Law:

Section:

Section 220 of the Income-tax Act, 1961, read with rules, 2, 16 and 60 of Schedule II to the Act - Collection and recovery of tax - When tax payable and when assessee deemed in default - 'D' was a defaulter under Act - Recovery proceedings were initiated against him under rule 2 by issuing a notice on 3-9-1973 - Attachment of properties was however, made on 11-2-1988 and thereupon property in question was sold in auction - In respect of property in dispute, defaulter had entered into agreement of sale with petitioner No. 1 on 20-11-1982 - Whether attachment though made after date of agreement of sale, by virtue of rule 51 it related back to and took effect from date of service of notice under rule 2 which was prior to said date of agreement - Held, yes - Whether, therefore, on 20-11-1982, defaulter was not competent under rule 16 to enter into agreement of sale with petitioner No. 1 - Held, yes - Whether, that being position, petitioner No. 1, by mere deposit of arrears of tax and other amounts required to be deposited, could not maintain application under rule 60 for setting aside sale of property in question in auction - Held, yes FACTS 'D' was a defaulter under the Act, recovery proceedings were initiated against him by issuing a notice on 3-9-1973; subsequently, attachment made on 11-2-1988; proclamation of sale was issued and the property was brought to sale by respondent No. 2 and, in the auction held on 14-3-1988, respondent No. 3 was the successful bidder. Petitioner No. 1 had entered into an agreement with the defaulter, on 20-11-1982, to purchase the lands in respect of which notice under rule 2 had already been served on him, petitioner No. 1 addressed a letter on 12-4-1988, to respondent No. 1 offering to deposit the entire tax arrears and sought for setting aside the sale under rule 60 on accepting the deposit; the said application was rejected by respondent No. 2 on 20-4-1988, stating that petitioner No. 1 was not a person whose interest was affected by the sale as he had absolutely no interest in the property by virtue of section 54 of the Transfer of Property Act against the said order of rejection passed by respondent No. 2, the first…

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