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Income Tax - Case Laws

Showing 21 to 40 of 674 Records

• 2021 (4) TMI 1319
  

  Disallowance of Social Forestry and depreciation on at use for social forestry - HELD THAT:- Considering the consistent decisions of the Tribunal in assessee’s own case [2020 (12) TMI 215 - ITAT SURAT] and following the principal of consistency and more over the Ld. CIT(A) granting relief to the assessee by following the order of Tribunal, therefore, we do not find any infirmity in the order passed by Ld. CIT(A). Hence, we affirm the order passed by Ld. CIT(A). In the result this ground of appeal is dismissed.

  Disallowance of Unexplained Creditors - HELD THAT:- We have noted that ld.CIT(A) while passing the order followed the order of Tribunal in assessee’s own case for A.Y. 2005-06 [2011 (2) TMI 1460 - ITAT AHMEDABAD] - Thus following the principal of consistency and more over the Ld. CIT(A) granting relief to the assessee by following the order of Tribunal, therefore, we do not find any infirmity in the order passed by Ld. CIT(A). Hence, we affirm the order passed by Ld. CIT(A). In the result this ground of appeal is dismissed.

  Disallowance on excess process stock declared to bank - HELD THAT:- We have noted that ld. CIT(A) while passing the order followed the order of Tribunal in assessee’s own case for A.Y. 2002-03 dated 09.04.2009.[2009 (9) TMI 999 - ITAT AHMEDABAD] - Tribunal in assessee’s own case and following the principles of consistency and more over the Ld. CIT(A) granting relief to the assessee by following the order of Tribunal, therefore, we do not find any infirmity in the order passed by Ld. CIT(A). Hence, we affirm the order passed by Ld. CIT(A). In the result this ground of appeal is dismissed.

  Addition made on account of commission paid on sale - HELD THAT:- We have noted that ld. CIT(A) while passing the order held that that ad-hock disallowance by A.O. is not justified. We have further on similar ground of appeal in assessee’s own case similar relief was granted to assessee in appeal for A.Y. 2010-11 to 2012-13 [2020 (12) TMI 215 - ITAT SURAT]

  Addition made on account of Other Expenses - CIT-A deleted the addition - HELD THAT:- We have noted that ld. CIT(A) while passing the order followed the order of Tribunal in assessee’s own case for A.Y. 2002-03 [2009 (9) TMI 999 - ITAT AHMEDABAD]

  Addition made on account of Employee Welfare Expenses - HELD THAT:- We have noted that ld.CIT(A) while granting relief to the assessee by taking view that ad-hoc disallowance by A.O. is not justified. We have further noted similar ground of appeal that raised by the revenue was dismissed by Tribunal in appeal for A.Y. 2010- 11 to 2012-13 [2020 (12) TMI 215 - ITAT SURAT]

  Addition made on account of Book Profit computation u/s.14A - HELD THAT:- As decided in own case as relying on Special Bench of Delhi Tribunal in Vireet investment [2017 (6) TMI 1124 - ITAT DELHI] held that computation under clause (f) of Explanation 1 to section 115JB(2), is to be made without resorting to computation as contemplated under section 14A. Considering the aforesaid discussions, we do not find any merit in this ground of appeal.

  Addition made on account of Non deduction of tax on foreign remittance - CIT-A allowed relief to assessee - HELD THAT:- We have noted that ld.CIT(A) while passing the order followed the order of his predecessor for AY 2012-13 [2020 (12) TMI 215 - ITAT SURAT] wherein its was held that commission paid to non-resident for services rendered outside India cannot be deemed to be income accrued or arisen in India. And followed the decision of Hon’ble Supreme Court in CIT Vs Toshoku Ltd [1980 (8) TMI 2 - SUPREME COURT] We have further noted that in appeal for AY 2010-11 to 20112- 13, similar relief was granted by Tribunal to assessee by dismissing the similar ground of appeal raised by revenue

  Revenue appeal dismissed.

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• 2021 (4) TMI 1316
  

  Appeal decided against dead person - As submitted that because of Covid-19 pandemic, the applicant could not receive any information about the case and that was the reason for non-appearance and not making an appropriate application for bringing on record the authorised representative at the time when appeal was pending - HELD THAT:- It is an admitted fact that the main appeal was filed by the assessee Dinesh Ojha and the said Dinesh Ojha had died during the pendency of the appeal. In this respect, copy of death certificate of Dinesh Ojha has also been placed on record by the applicant and the applicant has also placed on record the copy of her Aadhar Card wherein also it is clearly depicted that the applicant is the wife of assessee Dinesh Ojha. It is also an admitted fact that the appeal was decided by the Tribunal on 12/10/2020 and the order was passed against the deceased assessee Dinesh Ojha.

  Considering the interest of justice that the appeal was decided against a dead assessee as in the present case, the assessee had already died on 12/2/2019 and the appeal was subsequently decided against the assessee on 12/10/2020 and because of Covid-19 Pandemic, the applicant could not move application in time before the Tribunal, therefore, considering the principles of natural justice, equity and fair play, we allow the present application and recall the order of the Tribunal dated 12/10/2020 and directed the Registry to fix the appeal accordingly with a condition that the applicant would comply with all the mandatory requirements contained in Rule 26 of the Appellate Tribunal Rules, 1963 by filing revised Form-36 containing the details of legal/authorized representative of the deceased within 30 days from the date of receipt of this order. Misc. application allowed.

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• 2021 (4) TMI 1312
  

  Seeking release of cash seized in search u/s 132 - Interest towards compensation/damages for the delayed period - petitioners seek an order and direction against respondents to pay interest at the rate of 12% p.a. from 01.11.2017 to 01.12.2020 on cash amount of ₹ 9,35,000/- and interest at the rate of 12% p.a. from 01.11.2017 till its final realization of the amount - whether this Court can award interest or compensation having found delay on the part of the revenue in releasing the cash amount seized by the revenue from the petitioners while carrying out the assessment, though delay was attributed on the part of the respondents and not on the petitioners from the date of assessment order till payment or not? - HELD THAT:- There is no doubt that the said Section 132-B (4) (b) provides that, interest shall run from the date immediately following the expiry of the period of one hundred and twenty days from the date on which the last of the authorisations for search under section 132 or requisition under section 132A was executed to the date of completion of the assessment under Section 153A or under Chapter XIV-B. In our view the said provision does not indicate any bar from awarding payment of interest or compensation in a situation where Court finds any delay on the part of the revenue in releasing the amount within time specifically prescribed under the provisions of law for no fault of the assessee.

  The Hon’ble Supreme Court in a case of Sandvik Asia Ltd. Vs. Commissioner of Income Tax-1, Pune [2006 (1) TMI 55 - SUPREME COURT] while dealing with the claim for payment of interest under Section 214 of the Act, 1961 made by the petitioner whether there was gross delay on the part of the revenue ranging from 12 to 17 years held that, there is no question of the delay being 'justifiable' as is argued and in any event if the revenue takes an erroneous view of the law, that cannot mean that the withholding of monies is 'justifiable' or 'not wrongful'.

  In our view the principles laid down by the Hon’ble Supreme Court of India in a case of Sandvik Asia Ltd. Vs. Commissioner of Income Tax-1, Pune (supra) would apply to the facts of this case. The respondents were solely responsible for the gross delay in not releasing the cash amount of the petitioners under Section 132-B (4) (b) of the Act, 1961 and thus cannot refuse the payment of compensation to the petitioners for wrongfully withholding the said amount from the date of assessment order till payment.

  In this case, it is not the case of interpretation of Section 132-B(4)(b) of the Act, 1961 or under the said provision, the Courts would restrict obligation and liability of the revenue to pay interest or compensation upto the date of payment. The question for consideration of this Court raised by the petitioners is whether the respondents can refuse to compensate the petitioners for wrongfully withholding the cash amount of the petitioners though by the assessment order the liabilities of the petitioners were declared as nil beyond the date of assessment order.

  Though in this case the petitioners have prayed for interest at the rate of 12% p.a. from 01.11.2017 to 01.12.2020 on cash amount of ₹ 9,35,000/- and compensatory interest at the same rate from 24.12.2019 till 01.12.2020 on the amount of cash released of ₹ 14,36,000/-, the petitioners have restricted their prayer for compensatory interest at the rate of 6% p.a. on these two amounts and also on ₹ 24,29,000/-. In our view, though Delhi High court had awarded interest at the rate of 9% p.a. towards compensation/damages for the delayed period, since the petitioners in this case have restricted their claim for compensation/damages at the rate of 6% p.a. for the delayed period, we are inclined to allow the claim for the interest by way of compensation/damages at the rate of 6% p.a. for delayed period already quantified in the chart submitted by the petitioners.

  ORDER - The respondents are directed to pay interest by way of compensation/damages for the period from 03.03.2018 to 23.12.2019 as prayed under Section 132-B(4) of the Act, 1961 at the rate of 6% p.a. totaling to ₹ 5,99,780/- after giving credit of the interest already paid by the revenue for the period from 01.03.2018 to 13.12.2019 in the sum of ₹ 2,06,360/- within a period of four weeks from the date of this order.

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• 2021 (4) TMI 1311
  

  Validity of faceless assessment u/s 144B - Denial of natural justice - as argued the date for making the assessment is already extended up to 30.04.2021. But despite the aforesaid request, AO proceeded to pass the final assessment order dated 23.03.2021 (Annxeure-A) without even taking notice of the request for adjournment made by the petitioner - HELD THAT:- Prima facie case for consideration is made out. Admit. Issue notice.

  Till further orders of this Court, the effect and operation of the impugned assessment order dated 23.03.2021 (Annexure-A to the petition) shall remain stayed.

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• 2021 (4) TMI 1310
  

  Validity of faceless assessment u/s 144B - Denial of natural justice - As argued in the draft assessment order, the petitioner was given time up to 23:59 hours of 26.03.2021 whereby the petitioner was required to either accept the proposed modification or file his written reply objecting to the proposed modification or if required he could request for personal hearing but despite the said time having been allowed till the mid night of 26.03.2021, the reply having been tendered by the petitioner on 26.03.2021 i.e. within the time, the Assessing Officer proceeded to pass the assessment order on 25.03.2021- HELD THAT:- Prima facie case for consideration is made out.

  Admit. Issue notice - Till further orders of this Court, the effect and operation of the impugned assessment order dated 25.03.2021 (Annexure-A to the petition) shall remain stayed.

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• 2021 (4) TMI 1309
  

  Unexplained investment in land - AO made addition as deemed income being unexplained investment in land shown less in the balance sheet of the appellant - Substantial question of law or fact - CIT-A also after considering the oral and documentary evidence, recorded the findings that there was unexplained investment in land shown less in the balance sheet of the appellant and dismissed the appeal filed by the appellant - Tribunal has also recorded various findings of fact while dismissing the appeal preferred by the appellant - HELD THAT:- As the appellant vehemently urged that on the basis of photocopy of the agreement for sale between Shri Ayub Haji Abdul Rashid Qureshi and Shri Rajansingh Kuvarsingh Baisthkur, the assessing officer could not have made an addition in the income of the appellant. Learned counsel for the appellant could not dispute that the appellant had cross-examined Shri Rajansingh Kuvarsingh Baisthkur. Even in the cross-examination of the said seller Shri Rajansingh Kuvarsingh Baisthkur, he admitted that he had received the sum of ₹ 30.55 lakhs out of which ₹ 2 lakhs was received by cheque and balance amount of ₹ 23.50 lakhs was received in cash.

  The entire order passed by the Income Tax Appellate Tribunal is based on pure findings of fact. No substantial question of law arises in this appeal filed under Section 260A of the Income Tax Act, 1961. The appeal being devoid of merit is accordingly dismissed.

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• 2021 (4) TMI 1308
  

  Interest disallowance u/s 36(1)(iii) - assessee had borrowed funds from bank and group entities and paid aggregate interest - Assessee claimed deduction of net interest from business income in statement of computation of income on the reasoning that interest expenditure was periodic cost and hence, an allowable deduction u/s 36(1)(iii) - going by Accounting Standard 7 issued by Institute of Chartered Accountants of India (ICAI), AO opined that expenses directly related to the project were to be debited to cost of project and could be claimed as deduction only in the year in which corresponding income of the project was credited in Books of Accounts and offered to tax - HELD THAT:- It is quite evident that the assessee was following percentage of completion method of accounting to recognize revenue from operations as against the case law of Tribunal Special Bench in M/s Wall Street Construction Limited. [2005 (9) TMI 228 - ITAT BOMBAY-F] which deal with a case wherein the assessee was following completed contract method and therefore, the said decision was not applicable to the facts of the case, as rightly held by learned first appellate authority.

  As undisputed fact that the assessee was engaged in real estate construction and had borrowed capital for business purposes. No other diversion of income has been alleged by Ld. AO. As noted by Ld. CIT(A), the interest was paid to debenture holders, financial institutions as well as unsecured loan creditors and the loan was utilized for business purposes. The funds were borrowed for the purpose of construction and have gone into the projects of the assessee which constitute assessee’s stock-in-trade and not capital asset. In view of these clear cut findings, the adjudication of Ld. CIT(A) could not be faulted with. Another important fact is that the assessee has followed consistent accounting treatment to charge interest expenditure in the accounts. Therefore, the ground thus raised by the revenue stand dismissed.

  Set-off of brought forward losses - HELD THAT:- This ground would also not survive in view of the fact that the provisions of Sec.79 were not applicable to the assessee since assessee is a company in which public is substantially interested. This fact could not be controverted by revenue before us. Therefore, this ground also stands dismissed.

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• 2021 (4) TMI 1306
  

  Assessment u/s 153A - Period of limitation - HELD THAT:- Revenue on instructions, says that the limitation, for passing the assessment order will expire on 30.09.2021.

  The record shows that the matter is coming up for hearing, in the ordinary course, on 23.04.2021. In view of these circumstances, it is directed that the assessment proceedings be carried on and, in the event, an order is passed, the same shall not be given, effect to, during the pendency of the writ petition.

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• 2021 (4) TMI 1301
  

  Penalty u/s 271(1)(c) - HELD THAT:- In the present case, the basis for levying the penalty U/s 271(1)(c) is not in existence, as the assessment itself is set aside [2021 (5) TMI 22 - ITAT CHANDIGARH], we, therefore, by following the ratio laid down by KC BUILDERS AND ANOTHER VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX [2004 (1) TMI 7 - SUPREME COURT] delete the impugned penalty u/s 271(1)(c) of the Act levied by the A.O. and sustained by the ld. CIT(A). - Decided in favour of assessee.

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• 2021 (4) TMI 1298
  

  Ex parte order Passed by Tribunal due to non-appearance on behalf of the assessee - HELD THAT:- AR being a senior citizen was not well in December, 2017 and January 2018 with high blood sugar and high blood pressure - due to that medical emergency the AR failed to appear before the Tribunal on the hearing dates.Since there was nobody appeared before the Tribunal at the time of hearing, the Tribunal dismissed the assessee's appeal ex parte.

  We note that there is a reasonable cause which prevented the assessee to appear Tribunal on the dates fixed for hearing. So, we are inclined to recall the impugned order dated 31-01-2018 and direct the registry to fix the case afresh in due course. Appeal of assessee allowed.

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• 2021 (4) TMI 1296
  

  Stay of recovery - absolute stay - assessee-in-default u/s 220(3) - HELD THAT:- Firstly, the CBDT instructions No.95 dated 21.08.1969 on which reliance is placed to contend that absolute stay should be granted, is no more in force and stands superseded by instruction no. 1914 dated 28.07.2020. Secondly, by the CBDT instruction No.1914 dated 28.07.2020, the authorities under the Act are conferred power to grant stay pending appeal before the appellate forum under the Act; and it is stated therein that the authority in order to protect the interests of revenue can grant stay by directing payment of 20% of the demand. Authority can direct payment of even lesser amount.

  As contended before us that even a direction to pay the 1% of the demand raised by the assessing officer would cause undue hardship and irreparable loss to the petitioner, and that the authorities have not been able to recover any part of the demand raised on the petitioner, because of it’s financial stringency, the said submission does not appeal to this Court, as mere failure of the authorities to recover any amount cannot be considered as financial stringency of the petitioner.

  The 1st respondent, having regard to the facts of the case and the material placed on record, granted conditional stay, which the petitioner failed to comply with at the first instance; and even thereafter the 1^st respondent, by considering the request of the petitioner, granted further time for making the conditional payment to commence from 10th February, 2021. Thus, the petitioner failed to comply either order dt. 01.03.2020 or order dt. 03.02.2021.

  1st respondent, having considered the request of the petitioner, granted time to make conditional payment in installments commencing from 10.02.2021, beyond the period indicated by the petitioner. Even this the petitioner failed to comply with and only as an after thought filed the present Writ Petition on 15.02.2021, after having committed default in payment of the revised 1st installment due on 10.02.2021.

  Since, the 1st respondent has passed the impugned order dated 03.02.2021 by taking all the facts into consideration, including the request of the petitioner as noted above by way of reconsideration of its earlier order of March, 2020, and the said order passed by the 1st respondent is in exercise of discretionary powers, this court is of the view that no valid ground has been made out for interference with it. Writ Petition is dismissed at admission stage.

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• 2021 (4) TMI 1290
  

  TP Adjustment - comparability selection - HELD THAT:- We are informed during the course of hearing that this tribunal's coordinate bench order in assessee’s case [2021 (1) TMI 25 - ITAT HYDERABAD] has directed the departmental authorities to exclude the very five comparables M/s Tata Elxsi Limited, M/s Infobeans Technologies Ltd., Persistent Systems Ltd, Infosys Ltd., M/s Cybage Software Private Ltd.for the purpose of determining the ALP in the corresponding segment of development of software and ITES.

  Working capital adjustment - As relying on GXS INDIA TECHNOLOGY CENTRE PVT. LTD [2021 (1) TMI 775 - ITAT BANGALORE] assessee’s failure in placing on record the relevant working capital particulars only led to the impugned disallowance than on merits. We thus accept this 7th substantive ground for statistical purposes and direct the TPO to consider assessee’s working capital adjustment as per law.

  ALP adjustment in the nature of interest on receivables due to its overseas Associated Enterprises ‘AEs’ - HELD THAT:- It transpires that the learned lower authorities had adopted SBI short term fixed deposit rate on assessee’s international transactions without doing any benchmarking as per market rates in the very segment by referring to comparable entities. We accept this instant substantive ground on this count alone and direct the TPO to delete the impugned adjustment.

  Deemed international transaction - ALP adjustment in respect of recoveries made from resident associated enterprise M/s CDK Global India Private Limited - HELD THAT:- This last issue of deemed international transaction deserves a fresh innings before the TPO. We accordingly deem it appropriate to restore the same back to the file of TPO for his adjudication as per law within three effective opportunities of hearing. The assessee or its authorized representative shall appear before the TPO on or before 31.08.2021 with all necessary papers/ verification of records at its own risk and responsibility in the specified number of opportunities, failing which our remand directions shall stand vacated.

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• 2021 (4) TMI 1284
  

  Maintainability of appeal - low tax effect - HELD THAT:- This Tribunal has dismissed the Revenue’s appeal on account of low tax effect; however the Revenue was given liberty to get the appeal reviewed if the tax effect discovered later on, is more than the monetary limit prescribed by the CBDT. The Ld. DR has furnished before us, computation of the tax effect which comes to ₹ 75,00,000/- which is more than the tax limit of ₹ 50 lacs prescribed by CBDT Circular No.17 of 2019 dated 08.08.2019, therefore, we recall the order of the Tribunal dated 23.08.2019. The Registry is directed to fix the appeal for hearing on 27.05.2021. Since, the date of hearing has been announced in the open court, therefore no separate notice of hearing would be sent to the parties.

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• 2021 (4) TMI 1283
  

  TP Adjustment - Selection of MAM - applying TNMM as selected MAM - HELD THAT:- In the present case, for the impugned assessment year, we are not in agreement with selection of different method (CUP) by the TPO for bench marking one element of service, when entire services received by the assessee from its AE are tested at TNMM. In principle, we agree with the arguments of assessee that segregation of one element of services out of bunches of services received by the assessee from its AE and applying different method for bench marking transaction is not correct, most particularly when TPO has accepted transactions of the assessee with its AE are at ALP under TNMM.

  Fact remains that from the orders of the lower authorities, it was noticed that the TPO wanted the assessee to show that services were actually rendered by its AE to the assessee. Unless, the assessee substantiates its claim with necessary evidence including Invoices, if any, raised by the AE for rendering of services, then the claim of the assessee cannot be accepted. Therefore, we are of the considered view that the issue needs to be set aside to the file of the AO for limited purpose verification of facts with regard to rendering of services by the AE to the assessee in connection with payment of management fees. In case, the assessee produced particulars of actual receipt of services, then the TPO is directed to accept the TP study conducted by the assessee by applying TNMM as the most appropriate method and delete TP adjustment made towards management fees - Appeal filed by the assessee is allowed for statistical purposes.

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• 2021 (4) TMI 1280
  

  Receipts arising on sale of carbon credits - revenue or capital receipt - HELD THAT:- AS following the decision of the Co-ordinate Bench of this Tribunal in the case of Ambika Cotton Mills Limited and the decision in the Sri Velayudhaswamy Spinning Mills (P) Limited [2015 (4) TMI 132 - ITAT CHENNAI] as also on account of the fact that the legislature has by intent providing for taxing of the receipts from the sale of carbon credits under a special provision of Section 115BBG w.e.f 01.04.2018 and as the appeals relate to the period before this date, the receipts arising to the assessee herein on the sale of carbon credits is held to be capital receipt. Consequently, the order of the learned CIT(A) and that of the learned Assessing Officer on this issue stands reversed.

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• 2021 (4) TMI 1269
  

  TDS u/s 195 - disallowance made under the provisions of Section 40[a][i] - payments made by the appellant company to non-residents are in the nature of Royalty without deducting TDS - HELD THAT:- issue involved in this appeal has been put to rest in view of the decision rendered in ENGINEERING ANALYSISCENTRE OF EXCELLENCE PRIVATE LIMITED [2021 (3) TMI 138 - SUPREME COURT] and the issue involved in this appeal has been answered against the Revenue and in favour of the assessee.

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• 2021 (4) TMI 1267
  

  Since the amendment has been brought about on account of the fact that the order dated 11.03.2021 has been passed by the respondent/revenue; we are inclined to allow the amendment sought by the petitioner.

  Accordingly, the prayer made in the captioned application is allowed. Consequently, the amended memo of parties, list of dates and writ petition accompanied by an affidavit are, formally, taken on record.

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• 2021 (4) TMI 1264
  

  Application under Section 226 (4) - Direct Tax Vivad Se Vishwas Act - urgency of the prayers made by the petitioners for consideration of the application under Section 226 (4) of the Income Tax Act, 1961 filed by the respondent no.2 submitting to the effect that the petitioners seek to avail of the Direct Tax Vivad Se Vishwas Act, 2020 - HELD THAT:- As considered appropriate to direct the learned Special Judge, CBI-01 seized of the proceedings in relation to RC No.06(A)/2006 (bearing new No.CC/R82/2019) to dispose of the application filed by the Income Tax Authority dated 23.08.2021, under Section 226 (4) of the Income Tax Act, 1961 by the date 26.04.2021.

  A submission has been made on behalf of the CBI with reference to the aspect of the TCR in the matter having been requisitioned by this Court in an appeal preferred by the CBI assailing the orders dated 18.04.2015 and 23.09.2016 of the learned Special Judge, CBI-01 and it was thus submitted on behalf of the petitioners that the directions to the learned Special Judge, CBI-01 to dispose of the prayer under Section 226 (4) of the Income Tax Act, 1961 as moved by the Income Tax Authority would be made difficult in view of the pendency of the TCR before this Court, qua which, it is essential to observe that it is always open to the petitioners to seek redressal before this Court for the TCR to be placed before the learned Special Judge, CBI01 for disposal of the application under Section 226 (4) of the Income Tax Act, 1961, in relation to which, the prayer can always be made before the concerned Bench of this Court.

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• 2021 (4) TMI 1260
  

  Recovery proceedings - Petitioners are Banks and challenge orders encumbering properties that, according to them, have been offered to them as collateral by persons who have availed financial assistance - According to the revenue, the issuance of notice under Section 143(2) would create an automatic charge over the property by the petitioner and any subsequent alienation of the property by the petitioner would be liable to be set aside in light of the protection under Section 281 - Banks had initiated action under Section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (in short ‘SARFAESI Act’) and taken possession of the property thereafter under Section 13(4) thereof - HELD THAT:- . Section 281 states that any transaction of transfer engaged in after the commencement of proceedings, with the intention of defrauding the revenue and circumventing proceedings for recovery, would be construed as void as against any claim of tax or other sum payable by that assessee. However, bona fide transactions that have been entered into for adequate consideration, with the parties being unaware of the pendency of proceedings before the Income Tax authorities/without being put to notice, shall stand excluded from the rigour of the provision. Transactions engaged in with the sanction of the Assessing Officer would also be excluded from the application of the provision.

  No merit in the submissions of the respondent to the effect that Section 281 constitutes a declaration of charge much less, one which is preferential to the revenue. The thrust of Section 281 is only a protection to a bona fide purchaser in cases where an errant assessee may seek to alienate property to circumvent anticipated recovery of outstanding arrears payable by him to the Income Tax Department. Nothing in Section 281 would support the submission that it, by itself creates a positive charge of property. The charge in this case was created by the Income Tax Department only after 27.03.2017 when the property was attached in terms of Rule 48 of the 2nd Schedule and duly communicated to the SRO.

  A matter similar to the present one came up for consideration before the Andhra Pradesh and Telangana High Court (prior to bifurcation) in the case of ICICI Bank Ltd [2019 (3) TMI 701 - TELANGANA AND ANDHRA PRADESH HIGH COURT] - Conflicting claims to the same property were set up by the ICICI Bank and the Tax Recovery Officer. After considering the interpretation of Section 281 and the power of recovery under the 2nd Schedule to the Income Tax Act, the Bench states that the attachment in that case was prior to the attachment by the Income Tax Department and thus, held priority over the subsequent attachment. Following the ratio of the judgment of the Supreme Court in the case of Gangadhar Vishwanath Ranade [1998 (9) TMI 1 - SUPREME COURT] the claim of the Bank was allowed.

  In this case the mortgage by the Bank is on 10.02.2014 and that by the Income tax Department, is post attachment, on 27.03.2017 only. The subsequent attachment thus fails in the light of Section 26E.

  Incidentally, at the time when the above decision was rendered, Section 26E of the SARFAESI Act had not been notified, prompting the Bench to state at paragraph 6 of that decision (of the SCC online report) that the issue before them could have been resolved in a trice, had only the provisions of Section 26E been notified at the time when the decision was being rendered. The provisions of Section 26E have since been notified on 24.01.2020 and the benefit of the same is available for the present Writ Petitioners. WP allowed.

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• 2021 (4) TMI 1257
  

  Petition be dismissed as withdrawn at this stage leaving it open to the petitioner to avail such remedy as may be available at appropriate stages.

  Permission is granted. The petition is dismissed as withdrawn at this stage leaving it open to the petitioner to avail such remedy as may be available at appropriate stages.

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