Conclusion: The attachment of the immovable property stood vacated and the challenge succeeded.

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