TMI Blog2014 (12) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... eeben Magiya would have no funds of her own, is also not acceptable as she also possibly can have her Stridhan or can own property inherited from her father - the provision of section 3 of the Benami Transactions Act makes it obligatory on the part of the person to prove otherwise when such property is purchased in the name of the wife as legal presumption favours the wife and unmarried daughter - such presumption can be rebutted by the person who alleges by production of evidence or other material before the court, that the property was purchased for the benefit and interest of the person other than the wife and the unmarried daughter - unless the presumption gets rebutted by successfully producing cogent evidence that the suit property was purchased benami by the husband / father for his own benefit, such presumption would continue. The property had been transferred in the name of the present petitioner by way of a registered sale deed on payment of due consideration and, this was done in absence of any charge, registered with the office of the Sub Registrar in respect of the said property - Prima facie, it shall have to be termed as the bona fide purchase of the immovable p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petitioner that before the purchase of the impugned property, title investigation was carried out in the name of the previous owner by the learned advocate who issued a certificate dated 23.12.1996 certifying to the State Bank of Saurashtra that the title of the previous owner was clear, marketable and free from any encumbrances. Such property was purchased by the petitioner on 20.05.2010 which was duly registered with the respondent No.2 vide document No.2603 and the petitioner continued to enjoy the same peacefully. 2.1 It is the case of the petitioner that he entered into an agreement to sell with one Shri Kamlesh P. Shah on 26.03.2013 for the sale of such property. Such agreement to sell has been registered with the respondent No.2 on 26.03.2013. After the said process of entering into the agreement to sell with the proposed purchaser, when the petitioner approached the respondent No.2 for execution of the final sale deed, the same was refused by the respondent No.2 on the ground that a letter was received from the respondent No.1, inter alia, stating that one Shri Deepak Magiya, husband of the respondent No.3, (the previous owner of the impugned property) had not paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 appeared and filed an affidavit-in-reply contending, inter alia, that the impugned property is transferred by Shri Deepak Shantilal Magiya through his wife Jayshreeben Deepakkumar Magiya to the petitioner with an intention to defraud the Government revenue and that the said transaction is void under section 47 of the Gujarat Value Added Tax Act, 2003. It is contended that Shri Deepak Magiya opened the bank account in the name of Apna Enterprise citing its sale tax registration number. He was, in fact, not the real owner and the real owner was one Shri S. A. Saiyed. Shri Deepak Magiya was considered to be the king of billing business in Bhavnagar, who never got registered himself under the Gujarat Sales Tax Act or the Gujarat Value Added Tax Act. Shri Deepak Magiya used the registration numbers of other registered dealers as if they were his registration numbers, and his case was also referred to the Local Crime Branch. Mr. Deepak Magiya was initially absconding and after he was arrested, he once again absconded on being released on regular bail by the court. 3.1 It is also the say of the respondent No.1 that for the years 2005-06, 2006-07 and 2007-08, the total demand of the Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch person. Thus, section 47 of the Act is concerned with a dealer who creates a charge on or parts with the possession by way of sale, mortgage, exchange or any other mode of transfer, after any tax becomes due from him, and when he so does in favour of any other person with the intention of defrauding the government revenue, this provision states that such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the dealer. Section 48 of the Act creates first charge on the property of the dealer or any other person from whom tax is due. 6. It is to be noted at this juncture that section 47 of the GVAT Act is similarly worded to section 281 of the Income Tax Act, 1961 and therefore, some of the decisions in relation to the provision of section 281 of the Income Tax Act which hold the field deserve consideration at this stage. 7. The Supreme Court in the case of Tax Recovery Officer v. Gangadhar Viswanath Ranade, (1998) 234 ITR 188, discussed at length section 281 of the Income Tax Act, 1961, which declares as void any transfer made by the assessee during the pendency of proceedings with an intention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer. (1) Where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection : Provided that no such investigation shall be made where the Tax Recovery Officer considers that the claim or objection was designedly or unnecessarily delayed. (2) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms as to security or otherwise as the Tax Recovery Officer shall deem fit. (3) The claimant or objector must adduce evidence to show that - (a) (in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or (b) (in the case of movable property) at the date of the attachment, he had some interest in, or was possessed31 of, the property in question. (4) Where, upon the said investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the civil suit would be permissible and not otherwise, cannot be accepted. 10.1 It is true that there is no explicit provision made under the GVAT Act as is provided under the IInd Schedule of the Income Tax Act, however, it is a well settled law that in the event of any dispute in relation to the title of any property, it is the civil court which shall have a jurisdiction. This has also been emphatically held and observed by the Apex Court in Tax Recovery Officer v. Gangadhar Viswanath Ranade (supra) and followed by this Court in the case of Karsanbhai Gandabhai Patel v. Tax Recovery Officer rendered on 12.02.2014 in Special Civil Application No.2894 of 2004 and therefore, there is no reason why the same would have no applicability in the instant case. This Court in the case of Karsanbhai Gandabhai Patel v. Tax Recovery Officer in Special Civil Application No.2894 of 2004 had an occasion to deal with section 281 of the Income Tax Act and relying on the judgement of the Apex Court in Tax Recovery Officer v. Gangadhar Viswanath Ranade (supra), struck down the order of attachment, by observing thus: Section 281 of the Act provides certain transfers to be void. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same was entered into for adequate consideration and without notice of pendency of such proceedings or without notice of such tax or other sum payable by the assessee. This element of the transaction being with adequate consideration and without notice would equally apply to the assessee as well as the transferee. In a given case, it may even be open for the assessee to establish that the transaction was for adequate consideration without notice. In a given case, even if the assessee had notice of the pendency or the outstanding tax or sum payable, the transferee can still take shelter of the transactions having been entered into by him for adequate consideration and without notice. It is, therefore, that the courts have read into this provision the requirement of hearing the transferee also. Quite apart from this, as would be clear from the discussion hereinafter, courts have taken a view that sub-section (1) of section 281 of the Act only provides for the eventuality of the transaction hit by the said provisions as being void. It does not create any machinery for the Revenue authorities to entertain dispute and declare the transaction to be void for which purpose, only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 therefore not void. The Income Tax Officer had proposed to proceed under section 281 of the Act. The civil court in the suit filed by the plaintiffs found that the transaction was in breach of section 281 of the Act and therefore refused to grant the prayer. It was under such circumstances that the appeal was heard by the learned Single Judge of the Madras High Court and dismissed the same. The issue is squarely covered by the decision of the Supreme Court in the case of Gangadhar Vishwanath Ranade. We have, therefore, no hesitation in striking down the order dated 8th November 1995 qua the present petitioners. Rule is made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouncements on the very issue would be desirable at this juncture. [a] The Supreme Court in the case of Canbank Financial Services Ltd. v. Custodian and others, AIR 2004 SC 5123, held thus : 50. A civilized society furthermore always provides for remedies for cases of what was been called unjust enrichment or unjust benefit derived from another which it is against conscience that he should keep. (See Fibrosa Spolka v.Akcyjna Vs. Fairbairn Lawson Combe Barbour, Ltd. (1942) 2 All ER 122)] In Carreras Rothmans Ltd. V. Freeman Mathews Treasure Ltd. [(1985) Ch. 207 at page 222], it is stated : .equity fastens on the conscience of the person who receives from another property transferred for a specific purpose only and not therefore for the recipient's own purposes, so that such person will not be permitted to treat the property as his own or to use it for other than the stated purpose. 62. 'Benami Transaction' has been defined in Section 2(a) of the Benami Transactions Act to mean any transaction in which property is transferred to one person for a consideration paid or provided by another person. 'Transfer' of property, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney came from the plaintiff, the entire consideration to the plaintiff was provided by the defendant. It is true that the said amount was advanced by the defendant to the plaintiff on interest and the defendant could have the money claim against the plaintiff, but the fact remains that the entire amount of consideration came from the defendant to the plaintiff and was paid to the vendor by the plaintiff and the sale deed was executed in the name of the defendant. This is not a case where the consideration has come from the real owner and the said benami owner has no connection whatsoever with the transaction. As observed by the Supreme Court, the true character of the transaction is governed by the intention of the person who contributed the purchase money. In the present case, it cannot be said that the defendant had not contributed for the purchase money. In any case, even the intention of the plaintiff cannot be said to be that of the real owner while purchasing the property in the name of the defendant who had substantially invested his money. The facts and circumstances and the relations between the parties clearly show that the arrangement was that the defendant in whose name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is inevitable for attracting the said transaction. For any transfer to be termed as Benami, the person who so asserts need to prove that the consideration is paid by the person other than the one in whose name property is purchased and the true character of intention also can be gathered from surrounding circumstances. Law since does not allow application of provision of Section 3 of the Benami Act where purchase is made in the name of wife and unmarried daughter, burden surely requires to be discharged by the person who asserts that the transaction is Benami. 12. As reflected hereinabove, it is to be noted at this juncture that the State has fervently contended inter alia that the transaction of purchase of property in the name of Smt. Jayshreeben Magiya by her husband Deepak Magiya who is alleged to have defaulted, being called King of bogus purchases was only with a view to avoid the tax liability and to defraud the revenue. It is also further contended that Smt. Jayshreeben Magiya, being the house-wife, would have no money to purchase the impugned property. We notice that the suit property is a tenement, admeasuring 127.05 square metres, situated at Bhavnagar. The purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property decided on the line of the decision of the Apex Court in the case of Tax Recovery Officer v. Gangadhar Viswanath Ranade (supra). In absence of any explicit provision under the GVAT Act and in the wake of the fact that the outstanding dues of Mr. Deepak Magiya, nearly to the tune of ₹ 5 crores, having been finalized somewhere in the year 2009 for the assessment years 2005-06, 2006-07 and 2007-08. We, prima facie, are of the opinion that serious question of limitation also would stare in the face of the respondent. However, we choose not to conclude the maintainability of the suit. 14(b) Mr. Hemani has fervently objected to this by submitting that the availability of the civil suit in case of the Income Tax Act is on account of the provision explicitly made in Schedule II to rule 11(6). However, in absence of such explicit provision under the GVAT Act, even if both the provisions are somewhat similarly worded, such liberty may not be made available to the respondents. 15. On considering rival versions, we choose not to adjudicate on disputed questions of title which shall have to be necessarily decided by the court of law in the civil suit rather than concluding ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
