Civil Suit against Income Tax Dept.’s Auction of Attached Property not Numbered due to Bar Council Boycott: Madras HC Directs Sale but with Right to Challenge [Read Order]

The Madras High Court recently directed the Income Tax Department to proceed with the confirmation and issuance of a sale certificate in respect of a property attached with relation to income tax evasion; however the Court sustained the petitioner’s civil suit challenging the auction as the matter remained unnumbered before the civil court due to an ongoing Bar Council boycott.

The decision came in a writ petition filed by C. Sowmya Raga, seeking the quashal of a communication dated 21 October 2025 and the consequent auction notice dated 25 September 2025 issued by the first Respondent Tax Recovery Officer-3, Income Tax Department, Chennai for the recovery of income tax dues.

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The petitioner had earlier approached the High Court seeking direction to lift the attachment over the same property effectuated by the Tax Recovery Officer. However, the petition was dismissed by the Court after noting that the subject-property originally belonged to a fourth respondent who was subject to investigation by the Central Bureau of Investigation (CBI).

Following a CBI request, the Investigation Wing of the Income Tax Department initiated proceedings into alleged tax evasion, and issued summons under Section 131 of the Income Tax Act and notices under Section 143(2) for the Assessment Years from 2009 to 2011. The Tax Recovery Officer consequently attached the immovable property under the powers conferred by the Second Schedule to the Income Tax Act, 1961, which governs the procedure for recovery of tax dues.

In the meanwhile, the Income Tax Department proceeded with the auction on 28 October 2025 with M/s. V.V. Automotive Components Private Limited emerging as the highest bidder with a bid of ₹42 Crores.

A.S.Sriraman, appearing for the petitioner at this instance stated that the civil suit initiated by the petitioner remained unnumbered, and thus, un-adjudicated. Conversely, the Senior Standing Counsel for the Revenue pointed to Rule 63 of the Second Schedule to the Income Tax Act, 1961, and Section 293 of the Act to argue that the civil suit was barred and the auction was valid.

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The Bench of Justice C. Saravanan observed that while the department had already concluded the auction and received the demand draft, this should not prevent the petitioner from challenging the same through a civil suit due to the administrative delay in numbering the suit.

Accordingly, the Madras High Court directed the Tax Recovery Officer to proceed with the confirmation of the sale and the issuance of the sale certificate in favor of the highest bidder. However, the Court directed that the civil suit be numbered expeditiously with the highest bidder being arrayed as a party in the suit as well.

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