NOW, SELF-OCCUPIED HOUSE CAN BE ATTACHED, SOLD FOR INCOME TAX & BANK DUES
Different provisions won’t apply to different areas, rules Debt Recovery Panel
In a significant judgment having larger ramifications for the Income Tax Department and the financial institutions, the Debts Recovery Tribunal-I (DRT) has made it clear that a self-occupied house anywhere in the country can be attached and sold for the recovery of income tax and bank dues.
The assertion by presiding officer AS Narang came in a case where a borrower claimed that “main residential house” was exempt from attachment and sale following an amendment in the Civil Procedure Code by the Punjab Government.
The judgment is significant as the income tax department and the banks would now be entitled to attach and sell the self-occupied house of a person, even if it is not mortgaged, for the recovery of tax and bank dues.
The tribunal asserted that the question, which fell for consideration, was whether exemption from attachment of a house could be claimed by virtue of Section 60(1) (CCC) of the CPC. He added that the Code of Civil Procedure enacted by Parliament did not contain provision exempting any house owned by a person, other than an agriculturist, from attachment and sale in the execution of decree.
It was only by virtue of the amendment made by the Punjab Government to the CPC that Section 60 (1) (CCC) was engrafted, which stated that one main residential house occupied by a person would be exempted from attachment.
The tribunal observed the Section was applicable to Punjab and other areas. The issue for deliberation was whether the clause entitled a tax payer from exemption of the house under the Income Tax Act.
Punjab had amended CPC
- It was only by virtue of the amendment made by the Punjab Government to the Civil Procedure Code (CPC) that Section 60 (1) (CCC) was engrafted, which stated that one main residential house occupied by a person would be exempted from attachment
- The tribunal asserted that the Income Tax Act was a Central Act and it could not be accepted that different provisions would apply to different areas
He asserted that the Income Tax Act was a Central Act. It could not be accepted that different provisions would apply to different areas. In case the contention was accepted, a rich man having a palatial house in Punjab and other areas, where the clause was applicable, would be entitled to claim exemption for the payment of income tax dues. But a poor man of another state, where the clause was not applicable, would not be entitled to claim the exemption.
“We are afraid in case the contention is accepted, any of our tax fugitives, who own a palatial house worth crores of rupees in Punjab, would be entitled to claim exemption from the payment of tax dues. But a poor man with a house in a state, where Section 60(1)(CCC) is not applicable and who has failed to pay the income tax dues, would not be entitled to claim the exemption and the tax recovery officer would be entitled to sell his house,” the tribunal asserted.
Punjab had amended CPC
- It was only by virtue of the amendment made by the Punjab Government to the Civil Procedure Code (CPC) that Section 60 (1) (CCC) was engrafted, which stated that one main residential house occupied by a person would be exempted from attachment
- The tribunal asserted that the Income Tax Act was a Central Act and it could not be accepted that different provisions would apply to different areas