Y PRAMEELA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The petitioner, Smt. Y. Prameela, is the wife of one Y. Yadaiah Goud, who died on 7/06/1990. The late Yadaiah Goud fell in arrears of payment of penalty under ss. 271(1)(a) and 271(1)(c) of the IT Act in respect of the asst. yrs. 1969-70 to 1983-84 aggregating Rs. 2,94,078. On 16th Feb., 1989, the Tax Recovery Officer (TRO), respondent No. 2 herein, issued a sale proclamation in respect of site measuring 350 sq. yards adjacent to "house bearing No. 4-8-307 (4-8-2078) opposite RTC bus stand, Gowliguda", fixing the date of sale as 1 6/03/1989, and the time as 11.30 a. m., the venue being Aayakar Bhavan, the premises where the tax recovery office is located. On 13/03/1989, the assessee filed a written representation before the second respondent stating that the appeals preferred against the levy of penalties were coming up for hearing on 17/03/1989, and 23/03/1989, and, therefore, the proposed sale should be adjourned. It appears that the request for adjournment was rejected orally pursuant to which, an application was made in writing by the assessee on 15/03/1989, to the CIT requesting for postponement of the auction. The said request was not conceded and the auction, as proposed, was held on 16/03/1989. The 350 sq. yards of site was sold for Rs. 3,50,000 in favour of one Dr. J. Surender, the third respondent herein, the highest bidder. The sale was confirmed under r. 63 of the Rules of Schedule II to the IT Act on 25/05/1989. A sale certificate was also issued in favour of Dr. J. Surrender. The petitioner and her late husband, Yadaiah Goud filed two writ petitions in this Court - Writ Petns. Nos. 8797 and 8207 of 1989, respectively - for quashing the notice dt. 3/06/1989, issued by the TRO calling upon the assessee to give vacant possession of the premises. Writ Petn. No. 8797 of 1989, filed by the petitioner herein, was dismissed by a Division Bench of this Court on 10/07/1989, observing : "The petitioner should first file objections before the concerned authority instead of rushing to this Court. On this ground, the writ petition is dismissed." Subsequently, Writ Petn. No. 8207 of 1989, filed by the assessee, was withdrawn at the admission stage on 12th Sept., 1989, presumably in view of the dismissal of the writ petition filed by the petitioner herein. On 25th Jan., 1990, the assessee filed a written representation before the Chairman of the CBDT narrating the facts and alleged that the TRO had acted in haste ignoring the principles of natural justice and the property was sold in violation of the administrative instructions issued by the Board. No reply was given by the CBDT to this representation. On 6/07/1992, the petitioner sent another written representation to the Chairman of the CBDT requesting him to provide her a further opportunity in regard to her request for setting aside the sale of the property in question. Two more reminders were sent on behalf of the assessee on 1st Oct., 1992, and 12th Feb., 1993, but no replies were received. Ultimately, on 10th Feb., 1993, the second respondent herein, the TRO, issued a notice to the petitioner calling upon her to give vacant possession of the site to the third respondent and to produce the sale deed concerning the property in question.

(2.) Challenging the notice dt. 10th Feb., 1993, this writ petition was filed for issue of mandamus to declare the sale held on 16/03/1989, as illegal and without jurisdiction.

(3.) Sri M. Suryanarayana Murthy, learned counsel for the petitioner, has raised three contentions before us : (i) The TRO had sold altogether a different property, viz., house No. 4-8-307 which belongs to the petitioner instead of the site measuring 350 sq. yards as mentioned in the sale proclamation; (ii) The failure on the part of the TRO to adjourn the sale pending the appeal was illegal and arbitrary. Had the sale been adjourned, the assessee would have been greatly benefited since the penalty was reduced substantially by the first appellate authority, the CIT(A), from Rs. 2,94,078 to Rs. 60,500; and (iii) As the prescribed time for filing a petition to set aside the sale has expired, it is a fit case where the CBDT ought to have, in the exercise of their power under s. 119(2)(b), granted relief by waiving the period of limitation and afforded an opportunity to the petitioner to represent her case before the TRO. Re. (1) : We do not find any merit in the contention that instead of auctioning 350 sq. yards of site as notified in the sale proclamation, a different property was sold. The auction notice dt. 18th Feb., 1989, clearly mentions "site measuring 350 sq. yards adjacent to house No. 4-8-307 (4-8-2078) opposite RTC Bus Depot, Gowliguda, is proclaimed for sale on 16/03/1989, at 11.30 a. m.". The sale proclamation clearly mentions that what was brought to sale was 350 sq. yards of site adjacent to house No. 4-8-307. Originally, the building and the appurtenant site was known as "Sayeed Manzil". The assessee had purchased 435 sq. yards of land together with room Nos. 278, 278/1, 278/2, 279, 305 and 306 standing thereon. These numbers obviously are municipal numbers referable to the structures on the land. House No. 4-8-307 was purchased by the petitioner herein under a sale deed dt. 16/06/1972. Copies of both the sale deeds are filed by the petitioner before us and on going through them, we are satisfied that there was absolutely no mistake as regards the identity of the property sold by the TRO on 16/03/1989. What was sold was only the site measuring 350 sq. yards adjacent to house No. 4-8-307 but not the house bearing No. 4-8-307. We must also mention in this context that the number within brackets which is mentioned as 4-8-2078 in the sale proclamation was the old municipal number of the house which bears the present number - 4-8-307. We, therefore, reject the first contention. Re. (2) : It is true that a petition was filed before the TRO by the assessee on 13th March, 1989, requesting for adjournment of the sale on the ground that the appeals preferred by him were coming up for hearing on 17/03/1989, and 23/03/1989, before the appellate authority. He was told by the TRO, orally, that it was not possible to accede to the request. Admittedly, no steps were taken by the assessee to obtain stay from the appellate authority. What are the factors that disabled the assessee from seeking such a relief from the appellate authority, the second respondent has not been told, nor do we find any reference to any inconvenience felt by the assessee to seek such a relief from the appellate authority. It is true that the request made by the assessee before the CIT on 15/03/1989, seeking postponement of the auction was not acceded to but that cannot be a ground at this distance of time to set aside the sale itself. The rules contained in Sch. II to the IT Act provide a remedy for setting aside a sale of immovable property on the ground of non-service of notice or material irregularity. Rule 61 says that where immovable property has been sold in execution, the defaulter or any person interested may, within 30 days from the date of the sale, apply to the TRO to set aside the sale on the ground that notice was not served on the defaulter to pay the arrears or on the ground of a material irregularity in publishing or conducting the sale. Proviso (a) lays down that no sale shall be set aside on any such ground unless the TRO is satisfied that the applicant has sustained substantial injury "by reason of the non-service or irregularity". One of the contentions advanced is that the reserve price, as required under r. 53(cc), has not been mentioned in the sale proclamation and, therefore, the sale was vitiated. We do not agree. No application was filed under r. 61 before the TRO seeking setting aside of the sale on that ground. Even now, there is nothing to show that any substantial injury was sustained by the assessee because of the aforesaid lapse. At best, in our view, it is only a curable irregularity; it will not go to the root of the matter invalidating the sale itself. Nothing is brought to our notice that the sale price fetched, viz., Rs. 3,50,000, was in any way inadequate.