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Issues involved: Declaration of purchases as void u/s 281(1) of the Income-tax Act, 1961 by the Income-tax Officer.
Summary: The petitioners, purchasers of properties from a common vendor, challenged the Income-tax Officer's order declaring their purchases as void u/s 281(1) of the Act. The petitioners argued that their sale deeds were duly registered after income-tax clearance, transferring title effectively. They contended the Officer lacked jurisdiction to declare the sales null and void, asserting they were bona fide purchasers for value. The court noted the Officer's reliance on u/s 281(1) but emphasized that only courts can declare transactions void, not tax authorities. Citing a recent Supreme Court decision, it clarified that if fraud is suspected, the Revenue must file a suit u/r 11(6) to declare the transfer void u/s 281. Concluding that the Officer exceeded jurisdiction, the court set aside the order affecting the petitioners' property interests, allowing the writ petitions and closing the related cases.
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