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2021 (6) TMI 997 - HC - Income TaxRecovery proceedings - Attachment of property - ownership over the property in respect of which the petitioner is now seeking to exercise an exclusive right as an owner - case of the petitioner is that the property in question which has been attached by the impugned notice dated 22.03.2007 was transferred in his favour under a Family Settlement Deed - as submitted that the petitioner is not only in possession of the property but is also receiving rents from the tenants and therefore the question of attaching the property under the provisions of Section 226(3) of the Income Tax Act, 1961 does not arise - HELD THAT:- As per section 281 of the Income Tax Act, 1961 where, during the pendency of any proceeding under the Act, or after completion thereof, before service of notice under Rule 2 of the Second Schedule, any assessee creates any charge of his assets in favour of any other person or part of the possession by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever, such charge or transfer is void as against any claim in respect of any tax or any other sum payable by an assessee as a result of completion of the said proceedings or otherwise. Since Section 158 BD of the Income Tax Act, 1961, proceedings were pending for the Block Assessment Period from 01.04.1988 to 15.12.1998, all transfers are void under Section 281 of the Income Tax Act, 1961. In the facts of the case what is evident is that, the so-called transfer of undivided share in the land by the two brothers namely the paternal uncles of the petitioner in favour of the petitioner’s father has not been proved. Such transfer would been contrary to Section 281 inasmuch as notice under Section 158BD had been initiated against Late Milapchand Dadha and Sons (HUF) as early as 09.07.2001. The so-called family arrangement pursuant to which transfers were allegedly affected are to be declared as void. As far as, the arrears of tax from M/s.Dadha Estates (P) Ltd is concerned, it is not clear on what basis the Income Tax Department had issued the impugned notice inasmuch as the said company is not the owner of the property. Encumbrance Certificate dated 20.02.2009 filed along with the typed set of papers seems to indicate that the same property is under a charge in favour of Andhra Bank. M/s.Dadha Brothers Ltd and the petitioner’s father are shown to be party to the transactions and defaulted and proceedings were initiated before the Debt Recovery Tribunal, Hyderabad in O.A.No.146 of 1996 by the lending bank and they were default of ₹ 82,58,660/- and that a Recovery Certificate dated 10.04.2002 had been issued. These factors raises serious doubt as to the ownership over the property in respect of which the petitioner is now seeking to exercise an exclusive right as an owner. There are several disputed questions of facts which remain unanswered and there it cannot be unravelled in the course of a summary proceedings under Article 226 of the Constitution of India. The petitioner has to therefore necessarily approach a civil court in accordance with law to establish his rights, if any, over the property. Petitioner is fighting a proxy battle for and on behalf of the Coparcenors Milapchand Dadha and Sons (HUF) of which his father and his paternal uncles were Coparcenors and by virtue of his birth in the family, the petitioner alone became a Coparcenor. No reasons to interfere with the proceedings initiated by the respondent/Income Tax Department inasmuch as not only the late Milapchand Dadha and Sons (HUF) is in arrears of tax to the Income Tax Department but also the said company which had put the construction of the Dadha Complex, at New No.365, Mint Street, Sowcarpet, Chennai-600 079 was in arrears of tax. That apart, there is Recovery Certificate issued for the same property in favour of Andhra Bank in O.A.No.146 of 1996.
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