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TMI Blog2012 (11) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... lic auction of several parcels of land belonging to respondent No.3. In the notice, it was stated that persons desirous of bidding during such public auction should deposit a sum of Rs. 10,000/- before 10.03.2000. The auction would be held on 23.03.2000. Income tax dues, for which such auction was being held, was shown at Rs. 2,16,29,000/-. The notice specified that the highest bidder would be allotted/sold the land. Such bidder shall have to deposit 25% of the amount by cash or demand draft on the spot. Remaining 75% would have to be deposited within fifteen days thereafter. It was indicated that the Recovery Officer retained the right to accept or reject any offer. 1.3 On 10.02.2000, however, the Recovery Officer issued a corrigendum in which the dues of respondent No.3 were shown to be Rs. 15,06,76,539/-. Yet another correction came to be issued through a public notice dated 28.02.2000, wherein the outstanding amount was changed to Rs. 4,06,35,000/- and the date of auction was shifted to 31.03.2000. 1.4 On 31.03.2000, the petitioner participated in the auction proceedings. His offer was found highest and accepted by respondent No.1 with respect to plot of land No.9. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, before the petitioner deposited remaining 75% of the bid amount with the authorities, on 31.03.2000 itself, the Commissioner of Income Tax, Rajkot passed two separate orders. In first such order which was passed under Rule 80(3) of the Second Schedule under the Income Tax Schedule, 1961 (hereinafter referred to as 'the Second Schedule' for short) he provided as under: "Whereas an appeal has been filed by the abovenamed tax defaulter against the order of the Tax Recovery Officer, Jamnagar, directing for sale of his immovable property located at Walkeshwarnagri, Jamnagar, by auction, on various grounds mentioned therein. Pending the decision of this appeal, execution of the recovery certificate issued in the above case, is hereby stayed till further orders." 1.7 By a separate notice also issued on 31.03.2000, the Commissioner of Income Tax, Rajkot provided as under: Notice "Shri S.D. Jadeja of Jamnagar, has filed a petition before the Commissioner of Income Tax, Rajkot on 4th March 2000, objecting to the auction of his immovable property located at Jamnagar, by the Tax Recovery Officer, Jamnagar, for recovery of his tax dues. This petition is pending before the Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ou are, therefore, requested to please make such 75% payment after stay order is vacated or modified (within 15 days time of vacation of stay order.)" 1.10 On 20.04.2000, Commissioner of Income Tax, Rajkot passed impugned order and allowed the appeal of respondent No.3 herein. He set aside the proclamation for auction and subsequent proceedings of auction, under which, the plots of land were sold. In his order, he concluded that there was no proper application of mind or verification as to the actual outstanding of income tax and wealth tax dues of respondent No.3 after taking into account the payments made by him. He was of the opinion that such error would vitiate the proclamation since requirement of Rule 53 of Second Schedule to specify as fairly and accurately as possible the amount of recovery for which the sale was ordered, was not satisfied. He also noted that proceedings were pending before the Gujarat High Court where respondent No.3 had prayed for settlement under KVSS scheme. He, therefore, recorded that in respect of the demands, the disputes still exist. On such grounds, the appeal under Rule 86 of the Second Schedule came to be allowed. 2. We may notice that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r submitted that the petitioner had offered the highest price at a public auction held by the department for outstanding tax dues of respondent No.3. The offer of the petitioner was accepted by the auctioning officer. 25% of the bid amount was deposited on spot. Remaining 75% amount, which was to be deposited in fifteen days, the petitioner was always ready and willing to pay. At such an advanced stage, the auction proceedings could not have been quashed and that too without hearing the petitioner. 7. Counsel submitted that even in equity gross injustice would be caused to the petitioner if the order of the Commissioner is allowed to stand. The auction was held way back in the year 2000. In the meantime, the land prices have gone up. If the petitioner is not granted benefit of his highest bid, irreparable injury would be caused to him. 8. Mr. Shah drew our attention to the communication dated 09.03.2000 made by the Tax Recovery Officer, Jamnagar to the Commissioner of Income Tax, Rajkot, in which he pointed out various reasons why the appeal of respondent No.3 should be rejected. In such communication, Tax Recovery Officer had pointed out various efforts made for tax recovery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eless formality. It will not issue any such direction where the result would remain the same, in view of the fact situation prevailing or in terms of the legal consequences. Furthermore in this case, the selection of the appellant was illegal. He was not qualified on the cut-off date. Being ineligible to be considered for appointment, it would have been a futile exercise to give him on opportunity of being heard." 13. Counsel lastly submitted that there was considerable delay on the part of the petitioner in filing present petition. He pointed out that the Commissioner passed the impugned order on 20.04.2001. Such order was promptly conveyed to the petitioner by the department under communication dated 22.05.2001. The present petition came to be filed only on or around 15.04.2002. The petitioner has not explained such delay. Counsel submitted that subsequently, respondent No.3 had succeeded in persuading this Court to require the settlement commission to entertain the request of the respondent No.3 for a settlement. Such request was entertained and appropriate order was passed. Respondent No.3 had also made payments in terms of such order. He submitted that though there are still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such property. Rules 53 to 55 pertain to the procedure with respect to the proclamation and the time of sale. Rule 56 pertain to sale by auction and provides that the sale shall be made by public auction to the highest bidder and shall be subject to confirmation by the Tax Recovery Officer. Rule 57 inter alia requires the highest bidder of the immovable property to deposit 25% of the purchase money immediately, in default of which, the property shall forthwith be resold. 17. Rule 60 pertains to application to set aside sale of immovable property on deposit and reads as under: "60. (1) Whether immovable property has been sold in execution of a certificate, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale, on his depositing:- (a) the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, with interest thereon at the rate of [one and one-fourth per cent for every month or part of a month], calculated from the date of the proclamation of sale to the date when the deposit is made; and (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich is conclusive, shall lie to the Chief Commissioner or Commissioner] (2) Every appeal under this rule must be presented within thirty days from the date of the order appealed against. (3) Pending the decision of any appeal, execution of the certificate may be stayed if the appellate authority so directs, but not otherwise. (4) Notwithstanding anything contained in sub-rule (1) where a chief Commissioner or Commissioner is authorized to exercise powers as such in respect of any area, then, all appeals against the orders passed before the date of such authorization by any Tax Recovery Officer authorized to exercise powers as such in respect of that area, which is included in that area, shall lie to such Chief Commissioner or Commissioner." 22. From the above rule position it can be seen that proclamation of sale and holding a public auction are only the initial steps towards sale of immovable property of a tax defaulter to recover such amount through sale of his properties. The highest bidder, whose offer is accepted, during such public auction, has the responsibility to deposit 25% of the purchase money on spot, failing which, the acceptance of offer stands revoked. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 11.12.2009 passed in Misc. Civil Application No. 2593 of 2009, came to some what similar conclusion. We may recall that such Misc. Civil Application which was filed by a successful auction bidder who desired that the sale proclamation which was set aside by the High Court on a petition by the tax defaulter (in the said case also who happened to be present respondent no. 3) be recalled since such order was passed without hearing him. In that context, the Court observed as under: "7. Furthermore, it is an accepted position that the applicants are merely highest bidders at the auction sale conducted by the Income Tax Department. Thus, in law, till the point of time the sale is confirmed and sale certificate issued in favour of the applicants by Income Tax Department the applicants would merely be offerers whose offer may or may not be accepted by Income Tax Department. In the circumstances, it is not possible to accept the contention that the applicants are persons who are directly affected by the outcome of the dispute between the tax defaulter, whose property is put up for auction sale, and the Income Tax Department." 25. Additionally, we also find that though the Commissioner's ..... X X X X Extracts X X X X X X X X Extracts X X X X
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