Limitation under Rule 68B(1) barred the auction notice, and the consequential attachment was set aside.

Rule 68B(1) of the Second Schedule to the Income-tax Act was treated as prescribing a three-year limit for sale proceedings, because the Central Board of Direct Taxes could not extend that statutory period to four years by notification. The court noted that the earlier Andhra Pradesh High Court ruling invalidating the notification had been affirmed by the Supreme Court, and that a later connected decision did not hold that Rule 68B(1) itself fixed a four-year period. Applying the three-year limit, the auction notice dated 18.11.2004 was issued after expiry of time calculated from 01.04.2001, and the record did not show a resale covered by the proviso. The notice was therefore quashed, and the consequential attachment was also set aside.

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Issues: Whether the auction notice dated 18.11.2004 was barred by limitation under Rule 68B(1) of the Second Schedule to the Income-tax Act, 1961 and, if so, whether the consequent attachment of the property also had to be set aside.

Analysis: The period prescribed by Rule 68B(1) was held to be three years, because the Central Board of Direct Taxes had no authority to enlarge the statutory period to four years by notification. The judgment of the Andhra Pradesh High Court invalidating the notification was affirmed by the Supreme Court, and the later Supreme Court decision in a connected matter did not decide that Rule 68B(1) itself prescribed four years. On the facts, the notice dated 18.11.2004 was issued after expiry of the three-year period calculated from 01.04.2001, and the record did not establish that the case was one of resale attracting the proviso.

Conclusion: The auction notice was beyond limitation and was liable to be quashed. The attachment made in consequence of that notice was also set aside.

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