SATYANARAYANA D V Vs. TAX RECOVERY OFFICER

JUDGEMENT

(1.) IN these appeals (see [1992] 194 ITR 409), we are mainly concerned with the scope of rule 16 of the Second Schedule to the INcome-tax Act, 1961 (these rules are referred to hereinafter as "the Rules").

(2.) THE appellants entered into an agreement with the third respondent. It is dated February 23, 1984. THE agreement was to purchase a house property belonging to the third respondent for a sum of Rs. 2,80,000, out of which a sum of Rs. 1,30,000 was paid as advance. THE third respondent was a defaulter in the payment of taxes under the provisions of the Income-tax Act, 1961 ("the Act", for short), and, consequently, notices in Form I. T. C. P. 1 were served on him in the year 1973, under rule 2 of the Second Schedule to the Act. Subsequently, the property in question was attached under rule 48 of the Rules (read with Form I. T. C. P. 16). THEreafter, there was a proclamation of sale and sale of the property by public auction was held on August 19, 1987. THE third respondent defaulter was in arrears of tax in a sum of Rs. 5,99,509. He did not choose to challenge the sale. However, the appellants invoked rule 61 of the Rules to set aside the said sale.

(3.) THE eligibility of the appellants to invoke rule 61 depends upon the answer to the question as to whether they are "persons whose interests are affected by the sale".