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Section 29: Application of certain provisions of Income Tax Act

Recovery of Debts and Bankruptcy Act, 1993 • Official Statutory Text & Practice Guide

Statutory Regulation
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Competent Court / Tribunal
Act 1993
Section 28 All 37 Sections of Recovery of Debts and Bankruptcy Act, 1993 Section 30

Legal Commentary & Landmark Judgments: Section 29

Section 29 incorporates the Second and Third Schedules to the Income-tax Act, 1961 and the Income-tax (Certificate Proceedings) Rules, 1962 into the RDB Act, directing their mutatis mutandis application 'as far as possible' to all execution proceedings.

  • Statutory Incorporation of Tax Recovery Rules: Section 29 commands that the provisions of the Second and Third Schedules to the Income-tax Act, 1961 and the Income-tax (Certificate Proceedings) Rules, 1962, as in force from time to time, shall apply with necessary modifications to debt recovery under the Act.
  • The 'As Far As Possible' Doctrine: The application of the Income-tax rules is governed by the qualifying phrase 'as far as possible', requiring the Recovery Officer to adopt the procedural safeguards of the Second Schedule unless they directly conflict with the express provisions of the RDB Act.
  • Mandatory Auction and Proclamation Safeguards: Imports mandatory procedural rules governing warrant of attachment, thirty-day gap between proclamation and auction sale, fixing of reserve price, publication of proclamation, and deposit of 25% purchase price by the auction bidder (Rules 52, 53, and 55 of the Second Schedule).
Key Landmark Precedents:
  • Mathew Varghese v. M. Amritha Kumar (2014) 5 SCC 610: The Supreme Court held that the incorporation of the Second Schedule of the Income-tax Act via Section 29 mandates strict adherence to procedural safeguards protecting the borrower's equity of redemption, including fair valuation and mandatory notice prior to auction sale.
  • Ram Kishun v. State of U.P. (2012) 11 SCC 511: The Supreme Court held that properties sold in execution under Section 29 read with Schedule II of the Income-tax Act must fetch a fair market price; the Recovery Officer cannot sell valuable secured assets at a distress throwaway value without proper valuation.
  • J. Rajiv Subramaniyan v. Pandiyas (2014) 5 SCC 651: The Supreme Court held that non-compliance with the mandatory statutory rules of sale imported through Section 29 vitiates the auction sale, entitling the borrower or guarantor to have the sale set aside.
  • Allahabad Bank v. Canara Bank (2000) 4 SCC 406: The Supreme Court confirmed that the Recovery Officer steps into the shoes of a Tax Recovery Officer (TRO) under the Income-tax Act, 1961, exercising autonomous statutory authority in executing recovery certificates.
Courtroom Practice & Strategic Litigation Guidance:

In challenging an auction sale conducted by a Recovery Officer, carefully audit compliance with the Second Schedule of the Income-tax Act imported under Section 29: (1) verify whether proclamation of sale was drawn up after notice to the defaulter under Rule 53; (2) check if a mandatory 30-day notice period elapsed between the proclamation date and auction date under Rule 55; and (3) confirm whether the successful bidder deposited 25% of the bid amount immediately and the remaining 75% within fifteen days under Rule 57. Failure to strictly comply with Rule 57 renders the sale an absolute nullity.

Section 28 All 37 Sections of Recovery of Debts and Bankruptcy Act, 1993 Section 30