Settlement Commission payment-installment and conclusive demand under Rule 68B(1) - writ dismissed on discretionary equitable grounds.

The petition challenged a Settlement Commission order and the computation of final demand after a rectification application; the HC upheld the Principal Commissioner's view as a possible one and dismissed the writ. The court faulted the petitioner for failing to disclose a January 30, 2017 communication that intimated the final revised demand including interest and penalty. The judgment treats the term "conclusive" in the relevant limitation rule as denoting finality of demand, and emphasises that Article 226 jurisdiction is discretionary and equitable and should not benefit a defaulting taxpayer. Writ petition dismissed on these grounds.

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Issues Involved:
1. Quashing and setting aside the sale of a residential bungalow attached by the Income Tax Department.
2. Whether the order of the Settlement Commission is final and conclusive.
3. Applicability of Rule 68B of the Second Schedule of the Income Tax Act, 1961 regarding the limitation period for the sale of attached property.
4. Impleadment of the highest bidder in the auction as a necessary party to the writ petition.
5. Whether the petitioner has defaulted in payment of tax dues and the consequences thereof.

Detailed Analysis:

1. Quashing and Setting Aside the Sale of the Residential Bungalow:
The petitioner sought to quash the sale of his residential bungalow, which was attached by the Income Tax Department due to unpaid tax liabilities. The petitioner argued that the sale was illegal and beyond the permissible period under Rule 68B of the Second Schedule of the Income Tax Act, 1961. The petitioner contended that the order of the Settlement Commission dated 1st December 2011, which determined the tax dues, had become final and conclusive, and the sale was conducted after the expiry of the limitation period.

2. Finality and Conclusiveness of the Settlement Commission’s Order:
The petitioner argued that the order of the Settlement Commission dated 1st December 2011 was final and conclusive under Section 245-I of the Income Tax Act. The petitioner contended that non-payment of tax dues due to financial difficulties does not affect the conclusiveness of the Settlement Commission’s order. The respondents, however, argued that the order was not conclusive as the petitioner failed to comply with the conditions of payment in installments. The Principal Commissioner of Income Tax held that the order of the Settlement Commission becomes conclusive only upon fulfillment of the conditions, which the petitioner failed to meet.

3. Applicability of Rule 68B of the Second Schedule of the Income Tax Act:
Rule 68B prescribes a time limit of three years for the sale of attached immovable properties from the end of the financial year in which the order giving rise to the demand becomes conclusive. The petitioner argued that the sale conducted in 2017 was beyond this period. The respondents contended that the period of limitation was extended due to the petitioner’s own requests for extension of time and pending proceedings before the Settlement Commission. The Principal Commissioner held that the order of the Settlement Commission was not conclusive due to the petitioner’s continuing default, and thus, the limitation period had not expired.

4. Impleadment of the Highest Bidder in the Auction:
The highest bidder in the auction, Deccan Homes Pvt. Ltd., sought to be impleaded as a necessary party to the writ petition, arguing that it had a vital interest in the outcome as it had paid a substantial amount towards the purchase of the property. The court allowed the highest bidder to intervene and oppose the writ petition, noting that the bidder’s rights and contentions were directly affected by the petition.

5. Petitioner’s Default in Payment of Tax Dues:
The petitioner admitted to financial difficulties and requested extensions for payment of tax dues. The respondents argued that the petitioner was a defaulter who failed to comply with the payment schedule, leading to the attachment and sale of the property. The Principal Commissioner noted that the petitioner’s default was continuous and that the order of the Settlement Commission was not conclusive due to non-compliance with the conditions of payment in installments.

Conclusion:
The court dismissed the writ petition, holding that the petitioner’s failure to comply with the conditions of the Settlement Commission’s order rendered the order non-conclusive. The court found that the sale of the attached property was justified and within the permissible period, considering the petitioner’s requests for extensions and pending proceedings. The court also allowed the highest bidder to intervene, recognizing its interest in the outcome of the petition. The petitioner’s arguments based on Rule 68B and the finality of the Settlement Commission’s order were rejected, and the court upheld the actions of the Income Tax Department.

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