TaxTMI 
TaxTMI 
1998 (4) TMI 90
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....efaulters with the result that their immovable property situate at Kanpur, being several houses, big bungalows and other properties, were attached by the IT Department, as the law so provides, to realise the arrears of income-tax by sale of attached properties. At the relevant time, the gross income-tax arrears stood at Rs. 58,27,534. The subject-matter of this petition relates, specifically, to the property 7/76 Tilak Nagar, Kanpur. The property having been attached by the IT authorities, it was attempted to be sold, in the first instance in 1967. The sale did not materialise because the property would not fetch the price which the IT Department was anticipating. The bids offered at the public auction were inadequate and below the reserved price. Consequentially, those who owned the properties, the defaulters, aforesaid, also raised objection, as it was within their right to do so, that the reasonable market price was not forthcoming as a result of the public auction. Their objection was that should the properties fetch a reasonable market price and beyond the bids which were received, their income-tax liability would be reduced. It is accepted by the IT Department that with th....
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.... it has been confirmed by the TRO. " The Court refers to this aspect of the matter at the very outset as the controversy itself centres around the right of whoever may be the persons interested. 5. The Court will now revert to certain essential facts. When between the years 1967 to 1973, that is for about six years, the IT Department could not arrange to sell the property which was already attached to the Department as arrears of income-tax had not been paid, the defaulters approached the Department for permission to negotiate a sale under r. 66. The first offer which met with satisfaction and requirement of the IT Department came from one Amar Chand Agrawal on 3rd May, 1982. The offer was addressed to the CIT, Kanpur. It was for Rs. 3,50,000. This offer stood on record for almost seven months. As an abundant caution before the offer could be considered for the purposes of being accepted or approved by the IT Department, it wrote to the defaulters through the CIT, Kanpur, by his letter dt. 20th May, 1982. It said whereas one Sri Amar Chand Agrawal had left an offer for the purchase of the property, consent of all other co-owners may be obtained and filed in the office. In ....
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....yond and better than the value of the property assessed by the official valuer. The note recorded by the TRO for the CIT, taking all the circumstances into account mentions "looking to the facts narrated above, if the proposal is approved, the private sale may be allowed in the interest of the Revenue. " On 23rd Nov., 1982, the officer of the CIT, Kanpur, recorded an endorsement for the TRO : "TRO should decide the matter on merit." The TRO on 24th Nov., 1982, wrote to petitioner No. 1, Amar Chand Agrawal, that the offer of 3rd May, 1982, upon which consent had been received from the defaulters on 3rd June, 1982, has been considered carefully and it is accepted. The purchasers were now required to deposit a sum of Rs. 3,50,000 in favour of the TRO within seven days of the receipt of the letter, copy of this letter was endorsed for information, as an abundant caution, by the TRO to : (1) the IAC, C-Range, Kanpur, (2) Mr. S.N. Bagla, Karta, a defaulter, (3) Mr. B.P. Bagla, another defaulter, and (4) the CIT, Kanpur, in compliance to his letter dt. 23rd Nov., 1982. Having verified the valuation of the property and satisfied that the offer was more than what was valued, and having a....
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....e appeal are reproduced below : "The CIT, Officer of the CIT, Kanpur Ref. : Your letter No. Appeal/86/CIT/Recy/82-83/354/6638 dt. 23rd March, 1983 Sir, On the above subject we have to submit as under : The property No. 7/46, Tilak Nagar, Kanpur, with all the rights the previous owners (the vendors) had therein has vested in us (the vendees) absolutely by virtue of its release and duly authorised private sale confirmed in our name ; the sale thereby becoming conclusive and absolute. The previous owners as vendors have also in he absence of any impediment or restraint validly executed the corresponding sale deed which is duly registered and the document (title deed) is in our hands. We continue to deal with and the possessed of the said property as its absolute owners since then. We are further advised to state on legal advice that in the context of the letter under reply specific reply can be given or it called for in the absence of any intimation worth the name about the alleged grounds of objections, cause against us and other particulars which can be known only by inspection of records, and the relevant connected files. However, the writing/representation vag....
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....p; Yours faithfully, (Sd) Amar Chand Agrawal, For Amar ("hand Agrawal & Ors. Dt. : 4th April, 1983 &n....
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..... Agrawal, respondents Nos. 3 and 4, though the names of their learned counsel have been printed throughout. On behalf of respondent No. 3, D.R. Bajpayee, no one appeared at all. On behalf of respondent No. 4, B.K. Agrawal, Mr. S.P. Mehrotra, who has filed his memoranda of appearance, contended that he is without instructions as his brief stood transferred to another counsel. A party, Smt. Indumati Singh, seeking impleadment, has filed an application and is represented by Ms. Poonam Srivastava, but she made no submissions either. The arguments on behalf of the parties who addressed the Court were, in effect, i.e., the petitioner and the IT Department. 7. On behalf of the petitioners, the arguments were addressed by Mr. V.B. Upadhyay, senior advocate, assisted by Mr. V.B. Singh, advocate. The contention of counsel for the petitioners was that respondents Nos. 3 and 4 had no locus standi in the matter, regard being had to the circumstances, that the property was being permitted to be sold after a public auction did not fetch the desired result that the public auction had been postponed to enable the defaulters to raise the amount due under the certificate, on authorisation by the ....
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....bjections and having filed a misplaced appeal under r. 86, otherwise not maintainable, they neither had any risk nor anything to lose as all that they did was that in lieu of Rs. 3.5 lakhs deposited by the petitioners under the directions of the TRO after the matter had been negotiated as a tripartite arrangement between the TRO, the defaulters and the petitioners, one respondent offered Rs. 50,000 more and then the other added Rs. 10,000 over this. 8. It was contended on behalf of the petitioners that Sch. II itself provides remedies to any person who may be aggrieved or may feel that his interests are affected by a sale. In the circumstances, any person whose interests may be affected, has remedies laid out. The Court's attention was invited to r. 61 and it was submitted that the affected persons could be : (a) the Revenue, as the expression used in this rule are "such ITO as may be authorised by the Chief CIT or CIT in this behalf", (b) the defaulter, or (c) any person whose interests are affected by the sale, and may, at any time within thirty days from the date of the sale, apply to the TRO to set aside the sale of immovable property on the ground that notice was not served....
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....very Commissioner vs. K. Basavarajappa (1992) 197 ITR 398 (Kar) : TC 52R.676; Boddpati Ramachandra Rao vs. Special Deputy Tahsildar (1969) 71 ITR 277 (AP) : TC 52R.815 and K. Basavarajappa vs. TRC (1997) 138 CTR (SC) 202 : (1997) 223 ITR 297 (SC) : TC 52R.669. The last is a case decided by the Supreme Court by which the decision in Tax Recovery Commissioner vs. K Basavarajappa, has been affirmed and the matter of D.V. Satyanarayana vs. Tax Recovery Commissioner (1992) 103 CTR (Kar) 261 : (1992) 197 ITR 407 (Kar) : TC 52R.815, has been approved. Regard being had to the overall circumstances of the four cases, the net result on the law on who may be a person interested is best summed up by the decision of the Supreme Court in the matter of K. Basavarajappa vs. Tax Recovery Commissioner. The Supreme Court observed that "It is axiomatic that mere agreement to sell creates no legal interest or right in the property which is the subject-matter of the agreement". The Supreme Court came to the conclusion that "a person who had obtained an agreement to sell which is hit by r. 16 of the Second Schedule to the IT Act cannot make an application under r. 61 for setting aside the sale as a perso....
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....interested. As arguments concluded on 22nd April, 1998, the next day learned senior advocate fairly acknowledged that r. 66 was a code in itself as a whole unaffected by any other provision. 12. The Court will take up the submission as presented on behalf of the parties. The Court will take up the last submission as now there appears to be only an academic issue on what the nature of the proceedings under r. 66 are. Suffice it to say that the Court finds that the provisions of r. 66 do not appear different in principle and content than O. 21, r. 83 of the CPC. Similar provisions analogous to r. 66 as are contained under O. 21, r. 83 stipulate the principle that should a public auction be lacking in getting a reserve price or an anticipated price, a Court if not satisfied with the price fetched may permit a judgment debtor facing a decree to authorise him to arrange a better price by negotiating a sale. Likewise, this has been done in the present case, when the TRO authorised the defaulters to negotiate a private sale. Insofar as the period of 30 days is concerned, it is in the context of a public auction. The appellate authority apparently, failed and did not notice the all impo....