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2013 (2) TMI 326 - MADRAS HIGH COURTAttachment of immovable property in respect of 25 flats - sale confirmed by Tax Recovery Officer - demands on account of tax for the recovery - petitioner undertook an housing project and as a consequence to the development of the project and the profit derived thereon, they sought the benefit of Section 80-IB(10) - Held that:- The sale was held on 11.1.1980. No application was filed for setting aside the sale either by the assessee or by the auction purchaser or by anyone interested in the property. On expiry of 30 days from the date of the sale the Tax Recovery Officer could have passed an order confirming the sale. However, the Tax Recovery Officer was injuncted by the writ of civil court from confirming the sale. The interim order issued by the civil court ceased to operate on 12.1.1998 whereafter an order of confirmation was passed on 25.3.1998 by the Tax Recovery Officer ignoring, or unmindful of, the important event which had taken place in between. Before 25.3.1998, the demand against the assessee admittedly stood reduced to nil. This fact was in the notice of Income-tax Officer as well as the Commissioner of Income Tax. Attention of the Income-tax Officer as also the Tax Recovery Officer was also invited by the firm M/s. UPCC through its communication dated 22.11.1996. On 16.1.1997, assessee had specifically called upon the Income Tax Officer who had raised the demand against the assessee to confirm if all the recovery certificates issued against the assessee-firm had stood withdrawn or cancelled. In view of the facts within the knowledge of the department and the communications so made, the Tax Recovery Officer could not have confirmed the sale on 25.3.1998. Rule 56 casts an obligation on the Tax Recovery Officer to pass an order confirming the sale consciously and with due application of mind to the relevant facts relating to sale by public auction which is to be confirmed. Under Rule 63, confirmation of sale is not automatic. An order confirming the sale is contemplated to make the sale absolute. Ordinarily, in the absence of an application under Rule 60, 61 or 62 having been made, or having been rejected if made, on expiry of 30 days from the date of sale the Tax Recovery Officer shall pass an order confirming the sale. However, between the date of sale and the actual passing of the order confirming the sale if an event happens or a 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 sale was being held for an assumed demand which is found to be fictitious or held to have not existed at all, in fact or in the eye of law, is one such event which would oblige the Tax Recovery Officer not to pass an order confirming the sale and rather annul the same. The High Court clearly fell in error in not allowing relief to the petitioner-appellant by setting aside the sale. As the order of the ITAT, which is the highest fact finding authority, held in favour of the petitioner assessee and that order has been given effect to as a consequence, the Tax Recovery Officer is bound to give effect of the order of the Assistant Commissioner who accepted the order of the Tribunal - the first respondent Tax Recovery Officer is directed to pass necessary orders, consequent to the proceedings of the ACIT, Circle XIV, accepting the order of the Tribunal. Taking note of the nil payment insofar as the assessee for all the assessment year, the Tax Recovery Officer has to release the property from attachment in terms of the order of the Tribunal and consequent order of the Assistant Commissioner, Circle XIV.
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