TMI Blog2021 (11) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... 2nd respondent in the impugned order itself, it is evident that warrant of attachment in ITCP-16 was issued for the first time on 04.10.2002. On the other hand, the sale deeds under which petitioners 1, 2 and 4 had purchased the property are all registered on 19.07.1999 and that of the 3rd petitioner on 24.07.1999. Further, it is also to be noted that the order of attachment issued mentions that certificate of recovery has been drawn up only on 02.06.2000, whereby it is held that the3rd respondent has failed to pay the sum as shown therein. As the 3rd respondent is treated as an assessee in default only upon the drawing up of certificate of recovery dt. 02.06.2000, the transfers of immovable property effected prior to the said date in favour of the petitioner cannot be said to be hit by the provisions of Section 281(1) of the Act; consequently, the purchase of flats by the petitioners is a bona fide purchase and are covered by the escape route provided under Section 281(1) of the Act, as held in ICICI Bank case [ 2019 (3) TMI 701 - TELANGANA AND ANDHRA PRADESH HIGH COURT ] Thus, the petitioners are entitled to claim the benefit of protection provided under Section 281(1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hment in ITCP-16 dt.04.10.2002; and on further enquiry, they came to know of the 2nd respondent passed the impugned order dt.05.05.2009 declaring the transfer of subject immovable property, as void. 4. It is also contended that the petitioners were taken by surprise about some suits being filed in their name before the Civil Court questioning the said order of the 2nd respondent, and the said suits having been dismissed for non-prosecution on 26.10.2017; that the petitioners were not aware of the said civil suits initiated in their name, since at the relevant point of time, they were not even available in the country and were residing in United States of America; and that, while reserving a right to lodge a complaint against the suits filed in their names, the petitioners are challenging the order of the 2nd respondent declaring the transfer of immovable property in their favour as void, as the said authority is not conferred with such power. 5. In support of the above contentions, the petitioners rely upon the judgment of the erstwhile common High Court in the case of ICICI Bank Limited V/s. Tax Recovery Officer-I, Income Tax Department and others (2019) 411 ITR 518. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above said reason. 9. It is also contended that no evidence has been produced by the petitioners to substantiate the stand that the GPA holder had executed the sale deeds in favour of the petitioners; that since the original sale deed, under which the subject property was purchased by the 3rd respondent on 13.10.1995 was surrendered to the Income Tax Department on 28.10.1998, the sale deed under which the subject transaction has been entered into was executed without verifying the original sale deed; and that the petitioners cannot claim that their transaction is a bona fide transaction. 10. We have given our utmost consideration to the submissions made by the parties. 11. By the impugned order, the 2nd respondent has stated that the immovable property was attached under warrant of attachment in ITCP-16, dt.04.10.2002, since the 3rd respondent had failed to pay the taxes assessed for the assessment years 1994-95, 1995-96, 1996-97 and 2000-2001 and were certified to by the 2nd respondent for recovery of a sum of ₹ 11,22,29,496/-. 12. By the order impugned, it is also stated that since one of the owners of the flats constructed in the property attached had raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.2004 allegedly issued by the Sub-Registrar s Office, Sanjeev Reddy Nagar, Hyderabad, for perusal of this Court and directed the matter to be listed on 06.07.2021. 15. On 06.07.2021, at request, the matter was adjourned to 12.07.2021. In spite of the specific direction by this Court and the matter having undergone two adjournments, the respondents did not place before this Court the copy of the encumbrance certificate dt.03.05.2004 referred to and relied upon in the impugned order. Thus, the matter was heard on 12.07.2021 and the orders thereon were reserved. 16. While, the 2nd respondent had placed reliance on the alleged encumbrance certificate, dt.03.05.2004, to claim that none of the transactions entered into by the 3rd and 4th respondents with various purchasers, including the petitioners, are not reflected in the encumbrance certificate obtained, the documents placed before this court, on the contrary, indicate that the petitioners purchased their respective flats in the subject property developed by the 3rd and 4th respondents, and they were duly registered with the 6th respondent on 19.07.1999 and 24.07.1999. Further, it is also to be seen that though the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Rule 16(2), only the first (section 281) and the third (rule 16[2)) talk about voidity. Rule 16 (1) merely talks about prohibition of alienation. 25. Therefore the only way Section 281 (1) can be reconciled with sub-rules (1) and (2) of Rule 16 is to hold that up to the stage of issue of an attachment in terms of Rule 48, the transfers made by the assessee in default can be declared void only if an exercise is carried out by some one (be it the Tax Recovery Officer or a Civil Court). But after an attachment is made, the declaration of voidity under Section 281 (1) becomes automatic without any further effort on the part of any one. This is in view of sub-rule (2) of Rule 16. Further, this Court also observed in paras 27 and 28 asunder: 27. The procedure prescribed in Rule 11 for the investigation of claims and objections to the attachment or sale of a property, is relatable to the proviso to sub-section (1) of Section 281. It may be seen from the main part of sub-section (1) of Section 281 that the same declares all transfers and creation of charges to be void. But the proviso to sub-section (1) carves out an exception, in cases where the creation of the charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other hand, the sale deeds under which petitioners 1, 2 and 4 had purchased the property are all registered on 19.07.1999 and that of the 3rd petitioner on 24.07.1999. Further, it is also to be noted that the order of attachment issued mentions that certificate of recovery has been drawn up only on 02.06.2000, whereby it is held that the3rd respondent has failed to pay the sum as shown therein. 25. As the 3rd respondent is treated as an assessee in default only upon the drawing up of certificate of recovery dt. 02.06.2000, the transfers of immovable property effected prior to the said date in favour of the petitioner cannot be said to be hit by the provisions of Section 281(1) of the Act; consequently, the purchase of flats by the petitioners is a bona fide purchase and are covered by the escape route provided under Section 281(1) of the Act, as held in ICICI Bank case (supra). 26. Thus, the petitioners are entitled to claim the benefit of protection provided under Section 281(1) of the Act in respect of purchase of flats made by them from the 3rd respondent under registered documents bearing Nos.1666/99, 1667/99 and 1668/99 dt.19.07.1999 executed by the 3rd and 4th respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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