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Shiv NaraIn Vs. Income-tax Officer, Kanpur, and Another. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberCivil Miscellaneous Writ No. 4581 of 1965
Reported in[1967]65ITR233(All)
AppellantShiv Narain
Respondentincome-tax Officer, Kanpur, and Another.
Excerpt:
.....it would appear that the want of due care is betrayed by the second application praying that the date march 31, 1964, be substituted by may 8, 1964. be that as it may, i am satisfied that the order of the tax recovery officer cannot be sustained by the simple consideration that there was no order dated march 31, 1964, forfeiting the security. the order forfeiting the security was made under rule 58 of schedule ii to the income-tax act, 1961. that order was open to review under rule 87. the second review application was maintainable because the earlier review application had clearly not been disposed of by tax recovery officer on merits. it is well settled that a second review application is maintainable if the earlier review application has not been considered on its merits at all :see..........it would appear that the want of due care is betrayed by the second application praying that the date march 31, 1964, be substituted by may 8, 1964. be that as it may, i am satisfied that the order of the tax recovery officer cannot be sustained by the simple consideration that there was no order dated march 31, 1964, forfeiting the security.then, the tax recovery officer points out that he was not competent to reopen the proceeding terminated by the order dated march 24, 1964. it is difficult to appreciate why he felt that he was not competent. the order forfeiting the security was made under rule 58 of schedule ii to the income-tax act, 1961. that order was open to review under rule 87. the second review application was maintainable because the earlier review application had clearly.....
Judgment:

In proceedings for recovery of income-tax due from Messrs. Mohanlal & Company, the Tax Recovery Officer, Kanpur, attached house No. 1/196, Nawab Ganj, Kanpur. Thereafter, a proclamation for sale of the property was issued. The auction was held on October 16, 1963, and was knocked down to the petitioner at Rs. 6,000. The petitioner deposited a sum of Rs. 1,500 on the spot in accordance with rule 57(1) of Schedule II to the Income-tax Act, 1961. On October 28, 1963, the petitioner received a notice from Shri H. P. Mudgal, acting on behalf of Rup Narain Dikshit and Baikunth Vaishni Dikshit, informing him that the property which had been purchased by him was subject to a mortgage on the foot of which a suit had been instituted, and the suit had been decreed for Rs. 10,434,79. On October 30, 1963, the petitioner field an application under rule 61 of Schedule II pointing out that the fact that property was subject to an encumbrance had not been disclosed in the sale proclamation and that, if he had know of the encumbrance, he would not have purchased the house, and, therefore, the sale should be set aside on the ground of a material irregularity in and conducting the sale. The petitioner says that on orders were passed upon that application that application, and then on February 21, 1964, he made another application praying that the sale be cancelled and in the alternative for permission to deposit the balance of the purchase money. This application was rejected on March 24, 1964, by the Tax Recovery Office In that order the Tax Recovery Office observed that the security deposit was forfeited because of the omission of the petitioner to pay the balance of the purchase money in time and a fresh auction was directed. The petitioner says that the order was passed without affording him an opportunity of being heard in the matter. He was informed of the order subsequently on March 25, 1964. On April 25, 1964, the petitioner field an application praying for the review of the order forfeiting the security and prayed that either the money deposited by him be refunded to him or, in the alternative, he be allowed to deposit the balance of the purchase money so that the sale was confirmed in his favour. The application had already been forfeited, and reiterating that the property should be reauctioned. Then the petitioner made a second application for review on June 6, 1964. It is this application with which this petition is concerned. It is described as a review application against 'the order dated March 31, 1964, forfeiting Rs. 1,500 deposited by the applicant towards the purchase price of house No. 1/196, Nawab Ganj, Kanpur' and after setting out the grounds for review, which pointed out that the sale proclamation did not disclose the encumbrance upon the property and that the omission amounted to a material irregularity in conducting and publishing the sale and, therefore, the sale was liable to be set aside, and that the applications of the petitioner had been dismissed ex parte, the petitioner prayed that :

'The order dated March 31, 1964, forfeiting Rs. 1,500 of the applicant be set aside and the order for refund of the said amount to the applicant be passed; in the alternative, the applicant be allowed to deposit Rs. 4,500, balance sale consideration and, in the meantime, resale may kindly be stayed'.

During the pendency of this application, the petitioner moved another application, apparently on September 14, 1965, pointing out that the date mentioned in the review application as the date of the impugned order was an error and that instead of March 31, 1964, the date May 8, 1964, should be read. Both the applications were rejected by a common order dated September 21, 1965, by the Tax Recovery Officer. The petitioner has filed the instant petition praying for certiorari against the order dated March 24, 1964, May 8, 1964, and September 21, 1965.

When the petition came on for hearing before me, learned counsel for the petitioner stated that he confined his petition to the relief for certiorari against the order dated September 21, 1965.

It is contended for the petitioner that the Tax Recovery Officer did not apply his mind to the questions raised before him by the second review application and that the approach adopted by him to the consideration of that application was vitiated in law and amounted essentially to a refusal to exercise jurisdiction vested in him. It seems to me that there is force in the contention.

The second review application was dismissed by the Tax Recovery Officer by reference to the circumstance that there was no order dated March 31, 1964, forfeiting the security furnished by the petitioner and that the date of that order was March 24, 1964. He took the view that it was not competent for him to reopen the question which had been disposed of by the order dated March 24, 1964. As regard the prayer in the second review application that the petitioner should be allowed to deposit the balance of the sale consideration, he held that as there was no existing sale of the property on account of the default in payment of the balance within time, no question could arise of permitting the petitioner to deposit the amount. In this view, as the petitioner had failed to take proper proceedings for having the order of forfeiture set aside, the review application was liable to be rejected.

It is indisputable that while disposing of an application the authority must apply its mind to the entire contents of the application and consider what, in substance, is the relief claimed by it. It is well settled that merely because the applicant has cited an erroneous provision of the law under which the application purports to have been made, that should not prevent the court or Tribunal from considering whether the application is maintainable in view of allegations contained in it and the relief claimed in it. Here, there is no possible room for dispute that what the petitioner prayed for was the quashing of the order forfeiting the security. He said so in plain words at the very beginning of the application and in the prayer set out at the foot of the application. Merely because he mentioned a date other than the correct date of the order of forfeiture should not have prevented the Tax Recovery Officer from considering the application on its merits as an application for setting aside the order of forfeiture. The consideration that there is no order dated March 31, 1964, and that, therefore, the application must be rejected proceeds upon pure technicality. The Tax Recovery Officer has allowed himself to be persuaded by the from rather than the substance of the application. Indeed, the order gives the impression that there was no serious attempt to decide the questions raised by the application. It is regrettable that this is so. The petitioner, also, cannot be relieved of the obligation of drawing up his application with due care. Indeed, it would appear that the want of due care is betrayed by the second application praying that the date March 31, 1964, be substituted by May 8, 1964. Be that as it may, I am satisfied that the order of the Tax Recovery Officer cannot be sustained by the simple consideration that there was no order dated March 31, 1964, forfeiting the security.

Then, the Tax Recovery Officer points out that he was not competent to reopen the proceeding terminated by the order dated March 24, 1964. It is difficult to appreciate why he felt that he was not competent. The order forfeiting the security was made under rule 58 of Schedule II to the Income-tax Act, 1961. That order was open to review under rule 87. The second review application was maintainable because the earlier review application had clearly not been disposed of by Tax Recovery Officer on merits. By that application the petitioner had pointed out that the sale proclamation was defective inasmuch as it did not disclose that the property was encumbered and that therefore there was material irregularities in conducting and publishing the sale. He further questioned the forfeiture of the security without an opportunity having been afforded to him of being heard in the matter. These were important question which should have been disposed of when considering the first review application. It is apparent from the order dismissing the first review application that the Tax Recovery Officer did not apply his mind to these questions at all. Indeed, it appears from paragraph 19 of the counter-affidavit of Shanti Swarup Saxena that the Tax Recovery Officer did not apply his mind to the review application on its merits. The reason given is that by his application dated February 21, 1964, the petitioner had withdrawn his objection as to the irregularity in publishing and conducting the sale. It is said that, in the circumstances, 'there was nothing left to be decided on merits'. The application dated February 21, 1964, did not state that the objection was being unconditionally withdrawn. It stated that the objection should be considered as withdrawn if the petitioner was allowed to deposit the balance of the purchase money. In any event, whatever the ground, it is plain that the Tax Recovery Officer did not apply his mind at all to the first review application. It is well settled that a second review application is maintainable if the earlier review application has not been considered on its merits at all : see Langat Singh v. Janki Koer and K. Venkatasubbayya v. K. Virayya

Upon these considerations the petition must succeed.

The petition is allowed. A writ in the nature of certiorari shall issue quashing the order dated September 21, 1965. The Tax recovery Officer shall proceed to decide the second review application fresh. The petitioner is entitled to his costs.

Petition allowed.


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