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Bijli Cotton Mills (Under Authorised Custodian) Vs. Tax Recovery Officer - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberCivil Miscellaneous Writ No. 2741 of 1974
Judge
Reported in[1975]101ITR624(All)
ActsIncome Tax Act, 1961 - Schedule - Rule 11(2)
AppellantBijli Cotton Mills (Under Authorised Custodian)
RespondentTax Recovery Officer
Appellant AdvocateB.D. Agarwal, Adv.
Respondent AdvocateR.R. Misra, Adv.
Excerpt:
- - he hold that since the objector had failed to deposit rs. but in so far as the order dated 6th april, 1974, stated that if the terms are not complied with, the objector will not be entitled to be heard and further in so far as the order dated 27th april, 1974, rejected the objection of the petitioner because he had failed to comply with the terms imposed by the tax recovery officer, they were clearly illegal. in view of the divided success, the parties shall bear their own costs......property was attached. on jst april, 1974, the bijli cotton mills filed an objection that the attached property was exclusively owned by the mills. sri ram babu lal had no interest in it. it also prayed that the auction of the attached property be postponed pending disposal of the objection. on 6th april, 1974, the tax recovery officer passed an order requiring the objector to deposit a cash amount of rs, 2,90,000 or furnish a bank security of the same amount on or before 25th april, 1974, otherwise the sale will not be postponed. in this order it is also stated that the objector will not be entitled to be heard in case the terms mentioned above are not complied with. it appears that on or about 13th april, 1974, the bijli cotton mills filedanother application giving further details.....
Judgment:

Satish Ciiandra, J.

1. It appears that a sum of Rs. 2,87,388 was the dues payable by Sri Ram Bibu Lal as arrears of income-tax, Sri Ram Babu Lal was the managing director of Bijli Cotton Mills Private Ltd. In the course of recovery proceedings an immovable property was attached. On Jst April, 1974, the Bijli Cotton Mills filed an objection that the attached property was exclusively owned by the mills. Sri Ram Babu Lal had no interest in it. It also prayed that the auction of the attached property be postponed pending disposal of the objection. On 6th April, 1974, the Tax Recovery Officer passed an order requiring the objector to deposit a cash amount of Rs, 2,90,000 or furnish a bank security of the same amount on or before 25th April, 1974, otherwise the sale will not be postponed. In this order it is also stated that the objector will not be entitled to be heard in case the terms mentioned above are not complied with. It appears that on or about 13th April, 1974, the Bijli Cotton Mills filedanother application giving further details of ownership of the property and requesting postponement of the sale and release of the property from attachment. It also stated that in the circumstances of the case the order requiring the objector to furnish security, etc., was not called for. This application was dealt with by the Tax Recovery Officer by his order dated 27th April, 1974. He did not accept the case that the circumstances did not warrant the calling forth of the security amount. He hold that since the objector had failed to deposit Rs. 2,90,000 or give bank guarantee of the same amount by 25th April, 1974, his objection is rejected. At the top of this order the subject-matter is mentioned as objection dated 30th March, 1974, filed by the petitioner. It is thus event that by this order the principal objection dated 30th March, 1974, which seems to have been filed on 1st April, 1974, was rejected. Evidently, it was rejected without going into the merits of the case that the attached property belonged to the objector and not to the assessee.

2. It is true that Rule 11(2) of the Schedule II to the Income-tax Act confers a discretion upon the Tax Recovery Officer to postpone a sale on such terms as to security or otherwise as he deems fit. We are unable to hold that the order that the objector should either deposit the amount sought to be recovered or give bank guarantee was unreasonable. This part of the order, therefore, does not suffer from any manifest error of law. But in so far as the order dated 6th April, 1974, stated that if the terms are not complied with, the objector will not be entitled to be heard and further in so far as the order dated 27th April, 1974, rejected the objection of the petitioner because he had failed to comply with the terms imposed by the Tax Recovery Officer, they were clearly illegal. Rule 11(2) does not authorise the Tax Recovery Officer to reject the claim to an attached property on the ground that the terms to which he put the objector for postponing the auction have not been complied with. Under it he his to investigate the claim and decide it on the basis of tho evidence adduced by the objector. The portions of the two orders mentioned above were without jurisdiction.

3. In the result the petition succeeds and is allowed in part. The portions of the order dated 6th April, 1974, debarring the objector from being heard and of the order dated 27th April, 1974, rejecting the objection are quashed. The Tax Recovery Officer is directed to proceed to decide the objection in accordance with law. In view of the divided success, the parties shall bear their own costs.


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