Section 222 and Rule 68B of Second Schedule
– Recovery of tax – Where TRO had issued
on assessee a notice dated 18/11/2004 for auction of its attached property and
SC vide order dated 16/01/2001 had dismissed SLP of assessee filed against
assessment order, period of three years enacted in Rule 68B(1) of Second
Schedule to the Act would begin to run from 01/04/2001 and notice dated
18/11/2004 was, therefore, barred by limitation
The Tax Recovery officer
had issued on the assessee a notice dated 18/11/2004 for auction of its
attached property. The assessee filed a writ petition praying to quash the
above notice. It submitted that the notice was barred by limitation because of
rule 68B of Second Schedule of the Act. The assessee had challenged the
relevant assessment order upto Supreme Court and the Supreme Court vide order
dated 16/01/2001 had dismissed the SLP of the assessee.
The Bombay High Court allowed
the writ petition and held as under:
“i) Perusal of memo of writ petition does not show any effort made by
revenue after 16/01/2001 till 18/11/2004 for auction of attached property. The
only effort appears to be on 18/11/2004. It, therefore, is not a case of resale
but first or initial sale or auction only.
ii) Perusal of the judgment of the Andhra Pradesh High Court rendered
in the case of S.V. Gopala Rao v. CIT [2005] 144 Taxman 395/[2004] 270 ITR 433
shows that the CBDT does not have power to issue Notification to amend a
provision enacted by Parliament. Notification dated 01/03/1996 enhancing period
of limitation of three years stipulated in rule 68B(1) to four years is,
therefore, found to be bad. This judgment of Andhra Pradesh High Court was challenged
by department before the Apex Court. The Apex Court has endorsed the findings
of Andhra Pradesh High Court. With the result, it follows that period of
limitation of three years enacted by Parliament in rule 68B(1) could not have
been altered by the CBDT. The period, therefore, was always three years.
iii) Here the SLP of assessee is also dismissed on 16/01/2001 by the
Apex Court. The period of limitation, therefore, begins to run from 01/04/2001.
The period of three years expired on 31/03/2004 and period of four years
expired on 31-03-2005.
iv) The steps are initiated by the department in present matter on
18/11/2004, i.e., after expiry of period of three years but before expiry of
period of four years. The judgment of Apex Court endorses reasoning of Andhra
Pradesh High Court on lack of authority in CBDT to increase the period from
three years to four years. The incompetent authority, therefore, cannot
prejudice legal rights of the assessee flowing from statutory provisions or
eclipse the same in any manner. Notice dated 18/11/2004 is, therefore, beyond
period of three years and, therefore, hit by rule 68B(1).
v) In view of the aforesaid, the notice dated 18/11/2004 is
unsustainable and deserved to be quashed. Consequently, in view of mandate of
rule 68B(4), attachment of property which formed subject matter of notice dated
18/11/2004 is also set aside.”
