TaxTMI 
TaxTMI 
2026 (9) TMI 871
X X X X Extracts X X X X
X X X X Extracts X X X X
....ikumar For the Respondents in all WPs : Ms.S.Premalatha, Sr. Standing Counsel for R1&R2 COMMON ORDER Assessment orders were issued in respect of a partnership firm called M/s RJK Investments in respect of assessment years 2007-08 to 2011-12. The agreed position is that the assessee challenged only the assessment order relating to assessment year 2009-10. The appeal in respect of said assessment year was disposed of by order dated 23.08.2016. 2. Pursuant to the above mentioned assessment orders, demand notices under Sections 156 of the Income-Tax Act, 1961 (the I-T Act) were issued to the assessee and, upon default in discharging the dues, certificates were drawn up by the Tax Recovery Officer (the TRO) under Section 222 of the I-T Act. This was followed by the issuance of notices under Rule 2 of II Schedule of the I-T Act to the defaulting assessee. Thereafter, proceedings for the attachment and sale of the immovable property of the partnership firm were initiated. Proceedings were also initiated for the sale of the immovable property of Jawahar Ayya, a partner of the firm. This was challenged in W.P. No.8101 of 2025, which was disposed of on 06.08.2026. All these writ ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h Mr.S.Sajin Kumar was declared as the highest bidder in relation to the property bearing S.No.72/8, all payments were under demand drafts purchased by one Sivakumar. The receipt in relation to earnest money deposits was issued in the name of Mr.P.Kesavan. (viii) As a result of collusion between the TRO and the auction purchasers, these assets have been sold below fair market value. (ix) The amendment to Rule 68B of the II Schedule cannot be applied retrospectively. Hence, proceedings are barred by limitation. 5. The submissions of Ms.Premalatha, learned senior standing counsel, in response to these contentions may be summarized as under: (i) The objections of Mr.Venkataramanan under Rule 11 of the II Schedule were considered and disposed of on 28.02.2025. Each objection raised in the objection letter was dealt with therein. (ii) Notice to individual partners in relation to proceedings under the II Schedule is unnecessary. The judgment of Allahabad High Court in Ram Das Jaiswal v. Income-Tax Officer, [1971] 79 ITR 570, is relied upon. (iii) The first auction in relation to these properties was held on 25.11.2019. Said auction was unsu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....026 in W.P.No.8101 of 2026 (TASC Jawaahar Ayya v. The Principal Commissioner of Income Tax 4 and others, 2026:MHC:3374), the question of limitation was dealt with extensively in relation to the auction sale of the properties of TASC Jawahar Iyya, one of the partners of M/s RJK Investments. After dealing with Rule 68B of the II Schedule of the I-T Act in considerable detail, a conclusion was reached that proceedings to enforce the certificates issued in respect of the defaulting assessee were barred by limitation with regard to assessment years 2007-08 and 2008-09, whereas such proceedings were not barred in relation to assessment years 2009-10 to 2011-12. In course of said judgment, the contention relating to retrospective application of the amendment to Rule 68B was also dealt with. Relying on the judgment of the Hon'ble Supreme Court in Union of India v. Uttam Steel Ltd, 2015 SCC Online SC 512, it was concluded that the amendment would not apply in cases wherein the period of limitation had expired prior to the entry thereof, whereas it would apply to cases where the original limitation period was alive at the time of entry of the amendment. For said reason, the contention of Mr.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nly the owner of the property would be directly affected by the sale of his/her property. Illustratively, if the reserve price is low in comparison to fair value or if the property does not fetch a fair market value in course of auction, the person directly affected would be the individual owner of the property. Rules 60 and 61 also enable the defaulter or person affected to apply to set aside the sale subject to compliance with deposit requirements prescribed therein. As with all definition provisions, Rule 1 of the II Schedule contains the qualification "unless the context otherwise requires". If proceedings were to be initiated against the asset of an individual partner by enforcing such joint and several liability, for reasons aforesaid, I conclude that the context requires that the expression "defaulter" in Rule 1(d) be read as including the individual partner against whose asset(s) recovery measures are proposed to be taken. In support of such construction, it is sufficient to cite Vanguard Fire and General Insurance Co. Ltd. v. Fraser and Ross, AIR 1960 SC 971, where the Supreme Court held, in relevant part, as under: "6.... It is well settled that all statutory def....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ould have been rejected unless the amount recoverable had been deposited as a pre-condition and substantial injury was established as a result of non-service or irregularity. Considering these facts, I conclude that it cannot be said that applicable rules in the II schedule or the principles of natural justice were violated even proceeding on the assumption that it was necessary to send notices to individual partners. Valuation of the properties 14. Both Ms.Premalatha and Mr.Ravi Kiran contended that the guideline value of the firm's properties is Rs. 80,00,000/- per acre. In the affidavit executed by the three partners of M/s RJK Investments on 26.09.2024, the guideline value is recorded as Rs. 1,35,000/- per cent, which corresponds to Rs. 1,35,00,000/- per acre. It is also stated in said affidavit that the market value is Rs. 2,50,000/- per cent. The purchase price in respect of the property admeasuring 26 cents is R.2,36,00,000/- and the purchase price in respect of the property admeasuring 33 cents is Rs. 3,11,00,000/-. Thus, the purchase prices are much higher than the guideline value or the market price as per the above affidavit. While Mr.Venkataramanan raises an objec....