TaxTMI 
TaxTMI 
2006 (10) TMI 132
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....eals), vide order dated October 30, 1992, reduced the demand by partly allowing the appeals. The demand, vide notice dated March 29, 1993, against the petitioner stood as follows after the order of the first appellate authority: ----------------------------------------- Sl. No. Assessment year Amount (Rs.) ----------------------------------------- 1. 1980-81 9,280 2. 1981-82 1,20,131 3. 1982-83 2,23,616 4. 1983-84 2,49,628 5. 1984-85 2,94,504 6. 1985-86&n....
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....ng Officer took note of the order of the Income-tax Appellate Tribunal allowing the appeals of the petitioner for the assessment years up to 1986-87 as also dismissal of the appeal for the assessment year 1987-88 and also the outstanding liabilities against the petitioner for the assessment years 1990-91, 1991-92 and 1992-93. The Assessing Officer informed the Tax Recovery Officer that the following demand is outstanding against the assessee on March 18, 1997. Before the auction, reserve price of the shop in question was fixed by the Department as per the Department's valuer's report. The petitioner through his objection dated February 27, 1997, submitted that the reserve price to be fixed as per the wealth-tax assessment order for the assessment year 1988-89. The relevant portion of the said request, copy of which has been filed as annexure 3 to the writ petition, is reproduced below: "Kindly fixed the price as per W.T. assessment order for the assessment year 1988-89 copy file to you. The proposed price is too much below the actual cost. Therefore, the auction on lesser value than the market price should be stopped. The Income-tax Appellate Tribunal's order heard on Janu....
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....sements which appeared in the daily newspaper on March 19, 1997. With regard to the fixation of reserve price the stand of the Department is that it was fixed in consultation with the senior officers of the Department by associating technical expert, i.e., the Assistant Valuation Officer of the Department vide paragraph 18 of the counter-affidavit. The plea of non-issuance of fresh notice for the revised demand has been sought to be justified on the ground that the demands for the assessment years 1990-91 to 1992-93 were included and for the demand for the year 1987-88 no notice was required as there was no change/variation in demand by the order of the Income-tax Appellate Tribunal. Thus, no revised demand of notices were required to be served on the petitioner. Respondent No. 3, the auction purchaser has also filed a counter-affidavit and supported the auction proceedings and has come out with the case that the sale of the property has been confirmed by the concerned authority after examining all the aspects and provisions of law. The sale certificate has been issued to him and under no circumstances, the property sold can be reverted back to the petitioner. Learned counsel....
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.... the facts and circumstances of each case. By no stretch of imagination can be said that the asset which has been valued on the particular date will command the same market value after 8-9 years. Thus, the insistence of the petitioner without there being any supporting material to fix the reserve price in the light of the wealth-tax assessment for the assessment year 1988-89 is uncalled for. Noticeably no error or defect was pointed out by the petitioner in the process of valuing the asset by the valuer of the Department while fixing the reserve price of the shop in question at Rs. 2,50,000. The object and purpose of the fixation of the reserve price is that the said asset shall not be sold below the reserve price thus fixed. There is absolutely no material or tangible evidence on the record of the authorities below or before this court in the writ petition, that the shop sold at Rs. 2,72,000 has fetched a price lesser than the market price prevalent at the relevant time in the locality. The Valuation Officer, Income-tax Department, Agra, by his report dated December 10, 1996, fixed the valuation of the shop in question at Rs. 2,50,000 which was treated as reserve price by the Depa....
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....rty for the assessment years 1980-81 to 1987-88 for recovery of Rs. 38,64,201 plus interest vide annexure 1 to the writ petition, which is dated August 23, 1992. The said outstanding liability was there when the sale proclamation was drawn. In other words, it was correctly drawn on November 27, 1997, and to that extent there is no dispute between the parties. Before the auction took place the Income-tax Appellate Tribunal allowed the appeals for the assessment years 1980-81 to 1986-87, the appeal relating to the assessment year 1987-88 was dismissed. A sum of Rs. 21,01,465 is the balance demand for the assessment year 1987-88. The Tax Recovery Officer as well as the Commissioner of Income-tax (Appeals) have mentioned in their orders that in the meantime the assessment for the assessment years 1990-91 to 1992-93 were also completed by the Assessing Officer and intimation of the same was given by them to the Tax Recovery Officer, who in his turn had issued notices for the recovery of Rs. 6,63,506 plus interest Rs. 17,94,783 and Rs. 39,002 plus interest for the aforesaid three assessment years. The show-cause notices issued to the assessee-petitioner in Form No. 57 to deposit the afor....
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....ulter be given due importance as regards the fixation of upset price. The notice is publicly given before proclamation is drawn. The defaulter gets an opportunity and he has the option to suggest the reserve price. The above observations were made in a different factual context. In that case, there was failure for giving notice drawing up for proclamation. The reserve price in respect of property was fixed on previous auction but it was not incorporated for sale proclamation and no notice was given to the defaulter before drawing up the proclamation. In this factual background it has been held in the above case that "as there was no notice given to the defaulter about drawing up of the proclamation, the consequent steps cannot be held as valid and binding". It was further held that the property could be put to auction only after compliance with the statutory formalities to be observed. This is not the position in the case in hands. The sale proclamation was drawn, notice of demand was served on the petitioner and his only objection is that effect to the order of the Appellate Tribunal was not given. The fact that the demand for the assessment year 1987-88 to the tune of Rs. 21 lakh....
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....ion of appeal was given by the assessee in March, 1977, yet the demand was not modified. In this factual ground it was held that the jurisdiction of the Income-tax Officer under section 222 of the Income-tax Act to attach and sell the immovable property of the assessee intimates the default of payment of arrears due. The relevant portion of the judgment is reproduced below: "The effect of reduction of tax in appeal was that the liability of the petitioner had been substantially reduced. It could not, therefore, be deemed to be in arrears of the amount erroneously mentioned in the recovery certificate. The jurisdiction of the Income-tax Officer under section 222 of the Income-tax Act to attach and sell the immovable property, of the assessee emanates from default in payment of arrears due. When there was a mistake about it and the certificate was issued under a misapprehension, then the proceedings for sale stood vitiated. Alteration or withdrawal of the certificate after the sale under sub-section (4) of section 225 could not remove the infirmity in the sale which took place on a recovery certificate on arrears which did not exist in fact. In Union of India v. Jardine Henders....
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....ervice Commission, AIR 2003 SC 2661: "Each case depends on its own facts and a close similarity between one case and another is not enough because even a single significant detail may alter the entire aspect. In deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide, therefore, on which side of the line a case falls, the broad resumblance to another case is not at all decisive." The aforesaid observation has been reproduced and followed in State of Haryana v. AGM Management Services Ltd. [2006] 6 JT 19 (SC). There is an additional reason for not following the dictum laid down in the case of Mannoo Lal Kedar Nath (HUF) [1988] 172 ITR 612 (All). The court was concerned with the statutory provisions, namely, section 225(4) of the Income-tax Act, as it then existed, i.e., the law as it was up to March 31, 1989. Prior to its substitution, section 225 by the Direct Tax Laws (Amendment) Act, 1987, it stood differently. However, it is not necessary to dilate any further in the matter inasmuch as we are presently concerned with the case where the auction sale has taken pla....
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....nvalid, except in one situation as has been pointed out by the apex court in the case of Sri Mohan Wahi v. CIT [2001] 248 ITR 799 (SC); AIR 2001 SC 3906. In this case the sale proclamation was drawn on December 3, 1979, and the sale took place actually on January 11, 1980. The demand against the assessee was reduced to nil before confirmation of sale, in this fact situation on interpretation of rule 56 in the Second Schedule to the Income-tax Act, it was held that it casts an obligation on the Tax Recovery Officer and the order confirming the sale consciously with due application of mind to the relevant facts relating to the sale by public auction which is to be confirmed. Under rule 63, the confirmation of sale is not automatic. Between the date of sale and the actual passing of the order, the confirmation of sale if an event happens and if the fact comes to the notice of the Tax Recovery Officer, which goes to the root of the matter, the Tax Recovery Officer may refuse to pass an order confirming the sale. The fact that the sale was being held for an assumed demand, which is found to be fictitious or held to have been not existed at all, in fact or in the eye of law is one such e....
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....to mention here that learned counsel for the petitioners had half heartedly contended that the recovery proceedings in the facts and circumstances of the present case stood vitiated in law as no fresh demand notice had been served upon the assessees in pursuance of the order passed by the Appellate Assistant Commissioner whereby the amount of tax was substantially reduced. Learned counsel for the Revenue met this argument by inviting our attention to the ruling in ITO v. Seghu Buchiah Setty [1964] 52 ITR 538 (SC) and the ruling in Gopi Chand v. Union of India [1976] 102 ITR 707 (P & H) as well as the ruling in Union of India v. Jardine Henderson Ltd. [1979] 118 ITR 112 (SC). Our attention was also invited to the provisions of sections 3 and 5 of the Taxation Laws (Continuation and Validation of Recovery Proceedings) Act, 1964. A perusal of the ruling and the provisions of the Validation Act leads to an inference that no fresh notice of demand need be served upon the assessee in pursuance of reduction or enhancement of the tax in appeal. In the ruling in Union of India v. Jardine Henderson Ltd. [1979] 118 ITR 112, their Lordships of the Supreme Court have indicated as below: 'Cla....
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.... Officer to cancel the certificate if, for any reason, he thinks it necessary so to do, or to correct any clerical or arithmetical mistake therein." In view of the above discussion, looked from any angle there is no merit in point No. 2 raised by learned counsel for the petitioner. Lastly, a dispute was raised that in search and seizure operation a sum of Rs. 16,55,000 was seized from the premises of the petitioner on February 25, 1987. This amount ought to have been adjusted against the demands in accordance with the provisions of section 132B of the Income-tax Act. The said contention has been repelled by the Commissioner of Income-tax (Appeals) on the ground that certain payments out of seized cash were made against the demand of the petitioner and his family members as per request of the assessee for doing so it has referred a letter dated March 17, 1997, addressed to the Tax Recovery Officer in connection with the outstanding demand for the assessment years 1987-88, 1990-91 to 1992-93. The said dispute, in my opinion, has been raised by the petitioner as after thought and no such grievance was raised earlier during the attachment/recovery proceedings as also during the s....
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.... the seized cash earlier adjusted against the protective demands of the family members, was later on adjusted against demand in the assessee's case. On a perusal of the records of the Assessing Officer, it is also noticed that these payments out of seized cash against the demand of family members were made as per the request of the assessee for doing so." The Department has also justified their action of adjustment of the seized cash against the demand of assessment years to which income found undisclosed and the existing liabilities as per the provisions of section 132(3), Income-tax Act, vide paragraph 34 (g) and (h) of the counter-affidavit. In the rejoinder affidavit, the averments made in the above paragraph having not been specifically denied and only this much has been stated that the contents of paragraph 34(g) and 34(h) are misconceived and hence are wrong and incorrect and not accepted and in reply thereto the contents of earlier paragraphs of the writ petition are reiterated here. The denial not being specific, the averments made in the counter-affidavit are treated correct. Before parting with the case, it is desirable to note that under rule 61 read with rule 63 ....