TMI Blog2011 (2) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances mentioned therein and proceeding under section 222 by way of attachment and sale of assessee's property ignoring transfer in violation of section 281 subject of course to the statutory remedies of the affected party to raise objections or to file suit - Decided against the assessee - CWP NO. 9454 OF 2005 - - - Dated:- 15-2-2011 - ADARSH KUMAR GOEL, AJAY KUMAR MITTAL, JJ. Ashish Aggarwal for the Petitioner. Yogesh Putney for the Respondent. ORDER Adarsh Kumar Goel, J. This petition seeks quashing of order dated 15-2-2005 passed by the Income-tax Officer, Karnal attaching the property of the petitioner and declaring sale in his favour by his predecessor to be void on the ground that the said vendor was in default of Income-tax dues. 2. Case set out in the petition is that he purchased the property in dispute vide sale deed dated 9-9-1996. Later on he came to know that the impugned order was affixed at the shop declaring the sale in his favour to be void under section 281 of the Income-tax Act, 1961 (in short "the Act") and attaching the property. The order was addressed to Satpal Manocha vendor of the petitioner who had failed to pay dues to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 was for Rs. 2,65,000 while sale in favour of the petitioner after 10 years has been shown for Rs. 2,45,000 by way of undervaluation. The shop was not occupied by the petitioner and was still lying vacant. Since the sale was a sham transaction to defraud the revenue, the sale was void under section 281 of the Act and the property could be attached to recover the arrears. 4. We have heard learned counsel for the parties. 5. In support of his contention that Income-tax Officer had no jurisdiction to annul even a fraudulent sale to recover its dues, reliance has been placed by learned counsel for the petitioner on the judgment of the Hon'ble Supreme Court in TRO v. Gangadhar Vishwanath Ranade [1998] 234 ITR 188/100 Taxman 236 holding that the power of the Tax Recovery Officer (TRO) under Rule 11 of the Second Schedule to the Act was only to attach the property in possession of the assessee. If the property is transferred to third party with the intention to defraud the revenue, remedy of the department is to file a suit under Rule 11(6). 6. Learned counsel for the respondents submits that the judgment relied upon is distinguishable and after taking into account the said judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor child or son's minor child, as the case may be, continue to be included in the assessee's movable or immovable property for recovering any arrears due from the assessee in respect of any period prior to such date. (2) The Tax Recovery Officer may take action under sub-section (1), not withstanding that proceedings for recovery of the arrears by any other mode have been taken." "281. (1) Where, during the pendency of any proceeding under this Act or after the completion thereof, but before the service of notice under rule 2 of the Second Schedule, any assessee creates a charge on, or parts with the possession (by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever) of, any of his assets in favour of any other person, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceeding or otherwise: Provided that such charge or transfer shall not be void if it is made (i) for adequate consideration and without notice of the pendency of such proceeding or, as the case may be, without notice of such tax or other sum payable by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the claim or objection, such property was not, at the said date, in the possession of the defaulter or of some person in trust for him or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale. (5) Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his own property and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim. (6) Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute; but, subject to the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue after taking into account judgment of the Hon'ble Supreme Court in Gangadhar Vishwanath Ranade's case (supra) fully supports the stand of the revenue. 12.We, may, however, notice the contention raised on behalf of the petitioner that in Gangadhar Vishwanath Ranade's case (supra), the Hon'ble Supreme Court held that the TRO cannot declare any transfer by the assessee in favour of a third party to be void. The TRO can only examine who is in possession and in what capacity. He can attach property in possession of the assessee in his own right or in possession of a tenant or third party on behalf of or for the benefit of the assessee. This contention is no doubt borne out from the judgment but it is explained on behalf of the revenue that even if declaration by the TRO that the transfer was void is ignored, the statutory declaration of the transaction being void cannot be ignored. No doubt, it may be open to the revenue to file a suit to seek such a declaration but the revenue can also rely upon statutory declaration under section 281 though the TRO cannot grant such a declaration. We may also notice the statutory change in section 281 on account of amendment vide Taxation Law ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
