C.S.P. Singh, J. - (1.) THE controversy in this petition centres round the sale of properties belonging to the petitioner for realisation of arrears of income-tax dues. THE petitioner has, inter alia, prayed for quashing the auction proceedings as also the order of the Tax Recovery Officer confirming the sale and the sale certificate dated 24th November, 1975, issued in favour of respondent No. 3 and the sale deed dated 29th November, 1975, executed by the Tax Recovery Officer.
(2.) THE facts leading up to the controversy may be shortly stated : Income-tax arrears amounting to Rs. 56,628 including penalty and interest were due against the company. A sum of Rs. 8,905 was due against the managing director of the company. Separate recovery certificates appear to have been sent by the Income-tax Officer to the Tax Recovery Officer for realisation of these amounts. It transpires that initially the petitioner-company received a notice from the Tax Recovery Officer stating that a sum of Rs. 75,653 was due against the petitioner. Petitioner made representations against this notice alleging that certain amounts already paid by him had not been credited and that the sum demanded was not correct. In spite of these representations a sale proclamation was drawn up for sale of certain properties of the company for recovery of an amount of Rs. 75,653 together with interest. THE sale took place on that date and the highest bid received was Rs. 65,000. As the bid appeared to be low as compared to the reserve price fixed for the property by the department, the sale does not appear to have been confirmed. A fresh sale was held on 3rd July, 1972, but as none appeared to bid, it was postponed and a fresh proclamation of sale was issued on the 6th July, 1972, fixing the date of the sale for the 17th August, 1972. THE sale was again postponed on orders of the Additional Commissioner of Income-tax, Kanpur. It is not necessary to refer to certain other facts showing how the tax arrears which were claimed to be Rs. 75,653 were toned down to Rs. 56,628 as that is not relevant for the purposes of the present controversy. Subsequent to the fixation of the dues against the petitioner at Rs. 56,628 and against the managing director at Rs. 8,905 a sale proclamation dated November 22, 1972, was made fixing the date of sale as the 14th December, 1972. On the 25th November, 1972, the, petitioner moved a stay application before the Officiating Additional Commissioner of Income-tax for staying the auction scheduled to be held on the 14th December, 1972. A telegram was sent by the Officiating Additional Commissioner of Income-tax, Kanpur, staying the sale, but the respondents' case is that the telegram was received after the sale had already taken place. The sale took place on the 14th December, 1972. The petitioner filed a writ petition in this court on the 19th January, 1973, for staying the confirmation of the sale and stay orders were issued. This petition came up for hearing earlier before another Bench of this court and was dismissed ex parte. That order was subsequently set aside. But by the time the petition came up for hearing the sale had been confirmed by the Tax Recovery Officer, and a sale deed was also executed in favour of respondent No. 4. After that was done, the petition was amended and some of the reliefs now sought for were allowed to be incorporated in the petition. Counsel for the petitioner contended, firstly, that as the stay order had already been passed staying the sale, the Tax Recovery Officer had no jurisdiction either to hold the sale or to confirm it and issue a sale certificate. It is also contended that the proclamation of sale was vague. The contention, however, which we propose to consider is that the property of the petitioner could not be sold for the arrears of the income-tax dues of the managing director.
(3.) NOW, it is not disputed that the properties in question had been sold for realisation of an amount of Rs. 56,628 due against the company and also an amount of Rs. 8,905 due against the managing director. Annexure "A4" is the sale proclamation, on the basis of which the sale had taken place, mentions that the properties were being sold for realisation of an amount of Rs. 62,513 due from the petitioner. Although the sale proclamation mentions this amount as being due from the petitioner alone, but from the counter-affidavit filed on behalf of the department and on a perusal of the records produced before us, it is clear that this amount represented not only the demand against the petitioner-company but also of the managing director. Question is whether in these circumstances the sale is valid. The relevant provisions for the purposes of the present controversy are Sections 222(1) and 224 as also Schedule 2 of the Income-tax Act, 1961. We will extract the relevant part of Section 222(1) and then refer to the other provisions : "222. Certificate to Tax Recovery Officer.--(1) When an assesses is in default or is deemed to be in default in making a payment of tax, the Income-tax Officer may forward to the Tax Recovery Officer a certificate under his signature specifying the amount of arrears due from the assessee ; and the Tax Recovery Officer on receipt of such certificate, shall proceed to recover from such assessee the amount specified therein by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule- (a) attachment and sale of the assessee's movable property; (b) attachment and sale of the assessee's immovable property; (c) arrest of the assessee and his detention in prison ; (d) appointing a receiver for the management of the assessee's movable and immovable properties." ;