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2021 (4) TMI 25 - MADRAS HIGH COURTRecovery proceedings - attachment orders - transfer made by the assessee during the pendency of proceedings under the Act - petitioner had approached both the Income Tax Officer and the second respondent Tax Recovery Officer-VII. However, both the officers remained mute and therefore the petitioner was compelled to approach the first respondent to intervene and invited an adverse order though the petitioner had purchased the property prior to the impugned provisional attachment - HELD THAT:- Rule 11 of the Schedule-II of the Income Tax, Act 1961 prescribes a method for a proper redressal of all the issues by a Tax Recovery Officer-VII, namely the second respondent herein. Therefore, the claim of the petitioner that the provisional attachment and the consequential final attachment pursuant to assessment orders dated 30.03.2013, 30.12.2011 and 31.03.2013 purportedly passed under Section 144 read with Section 147 for the Assessment Years 2005-2006 to 2008-2009 and under Section 144 of the Income Tax Act for the Assessment Years 2009-2010 and 2010-11 are required to be seen. The machinery prescribed under the provisions of the Income Tax Act, 1961 to deal with situation arising out of wrongful attachment of property for the buyer is to approach Tax Recovery Officer-VII under Rule 11 of the Schedule-II to the Income Tax Act, 1961. Therefore, it is the second respondent Tax Recovery Officer-VII who was the competent authority to pass proper order under the circumstances. Further, as per Section 281 of the Income Tax Act, 1961, where an assessee creates a charge or parts with possession by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever of any asset by an assessee in favour of any other person during the pendency of any proceeding under the Act is void. Proviso to the said Section contains an exception. That exception provided in clause (i) applies to a situation where there is transfer for adequate consideration and without notice of the pendency of such proceedings or, as the case may be, without notice of such tax or sum payable by the assessee. Use of the expression “without notice of such tax or sum payable by the assessee” indicates the absence of the knowledge of a third party. The language in the clause (i) to the said proviso can apply only to a bona fide purchaser and not the assessee himself. The impugned order also does not state that there were any pending proceedings on the date when the sale was made and completed in favour of the petitioner on 06.05.2011. The assessments were completed only on 30.03.2013, 31.12.2011 and 31.03.2013 under Section 144 read with Section 147 of the Income Tax Act, 1961 for the Assessment Years 2005-2006 to 2010- 2011. The impugned order of the first respondent seems to indicate that the third respondent had either failed to make returns required under Sub-Section (1) to Section 139 or had failed to file a revised written under Sub-Section (4) or 5 of these aforesaid Section or had failed to comply with all the terms of notices issued under Sub-Section (1) to Section 142 or failed to comply with the directions issued under Sub- Section (2A) of Section 142 or having filed a return, failed to comply with all the terms of the notice issued under Sub-Section (2) of Section 143 of the Act. Copies of these assessment orders are also not available for perusal. Therefore, without seeing the content of these orders and the background, the relief claimed by the petitioner cannot be granted in this writ petition contrary to the mandate of Rule 11 of the Schedule-II of the Income Tax Act, 1961. The issue as to whether the case of the petitioner would fall within the proviso to Section 281 of the Income Tax Act is also to be decided by the second respondent Tax Recovery Officer-VII. Therefore, while setting aside the impugned order and the observation contained therein, I remit the case back to the said second respondent Tax Recovery Officer to pass appropriate orders on merits in accordance with Rule 11 of the Schedule-II to the Income Tax Act, 1961.
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