N N SAMANTA Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioner had some income-tax liability outstanding against him. THE ITO issued a recovery certificate. THE Tax Recovery Officer executed it by attaching and selling house No. 20, Kavi Kalidas Road, Dehradun, together with 5 bighas of land, etc. At the auction this property was sold for Rs. 99,000. It appears that out of the sale proceeds the TRO paid out the amount mentioned in the recovery certificate as well as the costs of the auction. THE question was as to what should happen to the balance. THE petitioner, who was the defaulter, applied for the refund of the balance to him. Respondents Nos. 5 and 6 also applied to the TRO that the balance be returned to them because they were the mortgagees of the property which was sold and of which the defaulter petitioner was the mortgagor. THE TRO issued notice to the petitioner to show cause against this application of the mortgagees. THE petitioner filed objections claiming that the TRO should not go into this matter. His duty is to refund the balance to the defaulter. Feeling that the TRO is not going to accede to his request, the petitioner filed the present writ petition in this court.

(2.) UNDER Rule 8 of the Tax Recovery Rules framed under the IInd Schedule of the I.T. Act, 1961, the sale proceeds are liable to be disposed of by first paying off the costs of the auction and then the amount due under the certificate in execution of which the assets were realised. Thereafter he has to pay to the ITO any other amount recoverable under the procedure provided under the Act and under Clause (d) the balance, if any, remaining after the payment referred to in Clause (c), shall be paid to the defaulter. The TRO's duty, therefore, is to first pay out the items mentioned in Clauses (a), (b) and (c) of the rule and thereafter to pay the balance to the defaulter.