TMI Blog2018 (4) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a basic fault in it to the extent that the Rule 16(2) shall be examined on the day when the sale was executed i.e. on 17.11.2006. The attachment was enforceable on that day when the sale was executed between the Company i.e. petitioner and the defaulting company and would be void. The clams of the department being enforceable against the defaulting company the petitioner’s attempt to take umbrage of Rule 16(2) is wholly unfounded. On a conjoint reading of Rule 16(1) and 16(2), it is apparent that while Rule 16(1) puts an embargo on the defaulter or his representative in interest to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer. Rule 16(2) disallows any private transfer or delivery of property attached or of creating any interest therein for any payments to the defaulter of any debt, dividend and other monies contrary to such attachment when all such dealings have been treated as void All cases the Tax Recovery Officers may not have proceeded under 168(b) and has an option to appoint a person as Receiver instead of directing of sale of property in terms of Rule 70 and 71. Admittedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Manger (Documentation) Rajsthan State Industrial Development and Investment Corporation Limited, Udyog Bhawan, Tilak Marg, Jaipur. Sir, Subject:- Arrear demand in the case of M/s Panasia Industries Ltd Plot No.F-62-63, RIICO Industrial Area, Behror, Distt. Alwar-regarding. Please refer to your letter No.U(20)3(-62)/164/94 dated 02.07.2009 and this office letter No.TRO- 2/ALW/2009-10/04 dated 23.06.2009 on the above subject. In this connection you have been reminded many times by this office that a huge demand of ₹ 1, 25, 45, 598 is outstanding against the above named assessee and for this purpose attachment of factory building including plant and machinery of M/s Pan Asia Industries Ltd. were made by way of issue of ITCP-16 on 26.03. 2004 by this office. You have been asked many times to cooperate in the matter so that recovery of tax dues may be made from the assessee. But instead of cooperating with the department you are trying to transfer the property of the above named assessee to M/s Premier Texto Trade Pvt. Ltd. You have been asked vide letter No.TRO-2 ALW/2007-08/45 dated 24.03.2008 that before giving permission to the assessee from your o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Sir, Subject: Recovery of outstanding demand of ₹ 7485523/- for Asstt. Year 91-92 to 94-95 in the case of M/S Pan Asia Industries Pvt. Ltd., Behror- regarding. Above demand is outstanding against the above company since long. To recover the above demand the immovable property situated at plot No.62-63, Ricco Industrial area, Behror has been attached by this office on 26.03.2004. Now it has been informed that your Company has taken possession over the immovable properties including the above said plot and possession over the immovable properties including the above said plot and running therein business activities. Since the above said immovable properties already stand attached by this Office you are an assessee in default in respect of above outstanding demand of ₹ 7485523/- plus interest. Accordingly you are requested to deposit the above demand within 3 days of the receipt of this letter failing which the above said immovable property shall be taken in possession by the Department and coercive measures of recovery including attachment of your Bank account etc. shall also be taken. For this purpose you may attend before the undersigned on 15.06.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of sub-rule (1), the attachment order in relation to the said property shall be deemed to have been vacated on the expiry of the time of the limitation specified under this rule. Thus, it is his submission that as the immovable property which was purchased by the petitioner-Company from Pan Asia (the defaulting Company) was made on 17.11.2006 and the sale of the immovable property by the respondent i.e. the Tax Recovery Officer was not made as prescribed under 68B within three years from the end of the financial year in which the order giving rise to the demand of tax for the recovery of which the immovable property has been attached; the attachment order would be deemed to have been vacated on the expiry of three years in other words after the expiry of three years i.e. from 31.03.2004 upto 31.3.2007, the attachment stood vacated on 31.03.2007 and the sale deed executed in favour of petitioner would remain intact and cannot be termed as void after 31.03.2007. (10) Learned Counsel also points out that the Pan Asia and the Tax Recovery Officer entered into a one time settlement. He submits that so far as RIICO is concerned, they were not justified in withholding the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany after the one time settlement arrived at between the defaulting Company and the RIICO. The Income Tax Officer was also informed by the RIICO about the one time settlement between the defaulting Company of the Corporation. The RIICO had also been been asked not to grant and recognize any sale of the property or transfer of title unless No Objection is received from the Office. Learned Counsel submits that in terms of Section 281 of the Act of 1961 any transfer of property where there is any pendency of any proceedings under this act, would be void as against any claim in respect of any tax or any other sum applied by the assesee. Further it is submitted that as per Rule 68(B)(i) the limitation of three years would be only from the date the demand of any tax has become conclusive under the provisions of Section 245(I) or as the case may be final in terms of provisions of Chapter 40 and, therefore, the same would not apply. Learned Counsel further submits that in terms of Section 64 of the CPC a private transfer by judgment debtor of the property contrary to the claims of the decree holder is void and submits that the judgment cited by the Counsel for the petitioner are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and his detention in prison; (d) appointing a receiver for the management of the assessee s movable and immovable properties. [Explanation.-For the purposes of this sub-section, the assessee s movable or immovable property shall include any property which has been transferred, directly or indirectly on or after the 1st day of June, 1973, by the assessee to his spouse or minor child or son s wife or son s minor child, otherwise than for adequate consideration, and which is held by, or stands in the name of, any of the persons aforesaid; and so far as the movable or immovable property so transferred to his minor child or his son s minor child is concerned, it shall, even after the date of attainment of majority by such minor 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), notwithstanding that proceedings for recovery of the arrears by any other mode have been taken.] Schedule Second Rule 2 2. [When a certificate has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (ii) during which the proceedings of attachment or sale of the immovable property are stayed by an order or injunction of any court; or (iii) commencing from the date of the presentation of any appeal against the order passed by the Tax Recovery Officer under this Schedule and ending on the day the appeal is decided, shall be excluded : Provided that where immediately after the exclusion of the aforesaid period, the period of limitation for the sale of the immovable property is less than 180 days, such remaining period shall be extended to 180 days and the aforesaid period of limitation shall be deemed to be extended accordingly. (3) -------------- (4) Where the sale of immovable property is not made in accordance with the provisions of sub-rule (1), the attachment order in relation to the said property shall be deemed to have been vacated. 70. Where immovable property is attached, the Tax Recovery Officer may, instead of directing a sale of the property, appoint a person as receiver to manage such property. Powers of receiver. 71. (1) Where any business or other property is attached and taken under management under the foregoing rules, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had in execution of a decree obtained in Suit No. 55 of 1953, attached the property, but that attachment was removed on March 23, 1957, on satisfaction of the decree. By Section 64, Code of Civil Procedure, the attachment is only void as against all claims enforceable under the attachment, and it is not void generally. Since the attachment effected on January 17, 1956 was removed, any private alienation contrary to such attachment cannot be regarded as void for there are no claims enforceable under the attachment, dated January 17, 1956. (11) In case of Balkrishan Gupta cited (supra) the Apex Court held as under : - 30.---------------What is forbidden under section 64 of the Code of Civil Procedure is a private transfer by the judgment-debtor of the property attached contrary to the attachment, that is, contrary to the claims of the decree holder under the decree for realisation of which the attachment is effected. A private transfer under section 64 of the Code of Civil Procedure is not absolutely void, that is, void as against all the world but void only as against the claims enforceable under the attachment. Until the property is actually sold, the judgment-debtor r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 68B if the sale is not executed within a period of three years after the attachment, the same shall be deemed to have been vacated. However, Rule 48 mentions attachment of immovable property of a defaulter prohibiting the defaulter from transferring or charging the property in any way and prohibiting all persons from taking all benefits under such transfer or charge fees. Thus, if the facts of the present case are taken into consideration, it is apparent that Section 281 of the Act of 1961 would not come into operation to declare the sale and transfer as void since the provision is only with reference to the pendency of the proceedings before the service of notice under Rule 2 of Second Schedule. (16) Learned Counsel for the petitioner relying upon Rule 16(2) has submitted that since it was a private transfer or delivery of a property attached, the same could be void as against of claimant enforceable under the attachment. However, as the attachment itself cannot be said to be enforceable after a lapse of three years as provided under 68(B)(4), the notices issued to the petitioner by the respondents were unjustified. (17) I do not agree with the said submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is other aspect which also needs to be noted. Rule 68(B)(iv) comes into operation where the sale of immovable property is not made in terms of Section 68(b)(1). However, it is seen that in all cases the Tax Recovery Officers may not have proceeded under 168(b) and has an option to appoint a person as Receiver instead of directing of sale of property in terms of Rule 70 and 71. Admittedly the Receiver has already been appointed on the properties of the defaulting Company which includes the property situated at Alwar thus, there was no occasion for the Tax Recovery Officer to proceed with the sale in terms of 68(b) and the argument of the petitioner relating to the same not being void on account of vacation of the attachment is not made out and in such circumstances, the sale executed in favour of the petitioner has to be treated as void. (19) Even as per Section 222 there is an option for either to proceed with the charge sheet and sale by the Tax Recovery Officer or to appoint a Receiver on the property. However, in view of the fact that Receiver had already been appointed by the Bombay High Court, it is to be presumed that the attachment and sale could not be proceeded furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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