Law:

Section:

Rule 61 read with rule 53 of second schedule to the Income-tax Act, 1961 - Application to set aside sale of immovable property on ground of non-service of notice or irregularity - Whether non of Rules in Second Schedule permit TRO to club together recovery certificate issued against one assessee with recovery certificate issued against another, and to issue a single sale proclamation in respect of dues against two separate assessee - Held, yes - Whether therefore, where properties of petitioner company had been sold for realisation of dues against its managing director, all steps beginning from sale proclamation to confirmation of sale and subsequent sale deed executed in favour of auction purchasers were invalid - Held, yes FACTS The ITO sent separate recovery certificates as respects the amount due against the petitioner as also the amount due against the managing director. The TRO compounded these recovery certificates and issued a sale proclamation which included not only the dues against the assessee, but also the dues against the managing director. The properties of the petitioner had been sold for realisation of the amount due against the company and also the amount due against the managing director. The petitioner filed a writ petition for staying the confirmation of the sale and stay orders were issued. Subsequently this petition was dismissed ex-parte. The sale was confirmed by the TRO and the sale deed was also executed in favour of the auction purchaser. On writ : HELD None of the Rules in the Second Schedule permit the TRO to club together recovery certificate issued against one assessee with recovery certificate issued against another, and to issue a single sale proclamation in respect of dues against two separate assessees. Obviously, the notice issued to the defaulter on the basis of the recovery certificate must be in respect of arrears which are due from the defaulter. In rule 8 the method of distribution of the proceeds of the execution are set out. Under clause (a ) the ITO is paid the cost incurred by him. Under clause (b ), the ITO is paid the amount due under the certificate in execution of which the amounts are realised. Now, if a sale…

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