SRI S N RAVIKUMAR vs THE TAX RECOVERY OFFICER

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 18TH DAY OF JUNE, 2013

BEFORE

THE HON’BLE MR.JUSTICE ARAVIND KUMAR

W.P.NOs.15891-15893/2013 (T-IT)

BETWEEN:

Sri.S.N.Ravikumar, Aged about 54 years Son of Sri.A.S.Narayana Rao, Residing at Flat No.401, Stanberry court, No.12, 60 Feet Road, Sanjaynagar, Bangalore-560 094.

....Petitioner

(By Sri.Malhara Rao, Advocate for Sri.S.Parthasarathi, Advocate)

AND:

The Tax Recovery Officer,

Central Range-I,

4th Floor, Central Revenues Building

Annexe, Queen’s Road,

Bangalore-560 001.

The Deputy Commissioner of Income-Tax,

Central Circle 1(2),

No.621, HMT Bhavan, 6th Floor,

Bellary Road, Ganganagar,

Bangalore-560 032.

The Commissioner of Income-tax

(Appeals)-VI,

Central Revenues Building,

Queen’s Road,

Bangalore-560 001.

…Respondents

(By Sri. K.V.Aravind, Advocate)

These writ petitions are filed under Articles 226 and 227 of the Constitution of India praying to quash the communication dated 18.03.2013 in file No.Auction /TRO.CR.1/S.N.RAVIKUMAR/2012-13 of

the first respondent vide Annexure-P etc.

These Writ Petitions coming on for orders this day, the Court made the following:

ORDER These writ petitions are directed against the communication dated 18.03.2013 Annexure-P, 19.03.2013 Annexure-Q and for issue of a writ of prohibition to restrain first respondent from recovering the impugned demand in pursuance to these two communications and also for a further direction to the third respondent to hear the stay application and consider the same on merits.

3 2. I have heard the arguments of Sri.S.Parthasarthi, learned counsel appearing for petitioner on 17.06.2013 and at his request matter was listed today. Sri.Malhara Rao, learned counsel appearing on behalf of Sri.Parthasarthi has filed an affidavit of the petitioner/assessee giving an undertaking to the following effect: “(i) The property morefully described in the schedule mentioned in the writ petition shall be held by me unencumbered until the demand on me for the assessment years 2006-07 to 2008-09 are settled and paid fully by me.

(ii) I shall pay the arrears of demand for the relevant assessment years referred to hereinabove if I am unsuccessful in the appeals pending before the CIT(Appeals), Bangalore (3rd Respondent in WP) against the orders under section 154 of the Act for the relevant assessment years, the balance of arrears of tax for the relevant assessment years shall

4 be paid within 10 days from the date of receipt of the appellate orders.

(iii) I shall also compensate the Revenue to the extent of deficit arising on account of receipt of lesser sale price on auctioning the schedule property to the extent of balance of arrears of tax”.

Facts in brief leading to filing of these petitions are as under: Consequent to search of the premises conducted at the residence of M/s.Ittina Property Private Limited, a consequential search was conducted in the residential premises of the petitioner/assessee on 28.02.2008. Return of income came to be filed for the assessment years 2006-2007, 2007-2008 and 2008-2009 by the petitioner/assessee declaring capital gains for transfer of land and also for the apartments allotted to the petitioner’s family. Second respondent concluded the assessment proceedings

5 whereunder the capital gains declared by assessee to tax was accepted and demand came to be raised for respective assessment years. Undisputedly the quantum assessment proceedings has reached finality since assessee has not challenged the same.

The Assessee was treated as an assessee in default and a certificate under Section 222 of the Income Tax Act, 1961 was drawn mentioning his name. On account of non payment of demand raised by revenue pursuant to assessment proceedings, first respondent has initiated recovery proceedings and attached four immovable properties of the assessee. One property was selected for auction and proceedings were initiated by issuing proclamation of sale. Assessee filed an application under section 224 and 225 before the first respondent with a prayer to refrain from auctioning the property contending that separate applications have been filed before the Assessing Officer seeking for rectification of the assessment orders dated 30.12.2009 and

6 until and unless the demand is recomputed by passing rectification order, the proceedings including attachment and sale of property be stayed. On the same day i.e., on 14.02.2013 petitioner filed three (3) applications under section 154 seeking rectification of assessment order dated 30.12.2009 raising several grounds. Said rectification applications came to be rejected by second respondent vide order dated 25.02.2013. Being aggrieved by the orders of rejection of rectification applications, petitioner filed three (3) appeals before the third respondent CIT(Appeals) along with applications for stay of demand. During the pendency of appeals before 3rd respondent, application which had been filed by petitioner on 04.03.2013 before 1st respondent came to be considered and orders came to be passed rejecting the same vide order dated 14.03.2013 (Annexure-M). Petitioner filed one more application under section 225 before the Tax Recovery Officer i.e., first respondent contending that application for stay along with appeals filed before CIT (Appeals) third respondent is yet to be disposed of and as

7 such prayed for not to auction the property. Said application came to be rejected by order dated 18.03.2013 Annexure-P and consequently intimation dated 19.03.2013 (Annexure-Q) was forwarded by first respondent to the petitioner about public auction having been conducted on 18.03.2013 at 11.30 a.m and successful bidder was NIMS Management Institutions Private Limited for a sum of `6.02 crores. It is these communications/endorsement dated 18.03.2013 and 19.03.2013 (Annexures P & Q) which have been questioned in the present writ petitions.

It is the contention of Sri.K.V.Aravind, learned counsel appearing for the revenue that when the quantum proceedings having reached finality and assessment having been concluded on the basis of return of income filed by the assessee himself, the assessing officer cannot go beyond the return of income filed and as such the very invoking of section 154 for rectification is bad in law and not maintainable and thus there is no merit in the claim now

8 made by the petitioner/assessee. Even otherwise he would contend that auction having been already conducted only sale confirmation is to be made in favour of the successful bidder and as such nothing else remains to be done and as such he prays for dismissal of the writ petition. He would also contend that in the event of this court were to issue directions to CIT(Appeals) to dispose of the appeal within a time frame same would be complied and by virtue of pendency of said appeal petitioner/assessee cannot be allowed to take umbrage at a subsequent stage to contend that sale proceedings has lapsed on account of limitation. Hence, he prays for necessary direction being issued in the event of alternate prayer made in the writ petition being granted by this court.

Having heard the learned advocates appearing for the parties and also on perusal of the records and undertaking filed today by learned counsel appearing for petitioner/assessee I am of the considered view that it would

9 suffice if a direction is issued to CIT(Appeals) i.e., third respondent to dispose of the appeal within an outer limit of two weeks from today, inasmuch as date of hearing has been fixed for today at 11.30 a.m which fact is not disputed by Sri.Malhara Rao, learned counsel appearing on behalf of Sri.Parthasarathi since he also states that necessary arrangements have been made to appear before the appellate authority. However, it requires to be further clarified that in the event of petitioner/assessee being unsuccessful before CIT(Appeals) the assessee shall pay the certified demand made by Revenue within ten days from the date of receipt of the order passed by CIT(Appeals) as also undertaken in the affidavit filed before this court today. It is also made clear that in the event of revenue being perforced to conduct re- auction for any reason whatsoever and if they were to receive any lesser amount in such auction petitioner/assessee shall also be liable to make good the same and an affidavit of undertaking shall be filed before the first respondent in this regard. It is further made clear that in the event of

10 petitioner/assessee failing to deposit the certified demand within ten days from the date of order of appellate authority being made available to the assessee, first respondent would be at liberty to confirm the auction sale in favour of successful bidder without granting any further time to the assessee and till then it shall be kept in abeyance.

Petitions stand disposed of in terms of the above directions. No costs. Ordered accordingly.

Sd/-

JUDGE

SBN

SRI S N RAVIKUMAR vs. THE TAX RECOVERY OFFICER