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recovery by xiangpeng

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									Recovery Proceedings




                       1
     MODES OF RECOVERY

• Attachment of movable property of
  defaulter(schedule II part II)
• Attachment of immovable property of
  defaulter(schedule II part III)
• Appointment of Receiver for management
  of defaulters property(schedule II part IV)
• Arrest of defaulter &his detention in prison

                                             2
        SERVICE OF NOTICE

•   Most important
•   TRI plays vital role.
•   Improper service can vitiate proceedings
•   Onus of service is on the Department
•   Notices can be served by any of the modes
    prescribed u/s282(i) of the IT Act.


                                                3
     DIFFERENT MODES OF
           SERVICE

• Service by post
• Service otherwise than by post.
  – Service on person
  – service by affixture
  – substituted service




                                    4
 ISSUE OF DEMAND NOTICE

• Issue of ITCP 1 sets in motion the recovery
  proceedings.
• Important that demand is verified before
  issue of notice
• D gets 15 days to pay demand.
• TRO can start further proceedings only after
  the period of 15 days

                                             5
• Notice should be sent by RPAD (SEC27Of
  General clauses Act
• Presumption of service if
  – notice was properly addressed
  – pre paid
  – &dispatched by registered post.
• Notice is also presumed to be served if the
  same is received back with the remark of
  postal Authorities--refused

                                                6
    SERVICE OTHERWISE BY
            POST

• Service on person-
  – served by notice Server/Any other officer
    authorised
  – on the D or authorised person(orderVCPC
    rule12&13
• Can be served on any adult family member
  residing with D.Servant not included.

                                                7
• Acknowledgment to be obtained.
• Despite service on person notice can also be
  required to served by RPAD IF TRO so
  considers.
• Tact& resourcefulness necessary.




                                            8
    SERVICE BY AFFIXTURE

• Can be resorted to if,
  – D or his agent refuses to take notice
  – serving officer after using all due&reasonable
    diligence can not find D or his agent or any
    other member on whom service can be made.
• Procedure-copy of notice should be affixed
  on
• outer door(entrance) or any conspicuous
  part of the building                       9
• In which D ordinarily resides or carries on
  business or personally works for gain
• Original should be returned to the TRO with
  a repot giving i)circumstances under which
  it was resorted to, ii)procedure
  followed.iii)name &address of person
  identifying the premises &in whose presence
  notice was affixed iv) time of affixture.
• On receipt of report TRO should record
  satisfaction note should examine if affidavit
  not enclosed with report                     10
     SUBSTITUTED SERVICE

• Can be resorted to if the D is avoiding
  service
• TRO has to pass order(rule 20) recording
  reasons
  – copy of the notice to be affixed conspicuous
    part of TROs office or on notice board
  – rest of the procedure same as in service by
    affixture
• Difference in two types of service               11
• Mere knowledge of issue of notice not sufficient
• Irregularity in service of notice - considered
  material irregularity and auction sale can be
  cancelled on this ground
• Period of 15 days after service of notice - valuable
  right of defaulter. Consent or waiver on his part
  does not confer jurisdiction on TRO to proceed
  further in execution of the certificate

                                                     12
                 Attachment Of Property
• TRI plays important role in attachment of movable
  / immovable property.
• Knowledge about procedure and intricacies
  involved is necessary.
• What is property ?
   – No comprehensive definition in I.T.Act or transfer of
     property act, general clauses act.
   – These acts give definition of certain types of property


                                                               13
• There is distinction in Law between
  movable property and immovable property.
• What is immovable property ?
  – Property which is rooted / embedded in earth
    e.g. Wall, Buildings etc.
  – Factum of attachment to the earth though an
    important consideration is however not the sole
    consideration.




                                                  14
  – Degree and nature of attachment has also to be
    considered.
  – If the attachment or embedding is required only
    when the property is in use, the property can be
    considered as movable e.g. touring cinema.
• Examples of immovable property.
  – Land, Houses, Building
  – Tenancy rights where the tenant has disposing
    power.
  – The interest of a member in the Undivided
    Property of HUF.

                                                    15
• Examples of movable property.
  – Growing or standing crops
  – Partners interest in partnership property.
• Property does not merely connote full
  ownership or proprietorship, but also
  includes any right or power in respect of the
  same.




                                                 16
            ATTACHMENT

• Not defined in the Act
• Dictionary meaning- to take or apprehend
  by commandment.
• In the context of recovery proceedings it
  means seizure by legal process
• Coercive method to force D to pay the
  demand

                                              17
• Power of attachment not unlimited.
• Rule 10 of II schedule exempts certain
  properties
  – Houses and other buildings with the material
    and sites thereof and the land immediately
    appurtenant thereto and necessary for their
    enjoyment, and belonging to an agriculturist or
    a labourer domestic servant and occupied by
    him..
  – Wearing apparel, cooking vessels, personal
    ornaments as in accordance with religious
    usage cannot be parted with by any woman.
                                                      18
– Tools of artisans - implements of husbandry
  used by an agriculturists
– Provident Fund .
– Salary to the extent of first Rs.400/- and two
  thirds of the reminder.
– An expectancy of succession by survivor- ship
  or other merely contingent or possible right or
  interest.
– A right to future maintenance.




                                                    19
• Properties which can be attached.
  – Section 60 of the CPC lays down that the
    following properties are liable to attachment:
  – Land, Houses or other Buildings,Goods,
  – Money, Bank notes, cheques, bills of exchange
    Hundies, Govt. Securities, Bond or other
    securities for money , debts, shares in a
    corporation, all other salable property.
• The term property is used in a wide sense.
  Even if a property does not belong to the
  defaulter, any right or power in respect of
  the same which the defaulter may have
                                                     20
  – Acquired for his benefit can be seized and sold.
• Salable property means salable at a
  compulsory court sale and not merely
  transferable by acts of parties.




                                                       21
 ATTACHMENT OF MOVABLE
       PROPERTY

• Warrant of attachment of movable property
  can be issued when
  – defaulter fails to pay demand within 15 days of
    service of notice.
  – Should be in writing and signed by TRO
  – should specify the name of the defaulter and the
    amount to be realised.
  – Should state the place where the movables
    should be attached.
                                                  22
• Service of warrant on the defaulter.
• Being coercive action should not be served
  on any other family member.
• Attachment of property if amount not paid
  forthwith.
• Attachment should be after sun rise and
  before sun set.
• Power to break open outer/inner doors of the
  house. No power to search or break open
  doors of Almirah etc.

                                             23
• Inventory of articles attached
• valuables like jewellery should be got
  valued.
• Attached articles should be transported to
  the Office of TRO for safe custody.
• Role of TRI in the above process.
  – Considering the onerous nature of the duties
    the TRI has to be methodical & meticulous.




                                                   24
• materials to be carried should be checked as
  per check-list.
• Attachment of agricultural produce.
  – Copy of the warrant to be affixed on the land.
  – On the outer door or conspicuous part of the
    house of D.
  – Attachment of other movable property can be
    made by issue of prohibitory orders.




                                                     25
      ATTACHMENT OF
    IMMOVABLE PROPERTY

• Attachment order is issued in Form
  No.ITCP 16.
• Service of order on defaulter
• Fact of attachment to be proclaimed.
• Copy of order to be affixed-property of
  D&in the o/o TRO
• panchnama to be prepared.
                                            26
• Report of attachment to given to TRO
• TRI should collect all details of property
  from office records. should carry necessary
  forms &other material should make
  necessary arrangement for proclamation
• Arrange for witnesses
• collect relevant details from Municipal
  Authorities.



                                            27
  PROCLAMATION OF SALE

• ITCP12 warrant in favour of TRI
• Issue of proclamation of saleITCP13
  –   In local language
  –   time &place of sale
  –   should state whether subject to confirmation
  –   proper description of property.
  –   In case of more than one property order of sale
      should be mentioned
                                                   28
            Movable Property
• Attached property – to be sold by public auction
• Sale after 15 days from proclamation
• Exceptions-’d ’agrees ,cost of storage likely to be
  excessive, property subject to natural decay
• Special procedure for agricultural produce
• Valuables-sale can be subject to confirmation



                                                    29
• Sale of agricultural produce R-41
• Growing crop-at or near the land
• If produce or gathered-at or near threshing
  floor or market plce
• Sale can be postponed only once-offer not
  fair in the opinion of auctioneer or ‘d’
  requests on the same ground
• To sale next date at what ever that is offered
• R-42 sale to be held when ?

                                              30
•        Immovable property
• TRI should carry necessary kit for
• proclamation
• service of notice ,affixture on property ,
  proclamation, panchanama & report are
  some of the important points to be
  remembered.
• Settlement of sale proclamation -
  – Before ITCP-13 - ITCP-17 is issued.


                                               31
• Check list to be kept by TRI.
  – Particulars applicable to movable/immovable
    property.
  – Form No.12, 13 whether filled correctly.
  – Correct arrears.
  – Details of property.
  – Name of Inspector
  – Place of auction.
  – Date & time of auction.
  – Value of property.

                                                  32
                AUCTIONS

• Preparation for auction
• How to conduct Auction
  – 1) One of the important function -
  – 2) Requires leadership, tact, ability to organise,
    capacity to deal with public, tenacity, patience
    and above all public relations.
  – 3) Lot of preliminary work involved


                                                     33
– (i) Advertisement in local newspapers.
– (ii) Particulars of movable / immovable
  property. e.g.
  a) Motor Car - taxes paid, year of
  Registration, Condition etc. b) Building -
  Details as Municipal record, Title deed,
  Encumbrance, Taxes, Plan of property etc.
– (iii) Terms & Conditions of Auction to be
  prepared carefully - copies given to bidders.
– (iv) Reserve price - fixation.
– (v) Venue of Auction .
– (vi) Proper arrangement - Drinking water, tea,
  snacks, sealing arrangement etc.
                                                   34
– 4) Before Commencing Auction -
– Public address system - Adequate manpower
  for assistance.
– i) Bidders list, collection of amount as security.
– ii)Authority letter from bidders - bidding on
  behalf of other person.
– iii) Allow inspection of property by bidders.
– iv) Read conditions of sale, rate of bid.




                                                   35
  – v) During auction - Name of bidder & amount
    of bid - announce loudly & clearly. In case -
    Adjournment - Signature of bidder -
    vi) Knocking down of property - Signature of
    bidders.
  – vii) Movable / Immovable Property - On
    collecting money - poundage fee, Certificate of
    sale to be given.
• Confirmation of sale of immovable property
  – can be done only If no application for setting
    aside sale
  – rule60,61 62
                                                     36
• Rule60-application by ‘D’or person
  whose interests are affected. Payment as
  per sale proclamation,plus 5%of purchase
  money for payment to purchaser.
• 61-On the grounds of material irregularity
  -ao or person whose interests are
  affected.or defaulter.
  – Sale to be set aside only if substantial injury
    caused.
  – Application by d only on payment.


                                                      37
  DELIVERY OF POSSESSION
       OF PROPERTY

• A) Movable -
  – Delivery is complete - property actually handed
    over to the purchaser.
  – Share in a Company -
  – TRO makes order prohibiting ‘D’ from
    transferring to anyone except to the purchaser -
  – Alternative - Duplicate share certificate to be
    obtained.

                                                   38
• B) Immovable property -
  – Rule 30 to 45 of ITCP Rules -
  – TRO has powers to eject the ‘D’/ Occupant.
• Procedure for delivering possession:
  –   i) TRO issues Warrant in the name of TRI -
  –   ii)TRI serves Warrant on ‘D’ / Occupant.
  –   iii)Reasonable time to vacate to be given.
  –   iv)TRI to be present till complete vacation.
  –   v) Record panchanama in presence of two
      witnesses.


                                                     39
  – vi) Call purchaser - hand over vacant
    possession.
  – vii) Obtain statement from purchaser /
    representative - possession has been taken.
  – viii) Report to TRO.
• Physical removal of the occupant -
  – Symbolic delivery - where the property is in
    possession of the tenant.
• Time limit for sale of attached property-


                                                   40
 APPOINTMENT OF RECEIVER

• Rules 69 to 72 second schedule
• property of D consists of business -business
  can be attached -receiver for appointment of
  business.
• Attachment by prohibiting D from
  transferring his business.
• 70- where immovable property is attached
  receiver can be appointed instead of sale.
                                            41
• Receiver has necessary powers for
  management of property & realisation of
  profit
• After deducting expenses remaining
  amount to be adjusted against dues of D.
• Rule 72withdrawal at the discretion of
  TRO.or on full realisation of arrears.




                                             42
      ITCP RULES 48 TO 52

• Rule 48-powers of receiver
  – Bringing in &defending suits
  – Powers of realisation management, protection,
    preservation of property collection of
    rents/profits execution of documents as the
    owner has. or such of these as TRO deems it fit
• Rule 49 remuneration TRO to fix it


                                                  43
• Duties of receiver-R-50(1)
• Furnish security
• Submit periodical accounts as directed
• Pay amount due from him to TRO
• Be responsible for any loss due to to his
  negligence or willful default
• Rule 50(2)maintainance of ledger, cash book
  counterfoil receipt book


                                            44
• Rule 50(3)- bank account transaction
  through bank
• Rule 50(4) accounts every three months or
  as directed
• Rule 51 enforcement of duties-
• Receiver fails to submit accounts-property
  can b attached
• TRO can make enquiry-whether payments
  due from receiver are received whether any
  loss –due to negligence etc if so direct
  payment in specified time
                                           45
• 51(3) failure to pay amount due – recovery
  out of security or attachment &sale of
  property of receiver
• Failure to render accounts or unlawful
  retention of money-whole or part of
  remuneration can be disallowed
• Rule 52 appointment of receiver form ITCP
  24



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