The Madurai bench of Madras High Court in the issue of proclamation of sale of immovable property drawn up after due notice to defaulter has held that no irregularity in auction conducted by Department for recovery of tax arrears.
The petitioner, M/s.IGGI Resorts International Limited, has arrears of income tax for a sum of Rs.29,84,56,331/- for the period prior to the year 2008. Apart from the arrears of tax there were several other outstanding’s to its customers, which includes both the registered and unregistered time share holders and amounts due to Repco Bank and Municipal dues.
Proceedings were initiated and Tax Recovery certificate was issued on various dates. The first attempt for auction did not materalise as the public did not evince any interest in the auction. Thereafter, a second attempt was made by the Income Tax Department by issuing another proclamation of sale but it also did not materalise. Thus, the third attempt was made by the Income Tax Department to auction the property. Against which the petitioner filed a Writ petition.
Mr. R. Murali counsel for the petitioner submitted that if the safeguards in Chapter III of the Second Schedule to the Income Tax Act, 1961 dealing with attachment and sale of immovable property particularly Rule 52, 53 and 54 were followed, the auction would have fetched a higher bid amount and for the instant case there was a material irregularity in the auction conducted by the respondents and consequential sale in favour of the third respondent is liable to be interfered and countermanded.
The High Court observed that the impugned auction notice clearly stated the terms and condition of the proposed Auction could be downloaded from the website of the Income Tax Department or collected from the office of the respondent Tax Recovery Officer. There is also no violation of Rule 53 (b). As per Rule 53 (b), a proclamation of sale of immovable property is to be drawn up after due notice to the defaulter as to the time and place of sale. The proclamation shall also specify as fairly and accurately as possible the reverse, if any, assessed upon the property or apart thereof. If revenue has not been assessed, question of including the same in the proclamation sale does not arise.
The single bench presided by Mr.Justice C.Saravanan while dismissing the Writ petition has held that “the amount was recovered from the auction sale is only Rs.3,38,03,500/-, the third respondent (purchaser of property in auction) is also bound to pay the amounts due to the 234 time share holders, Commercial Tax Department and Repco Bank. These are the liabilities of the petitioner which the third respondent has undertaken to discharge and therefore, I do not find any irregularity in the auction conducted by the Income Tax Department. There is no merit in the present writ petition”.
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