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Issues:
Quashing of order under section 264 of the Income-tax Act, refusal of certificate for sale of property under section 230A, existence of liability for granting certificate. Analysis: The petitioner sought to quash an order passed by respondent No. 1 under section 264 of the Income-tax Act, 1961, regarding the refusal of a certificate for the sale of a property. The petitioner contended that they fulfilled all requirements under section 230A of the Act for selling the property and requested permission from the assessing authority. The Assessing Officer refused to grant the certificate citing a pending civil suit by the Income-tax Department, claiming a substantial amount against the petitioner. However, the suit was subsequently dismissed by the civil court, as confirmed by an affidavit submitted to the High Court. The key provision in question, section 230A of the Income-tax Act, outlines the conditions for granting a certificate for property sale. It mandates that no document transferring property valued over a specified amount can be registered without certification from the Income-tax Officer regarding the existence of liabilities. In this case, the court emphasized that only existing liabilities ascertained and payable upon assessment can constitute a valid ground for withholding the certificate. The court noted that the Department's claim based on alleged fraud by the petitioner did not amount to an existing liability at the time of the certificate application, as it was merely a claim and not a confirmed liability. The court's analysis of the situation concluded that there was no existing liability of the petitioner under section 230A at the time of the application, as no assessment or proper procedure had established such a liability. The dismissal of the claim by the civil court further supported the absence of an existing liability. Consequently, the court directed the respondents to grant the certificate for the sale of the property within a specified timeframe, as no valid grounds existed for withholding the permission under section 230A. The judgment resolved the issue of the refusal to grant the certificate based on the absence of an existing liability and the dismissal of the Department's claim by the civil court, ensuring the petitioner's right to sell the property. This detailed analysis of the judgment highlights the legal intricacies surrounding the refusal of the certificate under section 230A of the Income-tax Act, emphasizing the importance of established liabilities and proper assessment procedures in such cases.
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