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TMI Blog1973 (2) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... faulter and that the properties had been in the possession and enjoyment of the defaulter. The attachment and the proclamation of sale in respect of property concerned in Writ Petition No. 1144 of 1970 were also made in identical circumstances. The property purchased in the name of the petitioner therein was a house property. The facts in Writ Petition No. 801 of 1970 could be mentioned at a later stage. In these writ petitions, the learned counsel for the petitioner conceded for the purpose of argument that the petitioners were benamidars and the legal or real ownership in the properties attached is vested in the defaulter, but he contended that the provisions of the Income-tax Act, 1961, and the Second Schedule thereof do not authorise the Tax Recovery Officer to attach and bring to sale any property which stands in the name of or registered in the name of a third party and that only those properties which stand registered in the name of the defaulter could be attached and brought to sale for recovery of the arrears of income-tax due from the defaulter. Under section 222 of the Act, on receipt of a certificate from the Income-tax Officer specifying the amount of arrears due fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the applications to set aside the sale or confirmation of sales are identically worded as in rules 83 to 94 of Order 21, Code of Civil Procedure. Thus, it is seen the entire provisions relating to attachment and sale of immovable properties of the judgment-debtor found in the Code of Civil Procedure are incorporated in the Second Schedule as the procedure to be followed for attachment and sale of the defaulter's properties for the recovery of the arrears of income-tax due from the defaulter. It may be mentioned that the Indian Income-tax Act, 1922, did not provide for the procedure to be followed for the recovery of the arrears as it is now found in the Second Schedule, but section 46(2) enabled the Collector on receipt of the certificate from the Income-tax Officer specifying the amount of arrears due from the assessee to proceed to recover from such assessee the amounts specified therein as if it were an arrear of land revenue. The proviso to that section further stated that for the purpose of recovering the amounts specified in the certificate the Collector shall have all the powers which a civil court has under the Code of Civil Procedure, 1908, for the purpose of recovery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in trust for him or on his behalf. " The proviso to this section sets out the properties which shall not be liable for such attachment or sale. Learned counsel for the petitioners, in support of his contention, relied on the last portion in the section which reads as : " whether the same be held in the name of the judgement-debtor or by another person in trust for him or on his behalf ", and contended that, but for the provision, even the civil court could not have the power to attach or sell properties held by another person in trust for the judgment-debtor. In the absence of a provision in the Income-tax Act similar to section 60 of the Code of Civil Procedure, it was contended, the properties held in trust by a third party for the defaulter could not be attached and brought to sale. We are unable to accept this contention of the learned counsel. It may be mentioned that under section 82 of the Indian Trusts Act, 1882, a benamidar holds the property for the benefit of the real owner who provided the consideration for the purchase. Section 222 of the Income-tax Act, 1961, and rule 4 of the Second Schedule authorise the Tax Recovery Officer to realise the arrears of tax by att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 possessed of, the property in question. (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. (5) Where the Tax Recovery Officer is satisfied that the property was, at the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hamarbaugwalla, while considering section 4 of the Bombay Prize Competition Tax Act, it was held that when the section required that prize competition shall not be conducted unless a licence inrespect of such a competition has been obtained by the promoter thereof from the Collector, it carried with it also the implied power assumed in the section on the part of the Collector to issue a licence. In V. G. Row v. State of Madras, a Full Bench of this court considered a number of English and Indian cases on this aspect. That case concerned with the interpretation of the Criminal Law Amendment Act as amended in Madras. The Act was amended by the Madras Act 11 of 1950 which came into force on August 15, 1950. Section 16 of the Act as it originally stood expressly empowered the Provincial Government by notification in the Official Gazette to declare any association which in its opinion interfered or had for its object interference with the administration of the law or with the maintenance of law and order or that it constituted a danger to public peace, an unlawful association. Section 15(2)(b) of the Act defined an unlawful association as an association declared to be unlawful by the Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a suit. It is the absence of provisions similar to rules 58 to 63 of Order 21, Code of Civil Procedure, that formed the basis for holding that the Collector had no power to attach and sell the property not registered in the name of the defaulter under the Madras Revenue Recovery Act. In fact the learned judges distinguished the decision in Hiraluxmi Pandit v. Income-tax Officer on the ground that the relevant Revenue Recovery Act of Bihar appears to have contained a provision for preferring a claim to the attached property on the ground that the property belonged to the claimant and not to the defaulter and on the rejection of such a claim, the claimant has also a right of suit. Therefore, far from supporting the case of the petitioner, we are of the view that this decision recognises a right of the Tax Recovery Officer to attach property ostensibly standing in the name of a person other than the defaulter on the assumption made by the department that the property really belongs to the assessee. We have, therefore, no hesitation in holding that properties held benami for the defaulter or held by any person in trust for the benamidar or on his behalf are liable for attachment and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfaction of the Tax Recovery Officer is only an interim satisfaction and the order of attachment itself is an interin order subject to the enquiry under rule 11 and the final orders to be passed thereon. Unless, in the enquiry under rule 11, the Tax Recovery Officer is satisfied that the property was in the possession of some other person in trust for the defaulter he shall release the property from attachment. The satisfaction of the Tax Recovery Officer that the real owner was the defaulter is also subject to any suit that may be filed by the party aggrieved. It may also be noted that the Tax Recovery Officer at the stage of attachment might not be aware of all the competing claims. Only after attachment when a claim petition is made, a full fledged enquiry is made in which any person who is entitled or required to attend before the Tax Recovery Officer may attend either in person or by any legal practitioner who is entitled to practice in any civil court in India. In any such proceeding, the Income-tax Officer also shall have the right of hearing either in person or by a representative. This is provided in rule 62 of the Income-tax (Certificate Proceedings) Rules, 1962. We are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery unusual for there to be judicial determination of the question whether there is a prima facie case. Every public officer who has to decide whether to prosecute or raise proceedings ought first to decide whether there is a prima facie case but no one supposes that justice requires that he should first seek the comments of the accused or the defendant on the material before him. So there is nothing inherently unjust in reaching such a decision in the absence of the other party. Even where the decision is to be reached by a body acting judicially there must be a balance between the need for expedition and the need to give full opportunity to the defendant to see the material against him." Again in Pearlberg v. Varty the House of Lords observed : "Despite the majestic conception of natural justice on which it was argued, I do not believe that this case involves any important legal principle at all. On the contrary, it is only another example of the general proposition that decisions of the courts on particular statutes should be based in the first instance on a careful, even meticulous construction of what that statute actually means in the context in which it was passed. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, the learned counsel for the petitioner did not want to advance any arguments and requested us to leave out of consideration his case relating to these two trade marks. The trade mark bearing Sathukudi belonged to the said Abdul Sathar Sahib in his individual rights. He assigned the same under a registered document dated March 31, 1968, and the learned counsel fur the petitioner also produced the order of the Registrar of Trade Marks registering the same in the name of the petitioner and issuing the trade marks in his name. In respect of this trade mark, in addition to the two grounds already considered by us, the learned counsel for the petitioner raised another contention that the assignment was true and valid and had been validly recognised by the Registrar of Trade Marks and that, therefore, it does not belong to the defaulter any more. But these facts were not brought to the notice of the Tax Recovery Officer. It may be that if the transfer was prior to the attachment, the claimant is entitled to succeed in this contention. It may be a case where the assignment was after service of notice under rule 2 on the defaulter, in which case rule 16 would be attracted. The Tax Rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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