Law:

Section:

Section 222 of the Income-tax Act, 1961 (corresponding to section 46 of the Indian Income-tax Act, 1922) read with section 281 of the Income-tax Act, 1961 and Rules 49(6)(c) and 49(8) of the Rules framed under Andhra Pradesh Co-operative Societies Act, 1964 - Collection and recovery of tax - Certificate proceedings - Respondent No. 2 against whom income tax demands were outstanding, had executed mortgages in respect of attached house in favour of - Respondent No. 1 bank on 9-6-1959 and said house was ultimately sold to appellant in an auction - Subsequently, an award was passed in favour of bank for recovery of amount due under mortgage - On basis of said award bank filed a petition for setting aside sale - Said petition was rejected on ground that mortgage in favour of bank was void under section 281 since by date of execution of mortgage i.e., 9-6-1959, 1961 Act had not come into force, provisions of section 281 of said Act would not render mortgage in favour of bank void - Whether sale effected for recovery of arrears of income-tax would not be free from encumbrances subsisting on property brought to sale - Held, yes - Whether therefore, sale effected in favour of appellant would be subject to mortgage on basis of which award was passed in favour of bank - Held, yes - Whether in view of provisions of rule 49(6)(c) and (8) of rules framed under 1964 Act Civil Court had jurisdiction to entertain petition for execution of award filed by bank, and said rules were not ultra vires powers of rule - making authority - Held, yes FACTS The second respondent No. 2 was in arrears of income-tax. For recovery of the said arrear amount the Special Deputy Tashsildar on issuance of certificate by ITO under section 46 of the 1922 Act served a notice of demand as well as an attachment warrant on the defaulter by affixture on the house. While so, on 9-6-1959, the respondent No. 2 executed a mortgage in respect of the said house in favour of the first respondent No. 1. The attachment notice, was served on the respondent No. 2 and the said attached property was brought to sale through an auction in which the appellant was the highest bidder. Subsequently, the Taluk co-operative…

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