TMI Blog1970 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the period of mortgage, the defendants had not cleared the debts and so the same be realised by sale of the mortgaged movable as well as immovable properties. The suit was contested for some time and eventually a compromise (dated 12th May, 1969) was arrived at between the parties which was recorded by the court on 26th May, 1969, and a compromise decree followed the same. One of the terms of the compromise decree was that defendants Nos. 1 and 2 will absolutely sell and convey to the plaintiff the aforesaid immovable property, namely, 3, Friends Colony, New Delhi, in consideration of adjustment of a sum of Rs. 8 lakhs and if the defendants failed to execute the sale deed within the period of one month, the plaintiff-decree-holder would be entitled to obtain a conveyance of the property through the court by an officer of the court appointed in this behalf, executing and registering the sale deed at the expense of the plaintiff-decree-holder. Eventually, by order dated 25th September, 1969, the court appointed the Registrar of the court as the officer concerned and directed him to execute and register the sale deed. After approval of the draft, the sale deed was engrossed on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of the court. The aforesaid submission of the counsel for the petitioner is controverted by the counsel for the Commissioner of Income-tax as well as the Inspector-General of Registration. They have contended that the provision is intra vires of the Constitution and is a reasonable restriction. They have also contended that the provision does not make any distinction or admit of any exception between voluntary and involuntary transfers. On the facts of the case, it has been further contended on behalf of the Commissioner of Income-tax that arrears of income-tax are due from defendants Nos. 1 and 2 (to the income-tax department) for which they have not made any adequate provision and that the decree of the court is a compromise decree and so it is only a contract between the parties, though it has the command of the court added to it and as such it cannot be used to circumvent the provisions of law and escape the enforcement of the liability for payment of income-tax. It has also been urged that the present petitioner had moved the earlier petition (I. A. No. 507 of 1970) on which the court had made unfavourable observations and so they withdrew the same without liberty to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substitution of the Ordinance. The effective provision of the same was contained in section 3 thereof, which reads as follows : " 3. Payment of taxes before registration of documents.- (1) Where any document required to be registered under the provisions of clause (a), clause (b), clause (c) or clause (e) of sub-section (1) of section 17 of the Indian Registration Act, 1908, purports to transfer, assign, limit or extinguish any right, title or interest in any property, other than agricultural land belonging to any person to whom this Act applies, no registering officer appointed under the said Act, shall register any such document, unless it is certified by the Income-tax Officer of the area in which the property is situate in respect of the person whose right, title or interest in the property is to be transferred, assigned, limited or extinguished under the terms of the document that :- (a) such person is not liable to assessment or taxation under the Indian Income-tax Act, 1922, the Excess Profits Tax Act 1940, or the Business Profits Tax Act, 1947 ; or (b) such person has either paid or made satisfactory provision for the payment of all existing or anticipated liabilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax authority, Custodian of Evacuee Property or Collector by the registering officer of the area in which any property belonging to such person is situate. " The circumstances and the reasons which led to the enactment of the said statute show a reasonable necessity for the same and sections 2 and 5 contain sufficient safeguards and no fault can be found with the said statutory provision. The question now arises whether the restrictions imposed by section 230A of the Income-tax Act, 1961, are reasonable. It would appear that the said section is not confined in its operation to the evacuees or intending evacuees or any other person going out of India, but it applies to all the citizens who have fundamental rights guaranteed to them. It also does not contain any guidelines for the officer to grant or refuse certificate, nor any provision by way of appeal and the only provision that can be availed of is the power of revision by the Commissioner of Income-tax, at the instance of the assessee under section 264 of the Income-tax Act, but the power of revision is certainly different from the right of appeal and this again is remissible only to the assessee, but the person who really ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n some other appropriate case and I am not deciding the first part of the contention of Mr. C. K. Daphtary, counsel for the petitioner. The question which now remains to be determined is whether section 230A applies to involuntary sales also. From the scheme of the Act and the Rules framed thereunder, I have no doubt that it does not apply to involuntary sales. Sub-section (2) of section 230A states that the person referred to in that sub-section, who intends to make a transfer, shall make an application in such form as may be prescribed, and rule 44A of the Income-tax Rules, 1962, has prescribed the Form 34A. A perusal of the form leaves no doubt that the same cannot possibly be filled in by the transferee or by an officer of the court executing the sale-deed since the particulars are either within the special knowledge of the income-tax department or the assessee or both. Nor is there any machinery provided for compelling the assessee-transferor to supply the said particulars, or at all events do so correctly, and, in its absence, the Income-tax Officer would legally be justified in rejecting the application and the transferee or the decree-holder would be left remedyless as even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dues to the judgment-creditor and a dishonest judgment-debtor would be in a very happy position. Again, to extend the analogy, if the debtor has become insolvent and the official receiver purports to sell his property and execute a sale deed on his behalf and supposing the sale consideration should be more than Rs. 50,000 and there should be arrears of income-tax due against the insolvent, it would be impossible for the receiver to register the document and the sale cannot be completed. The above illustrations only highlight the position that the words " transfer, assign, limit and extinguish " occurring in section 230A, have got to be strictly construed and they do not include involuntary transfers made either by operation of law or under orders or decrees of the court. It was stated at the Bar that there was no judicial authority construing section 230A. However, I find that in Hind Estates Ltd. v. C. S. Peters, the word " transfer " occurring in the provisions of the Payment of Taxes (Transfer of Property) Act, 1949 (XXII of 1949), came up for consideration and the vires of the Act was challenged before the court, but Dass Gupta J. held that he was not called upon to decide whet ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
