Rule 225 — Procedure for recovery of tax for the purposes of sections 413 and 475. Made under s.413, s.475, s.411 of the Income-tax Act, 2025.
Rule 225 gives effect to Section 413, Section 475 and Section 411 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
The rule is the whole recovery code made under sections 413 and 475. Sub-rule (1) defines certificate, defaulter, execution, movable property, officer and share in a corporation. Sub-rule (2) requires the Tax Recovery Officer, once a certificate has been drawn up, to serve a notice on the defaulter to pay the amount specified within fifteen days, intimating that steps will otherwise be taken. Sub-rule (3) bars any step in execution until those fifteen days have elapsed, but lets the Tax Recovery Officer order attachment of movable property at any time, for reasons recorded in writing, where the defaulter is likely to conceal, remove or dispose of it; that attachment is cancelled if the defaulter furnishes security. Sub-rule (4) lists the four modes of recovery: attachment and sale of movable property, attachment and sale of immovable property, arrest and detention in prison, and appointment of a receiver. Sub-rule (5) makes interest under section 411(3) and the charges of service and of the proceedings recoverable in execution.
Sub-rules (6) to (20) set the general frame: only the defaulter's right, title and interest vests in a purchaser; a suit against a certified purchaser on the ground that the purchase was made on the plaintiff's behalf is barred, without barring a suit alleging fraud; proceeds are applied first to the certificate and costs, then to other amounts recoverable under the Act, with the balance to the defaulter and any dispute determined by the Tax Recovery Officer; questions between the officer and the defaulter go by order and not by suit, except on the ground of fraud; property exempt from attachment under the Code of Civil Procedure, 1908 is exempt here, the officer's decision on exemption being conclusive; claims and objections to attachment are investigated, with the burden on the claimant to show interest or possession at the date of the notice for immovable property or of the attachment for movable property, and a suit lies against the resulting order; attachment is withdrawn on payment or cancellation of the certificate; a defaulting purchaser answers for any deficiency on resale, on an application filed within fifteen days of the resale; sales may be adjourned or stopped on tender of the arrears and costs; after service of the notice the defaulter may not deal with his property without permission and no Civil Court may issue process against it, and a private transfer after attachment is void as against claims under the attachment; officers connected with a sale may not bid; no sale on a Sunday or a general or local holiday; police assistance may be requisitioned; and the Tax Recovery Officer may entrust functions, with the previous approval of the Joint Commissioner, to an officer not below the rank of Inspector of Income-tax.
Sub-rules (21) to (47) govern movable property. Attachment is on a signed warrant served on the defaulter, by actual seizure where the property is in his possession, with immediate sale where the property is subject to speedy and natural decay or costly to keep. Agricultural produce is attached by affixing copies of the warrant, growing crops are not attached within twenty days of being fit to cut, and the officer makes arrangements for tending and gathering. Debts, shares and property not in the defaulter's possession are attached by a written prohibitory order; a decree of a Civil Court by request to that court; a share in co-owned movable property by notice; Government salary in the manner of rule 48 of Order 21 of the First Schedule to the Code of Civil Procedure, 1908; a negotiable instrument by seizure; property in a court's or public officer's custody by notice; and a partner's interest by a charging order with a receiver. An inventory is prepared, attachment must not be excessive, seizure is only between sunrise and sunset, and doors may be broken open after notification of authority and intention, with reasonable opportunity for women to withdraw. Sale is by public auction on a proclamation in the language of the district, at least fifteen days after the proclamation is affixed unless the property is perishable or the defaulter consents in writing; the price of each lot is paid at the time of sale and the sale becomes absolute on the grant of the certificate of purchase; irregularity does not vitiate a movable sale but an injured person may sue; negotiable instruments and shares may instead be sold through a broker; and attached coin or currency notes may be credited to the Central Government.
Sub-rules (48) to (70) govern immovable property. Attachment is by a prohibitory order, served on the defaulter, proclaimed on or near the property and affixed on it and on the office notice board, and relates back to the date the notice to pay was served. The proclamation of sale is drawn up after notice to the defaulter and states the time and place, the property, the revenue assessed, the amount for which the sale is ordered, the reserve price if any, and anything material to a purchaser. Sale is by public auction to the highest bidder, subject to confirmation, and not below the reserve price, and cannot take place until at least thirty days from the affixing of the proclamation unless the defaulter consents in writing. The purchaser deposits 25% immediately and pays the balance on or before the fifteenth day from the date of sale, failing which the deposit may be forfeited and the property resold. An Assessing Officer authorised by the Chief Commissioner or Commissioner may bid for the Central Government where a sale has been postponed for want of a bid at the reserve price. The sale may be set aside within thirty days on deposit of the amount with interest at 15% per annum from the date of the proclamation and a penalty of 5% of the purchase money for the purchaser, subject to a minimum of Rs. 1; or within thirty days on the ground of non-service of the notice or material irregularity, only on proof of substantial injury and, for a defaulter, on depositing the amount recoverable; or, by the purchaser, within thirty days on the ground that the defaulter had no saleable interest. The sale is confirmed and becomes absolute where no application is made or an application is disallowed and the full purchase money is paid, and a sale certificate issues stating the date the sale became absolute. Sale may be postponed to let the defaulter raise the amount by mortgage, lease or private sale, the proceeds going to the Tax Recovery Officer and the transaction not becoming absolute until confirmed. Sub-rule (70) bars any sale of immovable property after seven years from the end of the financial year in which the order giving rise to the demand became final under Chapter XVIII, extendable by the Board by up to three years for reasons recorded in writing and by one year where a resale or a set-aside occurs, with periods of stay and appeal excluded and a floor of one hundred and eighty days where the remaining period would be less; failing sale within that time the attachment order is deemed vacated.
Sub-rules (71) to (74) allow a business or immovable property to be attached and managed by a receiver, the profits after expenses going to the arrears and the balance to the defaulter, with management withdrawable at any time. Sub-rules (75) to (83) govern arrest and detention: no order for detention without a show cause notice and satisfaction, recorded in writing, that the defaulter has dishonestly transferred, concealed or removed property to obstruct execution, or has had the means to pay and refuses or neglects to do so; a warrant may issue at once where the defaulter is likely to abscond; an arrested person must be brought before the Tax Recovery Officer within twenty-four hours excluding journey time and released on paying the amount in the warrant and the costs of arrest; the karta is the defaulter for a Hindu undivided family; detention may be preceded by up to fifteen days' custody or security to allow the arrears to be satisfied; detention is for six months where the certificate exceeds two hundred and fifty rupees and six weeks otherwise; release follows payment or the Tax Recovery Officer's request, and does not discharge the liability though it bars rearrest under that certificate; release may also be ordered on full disclosure of property or on grounds of illness, with rearrest possible but never exceeding the aggregate detention allowed; a dwelling house may not be entered after sunset or before sunrise; and no woman, and no person who in the officer's opinion is a minor or of unsound mind, may be arrested or detained.
Sub-rules (84) to (95) close the code. Officers acting under the rule are deemed to act judicially and have the powers of a Civil Court to receive evidence, administer oaths, enforce attendance and compel production. A certificate does not cease to be in force on the death of the defaulter and proceedings, except arrest and detention, continue against the legal representative. An appeal from an original order of the Tax Recovery Officer that is not conclusive lies to the Chief Commissioner or Commissioner within thirty days, and execution is stayed only if the appellate authority so directs. Orders may be reviewed for a mistake apparent from the record after notice to all persons interested. A surety may be proceeded against as if he were the defaulter. Subsistence of an arrested defaulter is borne by the Tax Recovery Officer on the State Government scale and is treated as costs. The Board may specify forms, issue guidelines on the matters listed in sub-rule (93)(b), and issue orders to remove difficulties; and nothing in the rule affects a provision of the Act making tax a first charge on an asset.
Sections 413 and 475 create the certificate and the Tax Recovery Officer but do not say how an arrear is actually taken out of a person's property. This rule supplies the entire machinery — notice, attachment, sale, receivership, arrest — and borrows the Code of Civil Procedure only where it must, for exempt property and for Government salary. Almost every step carries its own period and its own safeguard, because the powers are coercive: fifteen days before execution, thirty days before an immovable sale, thirty days to apply to set one aside, and a hard outer limit of seven years for the sale itself.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Time to pay under the notice | Within fifteen days from the date of service of the notice | Notice served on the defaulter after the certificate is drawn up | Sub-rule (2) |
| Bar on execution | Until the period of fifteen days has elapsed since service of the notice | Subject to the early attachment power in sub-rule (3)(b) where the defaulter is likely to conceal, remove or dispose of movable property | Sub-rule (3)(a) |
| Application against a defaulting purchaser | Within fifteen days from the date of resale | For the deficiency of price and expenses of resale | Sub-rule (14) |
| Growing crop not to be attached | At any time less than twenty days before it is likely to be fit to be cut or gathered | A crop which from its nature does not admit of being stored | Sub-rule (25)(e) |
| Interval before a sale of movable property | At least fifteen days from the date the sale proclamation was affixed in the office of the Tax Recovery Officer | Unless the property is subject to speedy and natural decay or costly to keep, or the defaulter consents in writing | Sub-rule (40) |
| Interval before a sale of immovable property | At least thirty days from the date the proclamation was affixed on the property or in the office, whichever is later | Unless the defaulter consents in writing | Sub-rule (55) |
| Deposit by the purchaser of immovable property | 25% of the purchase money, immediately after the declaration | In default the property is forthwith resold | Sub-rule (57)(a) |
| Balance of purchase money | On or before the fifteenth day from the date of the sale of the property | In default the deposit may be forfeited and the property resold | Sub-rules (57)(b) and (58) |
| Application to set aside a sale on deposit | Within thirty days from the date of the sale | On depositing the amount in the proclamation with interest, and the penalty for the purchaser | Sub-rule (60)(a) |
| Interest payable on a deposit to set aside a sale | 15% per annum | Calculated from the date of the proclamation of sale to the date the deposit is made | Sub-rule (60)(a)(i) |
| Penalty payable to the purchaser | A sum equal to 5% of the purchase money, but not less than Rs. 1 | Deposited for payment to the purchaser on an application to set aside the sale | Sub-rule (60)(a)(ii) |
| Application to set aside on non-service or irregularity, or for want of saleable interest | Within thirty days from the date of the sale | Non-service or irregularity requires proof of substantial injury and, for a defaulter, a deposit of the amount recoverable | Sub-rules (61) and (62) |
| Outer limit for sale of attached immovable property | Seven years from the end of the financial year in which the order giving rise to the demand has become final under Chapter XVIII | Failing sale within the limitation, the attachment order is deemed vacated | Sub-rule (70)(a) and (g) |
| Extension of that limit by the Board | A further period not exceeding three years | For reasons to be recorded in writing; a maximum, not an automatic extension | Sub-rule (70)(b) |
| Extension on resale or set-aside | One year | Where the highest bid is below the reserve price, or the circumstances in sub-rule (57) or (58) arise, or the sale is set aside under sub-rule (61) | Sub-rule (70)(c) |
| Minimum period after exclusions | One hundred and eighty days | Where the remaining limitation after excluding stay and appeal periods is less than that | Sub-rule (70)(e) |
| Production of an arrested defaulter | Within twenty-four hours of arrest, exclusive of the time required for the journey | Before the Tax Recovery Officer issuing the warrant | Sub-rule (75)(d) |
| Custody before an order of detention | A specified period not exceeding fifteen days | To give the defaulter an opportunity of satisfying the arrears, or on his furnishing security | Sub-rule (78)(b) |
| Period of detention in civil prison | Six months | Where the certificate is for a demand of an amount exceeding two hundred and fifty rupees | Sub-rule (79)(a)(i) |
| Period of detention in civil prison | Six weeks | In any other case | Sub-rule (79)(a)(ii) |
| Time to appeal against an order of the Tax Recovery Officer | Within thirty days from the date of the order appealed against | Appeal lies to the Chief Commissioner or Commissioner of Income-tax against an original order that is not conclusive | Sub-rule (88)(b) |
| Payment of excess where property is accepted in satisfaction | Within a period of three months from the date of delivery of possession | Where the agreed price exceeds the amount due from the defaulter | Sub-rule (69)(c) |
| Interest on delayed payment of that excess | Simple interest at 0.5% for every month or part of the month | For the period from the expiry of the three months to the date of payment | Sub-rule (69)(c) |
| Interest recoverable in execution | Such interest as is payable in accordance with section 411(3) | The rule does not fix a rate; it points to the section | Sub-rule (5)(a) |
Attachment of immovable property does not date from the attachment order. Sub-rule (51) relates it back to the date the notice to pay the arrears was served, which is what makes sub-rule (16)(a) bite on dealings in the interval. The seven-year bar in sub-rule (70) is a limitation on the sale, not on the demand: when it runs out the attachment is deemed vacated under clause (g), the arrear survives, and the Board's power to extend is capped at three further years and requires reasons recorded in writing. The set-aside routes in sub-rules (60), (61) and (62) all run thirty days from the date of the sale, not from confirmation, and they are not interchangeable — sub-rule (60) requires money in, sub-rule (61) requires substantial injury and, for a defaulter, a deposit of the amount recoverable, and sub-rule (62) belongs to the purchaser alone. Detention is a means of coercion, not a discharge: sub-rule (79)(c) says release does not discharge the liability for the arrears, though the defaulter cannot be rearrested under that certificate. And most disputes about execution cannot be taken to a Civil Court at all — sub-rule (9) sends them to the Tax Recovery Officer by order, keeping only fraud for a suit.
A certificate for Rs. 40,00,000 is drawn up and notice is served on a firm on 1 March, giving fifteen days to pay. Nothing is paid, and the Tax Recovery Officer attaches a godown, the attachment relating back to 1 March. The proclamation is affixed on 1 July, so the auction cannot be held before 31 July. The property is knocked down on 5 August, the purchaser deposits 25% at once and pays the balance by the fifteenth day. The firm has until 4 September to apply under sub-rule (60), depositing the proclamation amount with interest at 15% per annum from 1 July and a penalty of 5% of the purchase money for the purchaser.
A taxpayer meets it first as the notice under sub-rule (2) demanding payment within fifteen days, and then in warrants, prohibitory orders, proclamations of sale and, at the far end, a show cause notice for detention. A purchaser meets it as the proclamation, the deposit terms and the sale certificate.
the Tax Recovery Officer shall cause to be served upon the defaulter a notice requiring the defaulter to pay the amount specified in the certificate, within fifteen days from the date of service of the notice
Where any immovable property is attached under this rule, the attachment shall relate back to, and take effect from, the date on which the notice to pay the arrears, issued under this rule, was served upon the defaulter.
where the sale of immovable property is not made in accordance with the provisions of clause (a), the attachment order in relation to the said property shall be deemed to have been vacated on the expiry of the time of limitation specified under this rule
