DADALA RAMANAYYA Vs. TAX RECOVERY OFFICER

JUDGEMENT

(1.) This writ petition is filed for the issuance of a writ, order or direction calling for the records relating to the sale of the petitioners immovable properties held on 13/03/1984, and to quash the sale. The facts relevant are as follows : The petitioner says that he is a resident of Yanam, which was formerly a French territory and which become a Union territory with effect from 16/08/1962, when the 14th Amendment to the Constitution took effect. The Income tax Officer, A-Ward, Circle-1, Kakinada, initiated assessment proceedings against the petitioner. He wanted to treat certain immovable properties situated in Kakinada town as belonging to the petitioner. Though the petitioner denied the same, it was held that those properties are held by him. Since he was unable to explain the source of income with which those properties were acquired, assessments were made and tax payable was determined. This happened during the assessment year 1964-65. In the subsequent assessment years, the income from the said property was treated as income in the petitioners hands and was brought to tax. The petitioner defaulted in paying the tax due. Ultimately, tax recovery certificates were issued to the first respondent herein, the Tax Recovery Officer, Visakhapatnam, for recovery of more than one lakh rupees. Actually three tax recovery certificates were issued. They are dated 23/02/197 2/10/1974, and 19/08/1975. respectively. Petitioners properties at Yanam were brought to sale on 13/03/1984, in pursuance of the sale proclamation issued on 9/02/1984, by the 1st respondent. At the auction the 4th respondent became the purchaser; he deposited the entire sale amount within the time prescribed. This writ petition was filed before the sale could be confirmed and stay of confirmation of proceedings was also obtained. The validity of the sale is challenged by the petitioner on the following three grounds; (i) The 1st respondent has no jurisdiction over Yanam. Therefore, the sale of property situated at Yanam by the 1st respondent is without jurisdiction and void; (ii) The notice under rule 2 of Schedule II to the Income-tax Act was issued by the 1st respondent. Inasmuch as he has no jurisdiction over Yanam, the said notice is bad. Accordingly, all the proceedings taken subsequent and pursuant to the said notice including attachment and sale are illegal; (iii) The tax recovery certificates sent to the 1st respondent are themselves invalid for the reason that they include interest for the period preceding the issuance of tax recovery certificates in respect of which interest notices under rule 118(1) of the Income-tax Rules were not issued. Since notices under rule 118(1) were not issued, the said interest amount had not fallen due and hence could not be recovered. The tax recovery certificates include the said amount. Therefore, they are invalid.

(2.) We shall deal with the above contentions in their proper order.

(3.) Coming to the first contention, it is not disputed that Yanam is a Union territory and not a part of Andhra Pradesh. The question is whether the 1st respondent (the Tax Recovery Officer, Visakhapatnam) has territorial jurisdiction over Yanam so as to sell the properties situated at Yanam for recovery of the amount mentioned in the tax recovery certificates sent to him. Learned standing counsel for the Revenue, who was called upon by us to produce the necessary notifications and orders, has produced the following proceedings - (i) Extract from Commissioners Notification in S.P. No. X (26 & 27) /KKA/1982-83 dated 31/08/1982. In this notification, the jurisdiction of various Income-tax officers was specified, evidently under section 124 of the Act. So far as the Income tax Officer, C ward, Circle-II, Kakinada, is concerned, his jurisdiction is said to extend to all the persons in the Union territory of Yanam. An extract from another notification dated 20/09/1982, has been placed before us according to which the said Income-tax Officer has been conferred jurisdiction over all the persons in the Union territory of Yanam.