TaxTMI 
TaxTMI 
2026 (8) TMI 1435
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.... the Income Tax Act, 1961 (the I-T Act), were issued to the assessee in default and certificates were drawn up by the tax recovery officer (TRO) under Section 222 of the I-T Act. After issuing notice under Rule 2 of the second schedule, the impugned proclamation of sale was made on 10.07.2025. Contentions on behalf of the petitioner 4. Learned counsel for the petitioner relied on Rule 68B of the second schedule to the I-T Act to contend that no sale of immovable property shall be made under part III of the second schedule after the expiry of three years from the end of the financial year in which the assessment order was issued. Learned counsel submits that the three year period expired on 31.03.2013 in relation to assessment year 2007- 2008 because the assessment order was issued on 28.12.2009 and the three year period commenced on 01.04.2010 (end of the financial year) and ended on 31.03.2013. As regards assessment year 2008-2009, he submits that the assessment order was issued on 28.12.2010 and the period of limitation expired on 31.03.2014 (i.e.. 01.04.2011 to 31.03.2014). As regards assessment year 2009-2010, he submits that the assessment order was issued on 18.03.2014 ....
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....rt. Contentions on behalf of the respondent 9. In response to these contentions, learned Senior Standing Counsel submits that the assessee is the partnership firm, namely, M/s RJK Investments and that as per Section 188A of the I-T Act, joint and several liability is imposed on the partners if the assessee is in default. According to learned counsel, the tax demand relating to assessment years 2007-2008 and 2008-2009 were discharged by the partnership firm. As regards assessment years 2009-2010 to 2011-2012, she submits that the tax demand was not discharged thereby resulting in recovery proceedings under Second Schedule. She also submits that the proceedings became conclusive and final in terms of Rule 68B only after the assessee failed to discharge the demand under the notices of demand. With regard to assessment year 2009-2010, she points out that an appeal was lodged by the assessee and that said appeal was disposed of on 23.08.2016. The relevant financial year, therefore, ended on 31.03.2017. If the three year limitation period were to be computed from said date, she submits that the amendment came into force before the expiry thereof. As a result, she submits further th....
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.... of Section 222 of I-T Act. Because these proceedings are against a partner of the firm, it is apposite to set out Section 188A: "Every person who was, during the previous year, a partner of a firm and the legal representative of any such person who is deceased, shall be jointly and severally liable along with the firm for the amount of tax, penalty or other sum payable by the firm for the assessment year to which such previous year is relevant, and all the provisions of this Act, so far as may be, shall apply to the assessment of such tax or imposition or levy of such penalty or other sum." The fact that the petitioner was a partner during the relevant years is not disputed. The principal defence raised by the petitioner is on the ground of limitation. This contention is required to be tested in relation to each assessment year. LIMITATION IN RESPECT OF ASSESSMENT YEARS 2007-2008 and 2008-2009 14. The assessment orders in respect of the above mentioned assessment years were issued on 28.12.2009 and 28.12.2010, respectively. The agreed position is that no appeals were filed against said assessment orders by the assessee. Rule 68B(1), as it stood during the relevan....
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....nded Rule 68B is as under: 68B. (1) No sale of immovable property shall be made under this Part after the expiry of seven years from the end of the financial year in which the order giving rise to a demand of any tax, interest, fine, penalty or any other sum, for the recovery of which the immovable property has been attached, has become conclusive under the provisions of section 245-I or, as the case may be, final in terms of the provisions of Chapter XX: Provided that the Board may, for reasons to be recorded in writing, extend the aforesaid period for a further period not exceeding three years. Provided that where the immovable property is required to be re-sold due to the amount of highest bid being less than the reserve price or under the circumstances mentioned in rule 57 or rule 58 or where the sale is set aside under rule 61, the aforesaid period of limitation for the sale of the immovable property shall stand extended by one year. (2) In computing the period of limitation under sub-rule (1), the period- (i) during which the levy of the aforesaid tax, interest, fine, penalty or any other sum is stayed by an order or injunction of ....
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.... limitation comes into force. A number of judgments of this Court have recognised the aforesaid proposition:" 18. Thus, if the period of limitation had expired as on the date of entry into force of the amendment, the amended period cannot be made applicable. This was the case in relation to assessment years 2007-2008 and 2008-2009. As discussed above, as regards assessment year 2009- 2010, the period of limitation under pre-amended Rule 68B would have expired on 31.03.2020. Prior thereto, the amendment took effect from 01.09.2019. Therefore, the amended time limit of seven years is applicable in respect of this assessment year. If the limitation period of seven years were to be applied, it would extend up to 31.03.2024. Since the sale has not taken place as on date, even said period is insufficient. Learned Senior Standing Counsel, however, contends that the extension granted by the Supreme Court is applicable. I turn to this aspect next. 19. During the period impacted by the Covid-19 pandemic, the Hon'ble Supreme Court directed that the period running from 15.03.2020 to 28.02.2022 shall stand excluded for purposes of computing applicable periods of limitation under any gener....
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....ply to the TRO within thirty days from the date of sale to set aside the sale by depositing the amount specified in the proclamation of sale and by agreeing to pay penalty to the purchaser. The purchaser has the right to apply to set aside the sale on the ground that the defaulter has no saleable interest in the property under Rule 62. 22. Considering these provisions and the nature of functions carried out by the TRO, I conclude that these functions affect the rights and liabilities of parties. Therefore, these functions qualify as quasi-judicial functions. As a corollary, I further conclude that the extension of time under the order of the Supreme Court is applicable to proceedings before the TRO. In effect, the period running from 15.03.2020 to 28.02.2022 shall stand excluded for purposes of computing the period of limitation. If limitation were to be recomputed by excluding this period, it will result in the addition of about two years. In other words, the period of limitation would have ended on 31.03.2026 but for a development dealt with in the next paragraph. 23. The petitioner had approached this Court and obtained a status quo order on 27.02.2026 in relation to furth....
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.... XX, prescribes the limitation period of 30 days from the date of service of the notice of demand for an appeal against an assessment order. When read with Section 220(4), it becomes clear that the assessee or the partners of the firm (as per Section 188A) cannot be categorised as assessee's in default unless said period expires. 27. It should also be recognised that proceedings under the Second Schedule are akin to execution proceedings under the Code of Civil Procedure. Said proceedings are contingent on the drawing up of a certificate under Section 222. Such certificate cannot be drawn up unless the assessee is in default in terms of Section 220(4). Action for the enforcement of the certificate cannot be taken under Rules 2 and 3 until the 15 day notice period after receipt of the Rule 2 notice has expired. Considering all these aspects, endorsing the position in Kutaguptan, I conclude that the limitation period under Rule 68B(1) is liable to be construed as running from the date of expiry of the notice period under the relevant notice of demand or the limitation period for filing an appeal, both of which are coterminous. Although it is possible for an assessee to apply for c....