Case Details: Smt. Kumari Kanagam vs. Tax Recovery Officer - [2026] 183 taxmann.com 356 (Madras)
Judiciary and Counsel Details
- Senthilkumar Ramamoorthy, J.
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D. Vijayakumar for the Petitioner.
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A.P. Srinivas, Sr. Standing Counsel & A.N.R. Jayaprathap, Jr. Standing Counsel for the Respondent.
Facts of the Case
An assessment order under block assessment was issued to the assessee, imposing a tax liability of Rs. 68.14 lakhs. The assessee filed an appeal before the High Court, which was dismissed. A Special Leave Petition was then filed against that judgment, but it was also dismissed.
Meanwhile, following the issuance of the certificate under section 222, the Tax Recovery Officer issued an order of attachment regarding the immovable property of the assessee. Much later, based on a certificate for the recovery of Rs. 6.13 lakhs, another attachment order was issued. To recover these amounts, a proclamation of sale was issued in Form No. I.T.C.P. 13. The proclamation of sale was challenged in the writ petition.
The principal ground on which the assessee challenged the sale was that the limitation period of three years prescribed in Rule 68B of the Second Schedule of the Income-tax Act had expired. Therefore, it was contended that the attachment order is vacated by operation of law under sub-rule 4 of rule 68B.
High Court Held
The Madras High Court ruled that the three-year limitation period for tax recovery starts from the end of the financial year in which the tax demand becomes final under Chapter XX or conclusive under section 245-I. The dispute was whether finality was established on 22-8-2012, when the High Court dismissed the appeal, or on 15-5-2015, when the Supreme Court dismissed the SLP.
The Court held that an order attains finality only when it is no longer capable of being set aside or modified. Although a statutory appeal to the Supreme Court could have been filed under section 261, the assessee instead filed an SLP; nonetheless, the assessment order remained open to alteration until the disposal of the SLP. Therefore, finality was reached only on 15-5-2015.
Since this date fell in FY 2015-16, the limitation period ran from 31-3-2016 to 31-3-2019, and the sale proclamation issued on 12-6-2018 was within time.
The Court further held that failure to sell the property within the limitation period only results in the vacation of the attachment under Rule 65B(4) and does not extinguish the department’s recovery rights. Although recovery under the second certificate was limited to Rs. 6.13 lakh, proceedings under the first certificate were within the limitation period. Accordingly, the writ petition was dismissed.
List of Cases Referred to
- Noorudin v. Tax Recovery Officer [2002] 121 Taxman 10/[2001] 251 ITR 357 (Madras) (para 4)
- K. Venkatesh Dutt v. Tax Recovery Officer [2016] 75 taxmann.com 144/[2017] 244 Taxman 1 (Karnataka) (para 4)
- T. Subramanian v. Tax Recovery Officer [2017] 83 taxmann.com 229/249 Taxman 170 (Madras) (para 4)
- Rajiv Yashwant Bhale v. Pr. CIT [2017] 82 taxmann.com 140/249 Taxman 82/[2018] 401 ITR 408 (Bombay) (para 5).
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