Law:

Section:

Section 222, read with rule 16 of Schedule II to the Income-tax Act, 1961 - Collection and recovery of tax - Certificate proceedings - In pursuance of order of Sub-Judge property of insolvent vested in official receiver - In auction held by Official Receiver wife of insolvent participated and purchased property - Said property was not under attachment and though income-tax people had notice of auction sale they made no attempt to stop sale but made application for setting aside sale after it had been effected and confirmed - Whether aforesaid sale could be set aside on ground of contravention of rule 16 of Schedule II - Held, no - Whether Official Receiver is a representative-in-interest for purposes of rule 16 of Schedule II - Held, no - Whether a property vested in him cannot be divested in absence of a specific provision in Act - Held, yes FACTS The debtor D was adjudged insolvent under the Provincial Insolvency Act and as per order of the Court the property of the insolvent vested in the Official Receiver. No evidence was adduced by the ITO to substantiate the plea that the insolvent had some more secreted property and he had not valued his assets. Some items were brought to sale by means of a public auction by the Official Receiver. The wife of D participated in the auction and as she was found to be the highest bidder of the property the Official Receiver accepted the bid in her favour. The ITO applied for setting aside of the sale of the property alleging that even though a memo was filed by the Income-tax Department for fixing the upset price at Rs. 1,50,000, the Official Receiver had proceeded with the auction, fixing the upset price at Rs. 40,000 only. The second contention raised by the ITO was that the registered lease set up by the insolvent was illegal and the purchasers were misled by it resulting in knocking down the sale for a nominal amount of Rs. 53,000 odd. The third contention raised was that a notice under rule 16(2) of Schedule II was given and the provisions of the Income-tax Rules, 1962 would prevail and the income-tax authorities alone were competent to attach and sell the properties of the insolvent. The Sub-Judge accepted the…

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