Law:

Section:

Section 220, read with Schedule II, of the Income-tax Act, 1961 - Collection and recovery of tax - When tax payable and when assessee deemed in default - Whether rule 11(2) of Schedule II does not authorise Tax Recovery Officer to reject claim to an attached property on ground that terms of which he put objector for postponing auction had not been complied with and under this rule he has to investigate claim and decide it on basis of evidence adduced by objector - Held, yes FACTS A sum of Rs. 2,87,388 was the dues payable as arrears of income-tax by 'R' who was the managing director of the company. In the course of recovery proceedings an immovable property was attached. The company filed an objection that the attached property was exclusively owned by the mills and 'R' had no interest in it. It also prayed that the auction of the attached property be postponed pending disposal of the objection. On 6-4-1974, the TRO passed an order requiring the objector to deposit a cash amount of Rs. 2,90,000 or furnish a bank security of the same amount on or before 25-4-1974, otherwise the sale would not be postponed. In this order it was also stated that the objector would not be entitled to be heard in case the terms mentioned above were not complied with. The company filed another application giving further details of ownership of the property and requesting postponement of the sale and release of the property from attachment. It also stated that in the circumstances of the case of the order requiring the objector to furnish security, etc., was not called for. The TRO did not accept the case and held that since the objector had failed to deposit of Rs. 2,90,000 or give bank guarantee of the same amount by 25-4-1974, his objection was rejected. On writ : HELD It is true that rule 11(2) of Schedule II to the Act confers a discretion upon the TRO to postpone a sale on such terms as to security or otherwise as he deems fit. It could not be held that the order that the objector should either deposit the amount sought to be recovered or give bank guarantee was unreasonable. This part of the order, therefore, did not suffer from any manifest error of law. But in so far as the…

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