COMMISSIONER OF INCOME TAX-III Vs. SHREE GANESH SYNTHETICS (P) LTD.
DEBTS RECOVERY APPELLATE TRIBUNAL
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M.C. Jain, J. (Chairperson) -
(1.) THE Income -tax Department is aggrieved by order dated 22.12.2004 passed by the Tribunal below.
(2.) THE respondent No. 1 was a Company subjected to yearly assessment of Income -tax. Income -tax dues for the Assessment Years 1980 -81 to 1985 -86 were outstanding against it. The respondent No. 1 -Company had availed of certain loan and credit facilities from respondent No. 2 (Canara Bank). It had mortgaged certain properties, including Plot No. 10, Sector 25, Faridabad (Haryana), with the Bank to secure the credit facilities. It (respondent No. 1) defaulted in payment of the dues of the respondent No. 2 and recovery proceedings were initiated before the DRT. Subsequently, the Income -tax Department attached the property of the respondent No. 1 for the recovery of Rs. 49,35,822/ - plus interest w.e.f. 1.4.2003 as also collection charges. During the pendency of the proceedings before the DRT, Chandigarh, the respondent No. 1 and respondent No. 2 (Bank) arrived at a settlement to sell the mortgaged property and pay the dues of the Bank. To give effect to the settlement, an application (3773/2004) was made by the 1st respondent -Company before the DRT. The Income -tax Department had attached the property in question on 3.9.2003. The Department opposed the said application, but the Tribunal below overruled the objection. The property in question was permitted to be sold on the following conditions:
(i) that the property shall be sold with advance notice to the Income Tax Department,
(ii) that the income Tax Department will have liberty to bring a buyer of higher price who may pay more than the prospective buyer of the defendants, but the difference shall be substantial,
(iii) that the sale proceeds shall be deposited in the shape of FDR in the name of Registrar, DRT, Chandigarh for distribution in accordance with law.
Aggrieved, the Income -tax Department has preferred this appeal.
I have heard Ms. Sonia Mathur, learned Counsel for the appellant, Mr. Rajeev Sharma, learned Counsel for the 1st respondent and Mr. A.K. Sharma, learned Counsel for the 2nd respondent.
(3.) IT is not in dispute that the property in question Plot No. 10, Sector -25, Faridabad was owned by the respondent No. 1. The argument of the learned Counsel for the appellant is that Government revenues have priority over other dues. The learned Counsel submitted that the Crown debts always have priority over other dues, the principle being that private interest would always give way to the public interest. She urged that the Income -tax dues fall in the category of 'Crown debt' and the same have priority over the dues of the Bank (respondent No. 2). It has also been argued by her that the dues of the Bank (respondent No. 2) could be reckoned from the date of default and the Bank could have cause of action thereafter only.;
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