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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Puranmal Delhiwala Income Tax Officer, 204 Niranjan, 99 Marine Drive Ward 14(3)(3) Mumbai-400 002 Mumbai-400 021 Vs. PAN No. AAFFP5709C Appellant .. Respondent Assessee by .. Shri Nitesh Joshi, AR Revenue by .. Shri G.N. Makwana, DR Date of hearing .. 02-05-2017 Date of pronouncement .. 12-05-2017 O R D E R PER MAHAVIR SINGH, JM:
This appeal by the assessee is arising out of the orders of CIT(A)-25, Mumbai, in appeal No. CIT(A)-25/IT-503/14(3)3/2009-10 dated 16-05-2011. The Assessment was framed by ITO Ward 14(3)(3), Mumbai for the A.Y. 2002- 03 vide order dated 24-12-2009 u/s 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. The first two inter-connected issues raised by the assessee are regarding assumption of jurisdiction by the AO i.e. reopening of assessment beyond four years despite there is a non-failure on the part of the assessee to disclose the material facts truly for the assessment of the assessee and also that the alleged capital gain is not assessable in the AY 2002-03 instead it should be assessee in 2001-02. For this assessee has raised following two grounds: - “1. The learned Commissioner of Income Tax (Appeals)-25, Mumbai, hereinafter referred to as the "CIT (Appeals)", erred in dismissing the appellants ground of appeal against reopening of assessment u/s 147 of the IT Act and further erred in holding that the Puranmal Delhiwala; (A.Y:2002-03)
action u/s 147 r.w.s. 148 of the Assessing Officer is in accordance with the statutory provisions in vogue.
Your appellants submit that, on the facts and in the circumstances of their case, the Assessing Officer assumed jurisdiction under section 147 of the IT Act without fulfilling the jurisdictional pre-conditions necessary under the said section and hence his order is illegal, bad-in-Law and without jurisdiction.
2. Without prejudice to the ground of appeal No.1, it is submitted that, the CIT(Appeals) erred in not adjudicating the ground of appeal before him that the alleged capital gains are not assessable during the assessment year 2002-03.”
Briefly stated facts are that in this case notice under section 148 of the Act was issued dated 10-01-2006 and subsequently another notice under section 148 dated 24-03-2006 was also issued by ITO Ward 14(3)(3) Mumbai. Assessment under section 143(3) read with section 147 of the Act was completed on 22-12- 2006 by ITO ward 14(3)(3) Mumbai. Subsequently, notice dated 01-10-2008 issued under section 148 of the Act, which was duly served on assessee on 08- 10-2008. This notice under section 148 was issued by recording the following reasons (reasons are enclosed at page 20 of assessee’s paper book recorded on 17-09-2008): - “REASONS FOR REOPENING UJS. 147 OF THE I.T. ACT, 1961 In this Case, assessee has filed return of income unto A.Y. 1999-2000. No further return has been tiled till 31.03.2006. Case was reopened u/s. 147 for A.Y. 2002-03 to fax escapement of income for Bondra property. Assessment completed u/s. 143 (3) r.w.s 147 determining total income at Rs. 21.000/- on 22/12/2006. In order to recover the arrear demand. the erstwhile TRO, Ward 25, Page 2 of 20
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Mumbai attached the assessee immovable property known as SARVESH Sadan Porperty. This properly purchased by the department under Rule 59, of Schedule II of the I.T. Act for a consideration of Rs. 2, 34, 25000/- in the auction conducted on 27/03/2001.
As per section 63 (1). the TRO has to make on order confirming the sale and thereupon the sale become absolute. TRO has confirmed the sale in the month of April-2001.
Since the transaction of auction purchase was within the knowledge of the department, the income from capital gains is to be taxed: however, assessee has voluntarily not offered the Long Term Capital Gains for taxation in the A.Y. 2002-03. In order to bring the escaped Long Term Capital Gains for taxation, the assessment is to be reopened u/s. 147 of the I.T. Act. 1961, as the escapement of income is more than Rs. 1 Iakh.
Since escapement of Long Term Capital Gains for taxation will be approximately more than Rs. 20 Lakhs, assessment is required to be reopened by taking the period of six years as the time available for reopening the escaped income u/s. 149 (1) (b) of the I.T. Act, which expires on 31/03/2009.
The quantum of escaped income is Rs. 20 lacs approx. for A.Y. 2002-03.
Necessary approval u/s. 151 of the I.E. Act 1961 may be given in this case for reopening the assessment for A.Y. 2002-03.”
4. The facts are that Mumbai TRO Ward 25, Mumbai attached assessee’s immovable property known as SARVESH Sadan property and department auctioned this property under Rule 59 of Second Schedule of the IT Act and Page 3 of 20
Puranmal Delhiwala; (A.Y:2002-03) purchased for a consideration of Rs. 2,34,25,000/- in the auction conducted on 27-03-2001. The final sale under auction took place in March 2001 i.e. 27-03- 2001. But according to AO as per rule 63(1) of the Act, the TRO has to make an order confirm the sale and there upon the sale becomes absolute. According to Revenue TRO has confirmed the sale in the month of April 2001. Even the reasons recorded by the AO i.e. ITO Ward 14(3)(3), Mumbai also confirmed the same position. The reasons are reproduced above. The assessee before the AO raised objection for reopening of assessment by issuing notice under section 148 vide letter dated 25-07-2009 and also raised objection of assessibility of long term capital gain in the relevant assessment year instead of the same should be assessed in the year of transactions which relates to AY 2001-02 when final sale under auction took place on 27-03-2001. This fact is accepted by AO in his letter dated 12-08-2009 and the relevant letter is enclosed at assessee paper book page 21 and the relevant reads as under: - “ Sub: - Assessment proceedings in the case of M/s. Puranmal Delhiwala for A.Y. 2002-03 - reg.
Ref: Your letter dated 25/712009
Please refer to the above.
The notice u/s. 142(1) was issued on 17/07/2009 alongwith the requesting letter to furnish the total income including working of Long Term Capital Gain. Instead of furnishing the details asked, you have raised the question of validity of the notice u/s. 148 issued on 10/10/2008 vide your letter dated 25/7/2009.
3. In this connection, I have to clarify you that as per section 63(1), the Tax Recovery Officer has to make an order confirming the sale and thereupon the sale becomes absolute. This can happen only after a period on months from 27/03/2001 i.e. on or after 27/4/2001. In other words, the transaction of sale becomes complete only on or after 27/4/2001, on which date the Tax Page 4 of 20
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Recovery Officer has issued the sale confirmation order under Rule 63(1). Therefore, the relevant assessment year for assessing capital gain is the A.Y. 2002-03.
3. I hope this is enough to understand the position and submit the details called for as per notice u/s. 142(1) dated 17/7/2009, so that assessment proceedings can be completed in time.”
The AO further, vide computation of long term capital gain assessed the long term capital gain at Rs. 1,27,38,296/- vide his order dated 24-12-2009 passed under section 143(3) read with section 147 of the Act. Aggrieved against the order of assessment framed by AO, assessee preferred the appeal before CIT(A).
The CIT(A) also confirmed the action of the AO in reopening the assessment and not adjudicated the issue of year of assessibility of capital gain raised by way of following ground No. 2 before CIT(A): -
2. Without prejudice to the ground of appeal No. 1, it is submitted that, alleged capital gains are not assessable during the assessment year 2002-03.”
Aggrieved against the action of the CIT(A) confirming the re-opening and confirming assessibility of capital gain in the relevant AY 2002-03, assessee came in second appeal before Tribunal.
Before us, the learned Counsel for the assessee Shri Nitesh Joshi, briefly narrated the facts regarding issuance of notice under section 148 of the Act. He first of all took us through the notice issued under section 148 of the Act dated 1- 10-2008 and stated the relevant AY is 2002-03 and hence, the re-opening is beyond four years. According to the learned Counsel assessee’s case falls under the proviso to section 147 of the Act. He took us through the proviso to section 147 of the Act which reads as under: -
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Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year:
The learned Counsel for the assessee stated that this information was very much available on the record of the department i.e. the auction of the immovable property known as SARVESH Sadan property which was purchased by the department under rule 59 of Second Schedule of the Act for a consideration of Rs. 2,34,25,000/- in the auction conducted on 27-03-2001. The learned Counsel for the assessee stated that this information was available with the department even at the time of reassessment order passed by AO dated 22-12-2006 and there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the relevant AY 2002-03. Furthermore, the learned Counsel for the assessee drew our attention to the remand report sent by the AO i.e. ITO ward 14(3)(3), Mumbai dated 24-06-2010 to the CIT(A). The relevant report is enclosed at page 73 of the assessee’s paper book and the same reads as under: -
Puranmal Delhiwala; (A.Y:2002-03) “24 June. 2010 No ITO-14(3)-3/Rem. Rep./2010-11 . To The Commissioner of Income-tax (A) - 25. Mumbai.
Sub: Appeal No.503/09-10 for A.Y. 2002-03 in the case of M./s. Puranmal Delhiwata - reg.
Ref No. CIT(A)-25/Remand Report/09-10 dtd. 30/4/2010 Kindly refer to the above, As regards the assessee’s submission on challenging the legality of notices issued u/s.148, the background of the case is given as under:
The Ld.CIT-14, Mumbai vide letter dated 3/8/2008 has directed to reopen the assessment for A.Y. 2002-03 to tax Capital Gains as auction conducted on 27/3/2001 and purchase of property under Rule 59 of Schedule - II of the I.T. Act. 1961 (copy enclosed for ready reference).
In view of the specific direction reasons were recorded (copy enclosed) & a proposal was sent for reopening the assessment to CIT and after taking necessary approval, notice u/s.148 was issued and reassessment proceedings started by issue of notice uls.143(2)/ 142(1) of the I.T. Act. 1961.
As regards the assessee's submission received on 13/412010 in respect of AX. 2002-03 related to levy of interest u/s.234A / 234B, the assessment was rectified u/s.154 of the I.T. Act, 1961 on 513/2010. Rectification resulted in reduction of interest u/s.234A I 234B to the extent of Rs.4,80,317/-.
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Submitted. ”
In view of the above remand report the learned Counsel for the assessee stated that the re-opening is just based on the directions of the CIT-14 Mumbai vide letter dated 03-08-2008. But this was contested by the learned SR. DR and stated that there is no such letter of CIT-14 Mumbai dated 03-08-2008 but actually there is a confusion and ambiguity created by the ITO’s letter dated 24- 06-2010, and the ambiguity was removed by the report of additional CIT Range 14(3) Mumbai dated 17-03-2011 but it was a letter written by CIT(Judl.) dated 07-08-2008 to CIT-14 Mumbai mentioning that there is no factual sequences of events relating to the sale of the said property which has given rise to capital gains. According to the learned Sr. DR, the relevant remand report of the additional CIT Range 14(3) dated 07-03-2008 is reproduced in the order of CIT(A) for the sake of clarity, the same is being reproduced as under: - “ In this case Remand Report in the above mentioned case was submitted by the 1TO-143(3) dated 24.6.2010 and the sane was simply forwarded to your Honors office the undersigned presuming that the facts mentioned therein are correct and true. However, subsequent to your office letter dated 11.1.2011 addressed to CIT-14, Mumbai, I personally have gone through the original assessment records and found that the facts mentioned by the ITO-14(3)(3) in his remand report dated 24.06,2010 are not incorrect by patently false. Earlier. 1T0 14(3)3 in his report dated 24.6.2010 has reported, as has also observed by you honour is as under: -
'The CIT-14, Mumbai vide letter dtd 3.8.2008 has directed to reopen the assessment for A. Y. 2002- 03 to tax capital gains as auction conducted on 27.3.2001 and purchase of property under Rule 59 of Schedule-11 of the LT. A cat, 1961 (copy enclosed for ready reference) In view of the specific direction reasons were recorded (copy Page 8 of 20
Puranmal Delhiwala; (A.Y:2002-03) enclosed) & a proposal was sent for reopening the assessment to CIT and after taking necessary approval, notice u/s. 148 was issued and reassessment proceedings started by issue of notice u/s. 143(2)/ 142(1) of the IT Act, 1961.
The perusal of original assessment shows that the above facts are not covered and the capital facts are as below. a. There was no letter written by CIT-14, Mumbai directing the AO. i.e. ITO 14(3)(3) to re-open the assessment for AY. 20020-03 to tax capital gains. In fact the said letter being referred to by ITO 14(3)(3) was written by CIT (Judl) (correct date is 7.08.2008) to CIT-14, Mumbai mentioning therein factual sequence of events relating to the sale of the said property which has given arise to capital gain. The copy of this letter has already been submitted to your honour (as is evident that copy of this letter was submitted in your office by the ITO 14(3)(3) alongwith the remand report dated 24.06.2010 by mentioning this as of CIT-14 letter dated 03.08.2008) from which it is clear that ITO has mis-understood this letter to have been written by CIT-14, Mumbai. The copy of this letter is again enclosed for your reference which clearly shows that there is nowhere anything in the form of a direction to either the AO or CIT-14, Mumbai. This letter is merely a factual report and is a part of the internal official correspondence between CIT(Judl.) and CIT-14, Mumbai, and as also can be seen a copy of this letter was duly forwarded to Addl. CIT-14(3), Mumbai as well as the ITO-14(3)3, Mumbai. Hence, this letter written by CIT(Judicial). Mumbai came to the AO
Puranmal Delhiwala; (A.Y:2002-03) i.e. ITO-1-4(3)3 in the form of a factual report. which was then independently considered by the AO for the purpose of making belief arid recording reasons for re-opening the assessment, b. Thus. ills clear that there was no direction from any Higher Authorities to the AO for re-opening the assessment. In fact the said letter of CIT-14, Mumbai dated 3.8.2008, does not exist at all and as stated above the letter of CIT(Judl.) Dated 7.82008 was inadvertently referred to as the letter of CIT-14, Mumbai. This fact also becomes more clear by perusing the reasons recorded by the AO (copy enclosed) which clearly shows the independent application, of mind of AO in making belief and recording the reasons for re-opening of assessment. c. Your honour has correctly intimated that as per judicial pronouncements it is well settled that the AO has to apply his own mind and record reasons for re-opening of assessment and he should not act merely as per the directions of higher authorities, but at the same time nothing prevents the AO to make his belief and record reasons by perusing the new facts which may appear before him. In this case the AO has taken an independent decision on the basis of facts available before him in the form of letter written by CIT(Judl.) to CIT- 14, Mumbai, a copy of which was duly marked to his as well.
The facts mentioned above makes it clear that in this case the reasons recorded by the AO after making honest and independent belief on the basis of certain facts and he has not acted on the Page 10 of 20
Puranmal Delhiwala; (A.Y:2002-03) directions of any higher authority. The entire confusion has been generated because of the wrong reporting facts by the ITO-14(3)3 in his earlier remand report dated 24-06-2010.. Nevertheless merely reporting of wrong facts shall not act against the existence of true facts which are hereby brought on record for your honor’s perusal. In this view it is requested that the remand report submitted by the I7'0-14(3)3 dated 24.6.2010 either may not be referred to or the same shall be amended accordingly as per the true facts reported above. The original assessment records are also being kept ready to be produced before your honour, it so required."
The relevant letter of CIT(Judl.) dated 07-08-2008 is enclosed at Page 74 of assessee’s paper book and the relevant text of the letter reads as under: - “2. It can be seen from the correspondence on the above subject that the Sarvesh SAdan property was purchased by the department under Rule 59 of Schedule II of the Income Tax Act for a consideration of Rs. 2,34,25,000/- in the auction conducted on 27-03-2001. In the report referred to above, it has been stated that the correct demand/ refund position in the case of the assessee, M./s Puranmal Delhiwala is yet to be worked out.
3. At the stage of forwarding the report, I had held a meeting with the then Addl. CIT-14(3), Mumbai, Shri Ashwani Kumar Sinha and the I.T.O -14(3)(3), Mumbai. At the time, I had suggested that the questionof levying capital gains tax in respect of the above transaction has to be looked into. However, it was stated that the capital gains tax assessment must have got bared because the date of sale is 27.03.2001 and the relevant Assessment Page 11 of 20
Puranmal Delhiwala; (A.Y:2002-03)
Year is 2001-02. I find that this cannot be the correct state of affairs because as per Section 63(I), the tax Recovery Officer has to make an order confirming one month from 27-03-2001 i.e. on or after 27-04-2001. In other words, the transaction of sale becomes complete only on or after 27.04-2001, on which date the Tax Recovery Officer has issued the sale confirmation order under Rule 63(I). Therefore, taking the period of six years as the time available for reopening the escaped assessment, there is time available upto 31.03.2009 for reopening the assessment. This fact is brought to your notice for necessary action.
It may be noted that though the transaction of auction purchase was within the knowledge of the department, the income from capital gains can be worked out only after the details of cost of acquisition, cost of improvement, exemptions, if any, etc., are known, which are not within the knowledge of the department. This matter is important for recording reasons for reopening of the assessment.”
On this facts, we find that the reasons are recorded by the AO on 17-09- 2008 and he held a meeting with additional CIT range 14(3) Mumbai as well as with CIT (Judl.) Mumbai, whose report dated 07-08-2008 clearly states this fact. We find from the report dated 07-08-2008 that the CIT (Judl.) Mumbai has referred the matter for reopening to assess capital gain on account of purchase of property by department under Rule 59 of Second Schedule of the Act for consideration of Rs. 2,34,25,000/- in the auction conducted on 27-03-2001.
We have gone through the facts in entirety and noticed that the reasons recorded by the AO are by applying independent mind. For this confusion, we have gone through the fact that there is neither such letter available in the assessment records nor CIT-14 Mumbai directed AO i.e. ITO ward 14(3)(3) Mumbai to reopen the assessment for AY 2002-03 to assessed the capital gains. Page 12 of 20
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We find that factually there is letter written by CIT(Judl.) dated 07-08-2008 to CIT-14 Mumbai mentioning the sequences of events relating to sale of property which has given rise to capital gains. We are of the view that ITO Ward 14(3)(3) while sending remand report on 26-10-2010 has wrongly mentioned the letter of CIT- 14 dated 03-08-2008, whereas factually the letter is of CIT (Judl.) dated 07- 08-2008. Thus, according to us it is clear that there was no direction from higher authorities for reopening of assessment to the ITO ward 14(3)(3) Mumbai. This fact also becomes clear by perusing the reasons recorded by the AO as well as on verification of assessment records, which clearly shows that AO while recording the proceedings for reopening made his belief and recorded the reasons by perusing the facts which appeared before him. In his case, the AO has taken an independent decision on the basis of facts available before him. Even though a letter written by CIT (Judl.) to CIT-14 Mumbai was available with him, as the same was marked to him as well. Accordingly, we are of the view that in this case reasons recorded by the AO for reopening the assessment is after making honest and independent belief on the basis of certificate available before him and he has not acted on the directions of any higher authorities. The entire confusion has been generated because of wrong report of facts by ITO Ward 14(3)(3) in his remand report dated 24-06-2007 and this cannot be the basis for quashing the re- assessment. Accordingly, we are upholding the reopening on this issue and on this issue assessee’s appeal is dismissed.
Coming to second issue of assessment of capital gain in AY 2001-02 or for present AY 2002-03, the learned Counsel for the assessee first of all took us through the reasons recorded wherein it is admitted that the department has purchased the assessee’s immovable property known as SARVESH Sadan property under rule 59 of Second Schedule of the Act for consideration of Rs. 2,34,25,000/- in the auction conducted on 27-03-2001. According to the learned Counsel, the sale is completed on the date when property was sold in auction dated 27-03-2001. According to him, the further confirmation by TRO under rule 63(1) of the Act to make and so far confirming the sale and claim of Revenue for the sale becomes absolute thereupon is totally baseless. The learned
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Counsel for the assessee referred to relevant rules. The relevant rule 63 of SECOND SCHEDULE reads as under: - 14.
“Confirmation of sale
(1) Where no application is made for setting aside the sale under the foregoing rules or where such an application is made and disallowed by the Tax Recovery Officer, the Tax Recovery Officer shall (if the full amount of the purchase money has been paid) make an order confirming the sale, and, thereupon, the sale shall become absolute. (2) Where such application is made and allowed, and where, in the case of an application made to set aside the sale on deposit of the amount and penalty and charges, the deposit is made within thirty days from the date of the sale, the Tax Recovery Officer shall make an order setting aside the sale : Provided that no order shall be made unless notice of the application has been given to the persons affected thereby. Return of purchase money in certain cases.
Sale certificate.
(1) Where a sale of immovable property has become absolute, the Tax Recovery Officer shall grant a certificate specifying the property sold, and the name of the person who at the time of sale is declared to be the purchaser. (2) Such certificate shall state the date on which the sale became absolute.”
The learned Counsel for the assessee in view of rule 63 and 65 of second schedule to the Act argued that no such order under rule 63 was passed by TRO confirming the sale in the present case and no such sale certificate has been granted to the assessee by the department. Apart from the above, learned
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Counsel for the assessee stated that the result of auction is that the purchaser’s title relates that to the date of sale and not the confirmation of the sale. For this proposition the learned Counsel for the assessee relied on the case of Hon’ble Supreme Court in the case of Janak Raj Vs. Gurdial singh and another AIR 1967 supreme Court 608 (SC), wherein it is held as under: - “Before referring to the various decisions cited at the Bar and noted in the judgment appealed from, it may be useful to take into consideration the relevant provisions of the Code of Civil Procedure. So far as sales of immovable property are concerned, there are some special provisions in O.XXI beginning with r. 82 and ending with r.
If a sale had been validly held, an application for setting the same aside can only be made under the provisions of rr. 89 to 91 of O.XXI. As is well- known, r. 89 gives a judgment-debtor the right to have the sale set aside on his depositing in, court -a sum equal to five per cent of the purchase money fetched at the :sale besides the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, less any amount which may, since the date of sale, have been received by the decree holder. Under sub-r. (2) of r. 92 the court is obliged to make an order setting aside the sale if a proper application under r. 89 is made accompanied by a deposit within 30 days from the date of :sale. Apart from the provision of r. 89, the judgment- debtor has the right to apply to the court to set aside the sale on the ground of a material irregularity or fraud in publishing or conducting it provided he can satisfy the court that he has sustained substantial injury by reason of such irregularity or fraud. 'Under r. 91 it is open to the purchaser to apply to the court to set aside the sale on the ground that the judgment-debtor had no saleable interest in the property sold. Rule 92 provides that where no application is made under any of the rules just now Page 15 of 20
Puranmal Delhiwala; (A.Y:2002-03) mentioned or where such application is made and disallowed the court shall make an order confirming the sale and thereupon the sale shall become absolute. Rule 94 provides that where the sale of immovable property has become absolute, the court must grant a certificate specifying the property sold and the name of the person who at the time of sale was declared to be the purchaser. Such certificate is to bear date of the day on which the sale becomes absolute. Section 65 of the Code of Civil Procedure lays down that where immovable property is sold in execution of a decree and such sale has become absolute, the property shall be deemed to have vested in the purchaser from the time when it is sold and not from the time when the sale becomes absolute. The result is that the purchaser's title relates back to the date of sale and not the confirmation of sale. There is no provision in the Code of Civil Procedure of 1908 either under O.XXI or elsewhere which provides that the sale is not to be confirmed if it be found that the decree under which the sale was ordered has been reversed before the confirmation of sale. It does not seem ever to have been doubted that once the sale is con- firmed the judgment- debtor is not entitled to get back the property even if he succeeds thereafter in having the decree against him reversed. The question is, whether the same result ought to follow when the reversal of the decree takes place before the confirmation of sale. ”
Further, the learned Counsel for the assessee also relied on another authority of Hon’ble Supreme Court in the case of Sagar mahila Vidyalaya, Sagar vs. Pandit Sadashiv Rao Harshe and others (1991) 3 Supreme Court cases 588 (SC): - “The High Court while dealing with the question of limitation held that the plaintiff in this case was not Page 16 of 20
Puranmal Delhiwala; (A.Y:2002-03) required to file a suit for getting the sale set aside when he is pleading that the sale itself is void. A void sale could be ignored by a true owner and it did not affect his title. The High Court in our view was totally wrong in holding that it was a case of void sale. It may be noted that Govind Rao Harshe had already taken steps for getting the sale set aside by moving a petition under Order XXI Rule 90 C.P.C. and his sons had filed a suit for declaration but all those proceedings finally terminated against them. Even if for arguments sake the objection now raised in the present suit is considered, it is only in respect of the sale certificate being wrongly issued in favour of Mahila Vidyalaya. So far as the sale in favour of Gopal Rao Mutatkar is concerned, there is no illegality and the sale was rightly confirmed in his favour under Order XXI Rule 92 C.P.C. by order dated 10th April, 1943. It may be noted that once an order was made under Order XXI Rule 92 confirming the sale, the title of the auction purchaser related back to the date of sale as provided under Section 65 C.P.C. The title in the property thereafter vests in the auction purchaser and not in the judgment debtor. The issue of sale certificate under Order XXI Rule 94 C.P.C. in favour of the auction purchaser though mandatory but the granting of certificate is a ministerial act and not judicial. Thus looking into the matter from this angle also it is clear that no right or title remained with Govind Rao Harshe after confirmation of sale in favour of Gopal Rao Mutatkar which related back to the date of sale i.e. 20th August, 1942. Thus there is no question of holding that it was a case of a void sale which could be ignored by a true owner and it did not affect his title. Govind Rao Harshe and as such the respondents who are his legal representatives were not entitled to take the stand that they were true owner as the sale itself was void and they Page 17 of 20
Puranmal Delhiwala; (A.Y:2002-03) were not required to file a suit for getting the sale set aside. With the risk of repetition it is held that it was not a case of the sale being void and in any case so far as issue of sale certificate in favour of Mahila Vidyalaya is concerned, the same was determined by a judicial order dated 26th February, 1944 and the executing court was competent to pass such order cannot be held to be void on the ground of being without jurisdiction as determined by the High Court and it was necessary to challenge the said order within limitation. Even if the residuary Article 120 of the Limitation Act, 1908 is applied, it should have been challenged within 6 years and as such the present suit filed on 26th November, 1960 was hopelessly barred by time. ”
The learned Counsel for the assessee argued that Hon’ble Supreme Court has laid down the proposition that once an order is made under Order XXI rule 92, confirming the sale, the title of the auction purchaser related back to the date of sale as provided under Section 65, C.P.C. The title in the property thereafter vests in the auction purchaser and not in the judgment-debtor. The issue of sale certificate under order XXI, rule 94, C.P.C. in favour of the auction purchaser though mandatory but the granting of certificate is a ministerial act and not judicial. In view of these rulings of Hon’ble Supreme Court, the learned counsel for the assessee argued that in the present case before us the final sale under the auction took place on 27-03-2001 and consequently, the transactions relates to AY 2001-02 and not Ay 2002-03 as assessed by the Revenue. He argued that rule 63 r.w.r. 65 of the Second Schedule of the Act are pari materia with the provision of Civil Procedure Code order XXI, rule 92 & 94 and Section 65 of auction sale.
We have heard rival contentions on this issue and gone through the facts and circumstances on the case. Admittedly, assessee’s immovable property known as SARVESH Sadan property was purchased under rule 59 of Second Schedule of the Act for consideration of Rs. 2,34,25,000/- in the auction Page 18 of 20
Puranmal Delhiwala; (A.Y:2002-03) conducted on 27-03-2001. But in the reasons recorded by the AO for reopening it is clearly mentioned that the TRO has to make an order under rule 63 of Second Schedule of the Act confirming the sale within one month and for that date sale will become absolute. We also find that as per rule 65 of Second Schedule of the Act confirming the sale within one month certificate has to be issued in this regard. But none of the acts was done by the Revenue as per records and also enquiry made by the Bench from the Revenue during the course of hearing. In such circumstances and the decision of Hon’ble Supreme Court clearly applicable to the assessee in regard to the title of the auction relates back to the date of sale of property. Hon’ble Supreme Court stated that sale of property was perfectly valid as soon as the sale was confirmed under order 21 rule 92 of CPC and the judgment debtor has no right or title in the property. Once an order is made confirming the sale, the title of the auction purchaser relates back to the date of sale as provided u/s 65 of CPC i.e. the auction sale. The title in the property thereafter vests in the auction purchases and not the judgment debtor. The issue of sale certificate under order 21 rule 94 of CPC in favour of auction purchaser though mandatory but the granting of certificate is a ministerial act and not judicial one. In view of the above proposition of law laid down by Hon’ble Supreme Court in the case of Sagar mahila Vidyalaya, Sagar & also Janak Raj (supra), we are of the view that in the present case the transaction of sale of property completed in the assessee’s case as on 27-03-2001 because SARVESH Sadan property was purchased by the department under rule 59 of Second Schedule of the Act for consideration of Rs. 2,34,25,000/- in the auction conducted on 27-03-2001. Therefore, the TRO making an order under rule 63 of Second Schedule of the Act confirming the sale within one month and for that date sale will become absolute and also issuing certificate in this regard as per rule 65 of Second Schedule of the Act is just ministerial act and not judicial one. Hence, the transaction of sale falls in AY 2001-02 and not in AY 2002-03 as assessed by the Revenue while framing re-assessment u/s 147 r.w.s 143(3) & 148 of the Act. This issue of the assessee’s appeal is allowed.
Puranmal Delhiwala; (A.Y:2002-03)
Since we have allowed the appeal of the assessee quashing the year of assessibility in the year 2002-03 by holding that the actual assessable year is AY 2001-02. We need not go into the merits of the case and the grounds raised on merits are not adjudicated accordingly.
In the result, appeal of assessee is allowed. Order pronounced in the open court on 12-05-2017.