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2018 (4) TMI 780 - HC - Indian LawsRecovery proceedings - lease rights were not transferred in favour of the petitioner - attachment of immovable property of a defaulter - sale aftr expiry of three years - Held that:- Provisions show that under Section u/s 68B if the sale is not executed within a period of three years after the attachment, the same shall be deemed to have been vacated. Rule 48 mentions attachment of immovable property of a defaulter prohibiting the defaulter from transferring or charging the property in any way and prohibiting all persons from taking all benefits under such transfer or charge fees. Thus, if the facts of the present case are taken into consideration, it is apparent that Section 281 of the Act of 1961 would not come into operation to declare the sale and transfer as void since the provision is only with reference to the pendency of the proceedings before the service of notice under Rule 2 of Second Schedule. Do not agree with the said submission as there is a basic fault in it to the extent that the Rule 16(2) shall be examined on the day when the sale was executed i.e. on 17.11.2006. The attachment was enforceable on that day when the sale was executed between the Company i.e. petitioner and the defaulting company and would be void. The clams of the department being enforceable against the defaulting company the petitioner’s attempt to take umbrage of Rule 16(2) is wholly unfounded. On a conjoint reading of Rule 16(1) and 16(2), it is apparent that while Rule 16(1) puts an embargo on the defaulter or his representative in interest to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer. Rule 16(2) disallows any private transfer or delivery of property attached or of creating any interest therein for any payments to the defaulter of any debt, dividend and other monies contrary to such attachment when all such dealings have been treated as void All cases the Tax Recovery Officers may not have proceeded under 168(b) and has an option to appoint a person as Receiver instead of directing of sale of property in terms of Rule 70 and 71. Admittedly the Receiver has already been appointed on the properties of the defaulting Company which includes the property situated at Alwar thus, there was no occasion for the Tax Recovery Officer to proceed with the sale in terms of 68(b) and the argument of the petitioner relating to the same not being void on account of vacation of the attachment is not made out and in such circumstances, the sale executed in favour of the petitioner has to be treated as void. Even as per Section 222 there is an option for either to proceed with the charge sheet and sale by the Tax Recovery Officer or to appoint a Receiver on the property. However, in view of the fact that Receiver had already been appointed by the Bombay High Court, it is to be presumed that the attachment and sale could not be proceeded further and receiver as appointed by the High Court, would be deemed to do the work in terms of Rule 70 and 71 of the Income Tax, 1961. In view of the law as laid down by Apex Court in Macson Marbles Private Limited cited (2003 (11) TMI 71 - SUPREME COURT OF INDIA), the sale executed in favour of the petitioner results in the petitioner liable to pay the dues as against the defaulting company and, therefore, the demand raised by the department is wholly justified. Income Tax Act provides a complete code in itself and protect the revenue from misadventures which may be taken up by a defaulting person like the Company in the present case.
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