9911796707
TMI Blog1998 (9) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... irm known as United Capital Construction Company and also as a contractor. For the assessment years 1962-63, 1963-64 and 1964-65, he was assessed to income-tax and the amounts of tax so assessed became final on August 7, 1967. There were also income-tax demands which were outstanding for the subsequent assessment years at the time when the Tax Recovery Officer served notices on the assessee under rule 2 of the Second Schedule to the Income-tax Act, 1961, on October 21, 1972. Thereafter, on October 23, 1972, an immovable property being a residential house of the assessee in Ramdaspeth, Nagpur, was attached by the Tax Recovery Officer. In the objections filed by the assessee, original respondent No. 1, it was stated that on December 2, 1967, he had executed a mortgage in respect of this property in favour of the Bank of Maharashtra for raising a loan of Rs. 75,000. He further stated that on February 21, 1969, he had executed a trust deed in respect of the said property in favour of his wife and his daughter. On February 27, 1969, the assessee, original respondent No. 1 had, by a registered deed, conveyed the said property to his wife and his daughter, original respondent No. 2. Simil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling a writ petition before the High Court. The High Court by its impugned judgment has set aside the order of the Tax Recovery Officer. The High Court has upheld the contention of the respondent/s that the Tax Recovery Officer has no power under rule 11 of the Second Schedule to the Income-tax Act, to declare as void a transfer of property effected by the assessee during the pendency of proceedings against him under the Income-tax Act on the ground that the transfer was with the intention to defraud the Revenue and was void as against the Department under section 281 of the Income-tax Act as it then stood. The High Court also negatived the contention of the Department that by reason of the judgment of the High Court in the earlier proceedings, the respondent/s were precluded from raising such a contention. The latter contention has been rightly negatived by the High Court in view of the express findings of the High Court in the earlier decision in the case of the assessee and in Gangadhar Vishwanath Ranade (No. 1) v. ITO [1989] 177 ITR 163 (Bom), which was become final. While examining the declaration given in the present case by the Income-tax Officer under section 281 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to investigate the claim or objection. Under rule 11(4), (5) and (6) it is provided as follows :--- "Rule 11(4). Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated 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. Rule 11(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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. In such a suit it would be open to the attaching creditor to plead in defence that the transfer was in fraud of the general body of creditors and was void under section 53 of the Transfer of Property Act. Similarly, if the claim of the transferee is allowed, the attaching creditor may sue on behalf of himself and all other creditors under section 53 of the Transfer of the Property Act for a declaration that the transfer was void as it was in fraud of the creditors. In the case of C. Abdul Shukoor Saheb v. Arji Papa Rao, AIR 1963 SC 1150, at page 1158, this court considered, inter alia, the nature of proceedings under Order XXI, rules 58 to 61, prior to the amendment of the Civil Procedure Code in 1976. This court observed : "In the summary proceedings under Order XXI, rules 58 to 61, having regard to the terms of rule 61, the court is concerned only with the question as to whether the transferee is in possession of the property in his own right and not on behalf of the judgment-debtor. When a transfer is real, though it is liable to be impeached as a fraud on creditors, and the transferee has entered into possession, he would succeed in the summary proceedings, with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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