TMI Blog2014 (4) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... ght, he will have to raise the attachment. If the Department desires to have the transaction of transfer declared void under Section 281, the Department being in the position of a creditor, will have to file a suit for a declaration that the transaction of transfer is void under Section 281 of the Income-tax Act" The action of the TRO in declaring the transfer of property to be void was without jurisdiction. - no hesitation in striking down the order dated 8th November 1995 - Rule is made absolute accordingly – Decided in favour of petitioner. - SPECIAL CIVIL APPLICATION NO. 2894 of 2004 - - - Dated:- 12-2-2014 - MR. AKIL KURESHI AND MS SONIA GOKANI, JJ. FOR THE APPELLANT : MR BS SOPARKAR, ADVOCATE WITH MRS SWATI SOPARKAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch demand notices were served on the defaulter before the date of transfer of the properties. He, therefore, declared the transactions void. Under communication dated 20th December 1995, the petitioners raised objection to the said order dated 8.11.95 contending, inter alia, that such order was passed without any notice to them and in any case, TRO had no jurisdiction to declare any transaction as void under section 281 of the Act. There was no response to this communication by the respondents. Many years later, the petitioners once again wrote to the department on 21.10.03 and requested for withdrawal of the order under section 281 of the Act. Yet another letter was written for the same purpose on 18.12.2013 by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relied on following decisions: (1) In the case of Abdul Jamil v. Secretary, Income-tax Department, (1998) 102 Taxman 332 (Madras). (2) In the case of Palani Gounder v. I.T. Revenue Department, 229 ITR 59. Having thus heard the learned counsel for the parties and having perused the documents on record, it emerges that notices were issued to the defaulter during the years 1989 to 1994 for recovery of unpaid taxes. Such taxes were, however, not paid. In the meantime, the defaulter sold certain properties to various persons including the petitioners. Such sale deeds were executed on or around 17/18th May 1995. It was only thereafter that the department attached the property in question by issuing an order dated 22.5.95. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortgage, gift, exchange or any other mode of transfer any 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 completion of the said proceedings or otherwise. Proviso to sub-section (1), however, provides that such charge or transfer shall not be void if made for adequate consideration and without notice of pendency of such proceedings or without notice of such tax or other sum payable by the assessee or with the permission of the Assessing Officer. It can thus be seen that even if the transactions creating a charge or parting of possession has been entered into by the assessee during the pendency of any proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transaction to be void for which purpose, only a civil suit would lie. In the case of Gangadhar Vishwanath Ranade v. T.R. O. 177 ITR 176, a Division of the Bombay High Court held that under section 281 of the Act, the TRO has no power to declare a transfer as void. This decision of the Bombay High Court was carried in appeal before the Supreme Court. The Apex Court in TRO v. Gangadhar Vishwanath Ranade (supra) confirmed the view of the Bombay High Court and held and observed as under: In the light of this discussion about the provisions of Order XXI, Rules 58 to 63, if we examine Rule 11(4) of the Second Schedule to the Income-tax Act, it is clear that the Tax Recovery Officer is required to examine whether the possessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs as void. The decisions cited by the counsel for the Revenue arose in different factual background. In the case of Abdul Jamil (supra), the issue arose out of civil proceedings in which the Court found that the vendor had sold the property to the first plaintiff after the issuance of certificate under the Act for recovery of the tax arrears from him. The Court therefore, held that the transaction was hit by the provisions of section 281 as well as rule 16(1) of the Rules. The case of Palani Gounder (supra), also arose in different factual background. It was a case in which the plaintiff had filed suit for declaration that their purchase of the suit property was for a valid consideration and it was a duly registered sale deed and was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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