Case Note & Summary
The petitioner, M/s Rambilas Gulabdas (HUF), filed a writ petition challenging an auction notice dated 18.11.2004 issued by the Tax Recovery Officer under the Income Tax Act, 1961. The petitioner contended that the notice was barred by limitation under Rule 68B of the Second Schedule to the Act, which prescribes a period of limitation for initiating auction proceedings. The petitioner argued that the limitation period should be computed from the date of the High Court judgment in reference proceedings, which would render the notice time-barred. The respondents, however, relied on the Supreme Court's decision in Tax Recovery Officer v. R.B. Sriram Durgaprasad (HUF), which held that the limitation period under Rule 68B is to be computed from the date of dismissal of the Special Leave Petition (SLP) by the Supreme Court, as that is when the assessment attains finality. The court noted that the petitioner's HUF was a copartner in the firm R.B. Sriram Durgaprasad (HUF), and the same issue had been decided by the Supreme Court in that case. The court also considered the petitioner's argument regarding the amendment to Rule 68B by the Central Board of Direct Taxes (CBDT), which extended the limitation period from three to four years. The Andhra Pradesh High Court had quashed this amendment in S.V. Gopala Rao v. Commissioner of Income Tax, holding that the CBDT lacked the power to amend legislative provisions. However, the court found that even applying the three-year period, the auction notice was not barred because the limitation period began from the date of dismissal of the SLP, not from the High Court judgment. The court dismissed the writ petition, holding that the auction notice was within the limitation period as per the Supreme Court's ruling.
Headnote
A) Income Tax - Rule 68B Limitation - Auction Notice - Computation of Limitation Period - Rule 68B of Second Schedule to Income Tax Act, 1961 - The petitioner challenged an auction notice as barred by limitation under Rule 68B. The court held that the limitation period for initiating auction proceedings under Rule 68B is to be computed from the date on which the assessment attains finality, which is the date of dismissal of the Special Leave Petition by the Supreme Court, not from the date of the High Court judgment. The court relied on the Supreme Court's decision in Tax Recovery Officer v. R.B. Sriram Durgaprasad (HUF) to reject the petitioner's contention. (Paras 2-4)
Issue of Consideration
Whether the auction notice dated 18.11.2004 is barred by limitation under Rule 68B of the Second Schedule to the Income Tax Act, 1961, and whether the limitation period should be computed from the date of the High Court judgment or from the date of dismissal of the Special Leave Petition.
Final Decision
Writ petition dismissed. Auction notice dated 18.11.2004 held not barred by limitation under Rule 68B of Second Schedule to Income Tax Act, 1961.
Law Points
- Limitation period under Rule 68B of Second Schedule to Income Tax Act
- 1961
- computed from date of dismissal of SLP
- not from High Court judgment
- CBDT amendment extending period from 3 to 4 years quashed by Andhra Pradesh High Court
- but period of 3 years applicable from date of finality of assessment.
