Court orders Tax Recovery Officer to refund sale price with interest to appellants. Appellants to seek refund promptly.

The Court directed the Tax Recovery Officer to refund the sale price with interest to the appellants for the property sale set aside by the Income Tax Department. The appellants were instructed to approach the Officer for prompt refund within six weeks, as mandated by Rule 64 of the Income Tax Act. Additionally, the Court ordered the Income Tax Department to provide physical possession of the property to the appellants, emphasizing adherence to Rule 65 for issuing sale certificates and facilitating possession transfer. The judgment aimed to ensure swift resolution and compliance with refund and possession transfer rules in such cases.

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Issues:
1. Refund of sale price with interest to the appellants.
2. Non-delivery of physical possession of the property to the appellants by the Income Tax Department.

Analysis:

1. Refund of Sale Price with Interest:
The appeal was against an order allowing the sale of properties by the Income Tax Department for recovery of tax dues. The appellants were declared successful bidders for one property, but the sale proclamation for the other property was set aside. The appellants had paid the sale price in 2006, which was not refunded with interest. The learned Single Bench directed the appellants to approach the Tax Recovery Officer for refund, emphasizing expeditious disposal within six weeks. Rule 64 of the 2nd Schedule to the Income Tax Act mandates the return of purchase money with interest if a sale is set aside. The Court agreed that the Tax Recovery Officer should determine the interest payable, as per the rule.

2. Non-Delivery of Physical Possession:
The second grievance was the failure to hand over physical possession of the property to the appellants despite being declared successful bidders. The Court noted that a sale certificate had been issued, making the sale absolute, and the Income Tax Department had no justification for withholding possession. Rule 65 of the 2nd Schedule requires the Tax Recovery Officer to grant a certificate specifying the property sold and the purchaser. The Court issued interim directions for the respondents to refund the purchase money with interest by a specified date and for the Tax Recovery Officer to provide an affidavit explaining the delay in handing over possession, the roadblocks, and the necessary procedures.

The judgment emphasized the strict adherence to the rules governing the refund of purchase money and the delivery of possession in cases where property sales are set aside. The Court's directions aimed to ensure prompt action by the Income Tax Department in refunding the appellants and facilitating the transfer of physical possession of the property without further delay.

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