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2018 (4) TMI 780

show that under Section u/s 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. 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. - Do not agree with the said submission as 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 petitionerís attempt to take umbrage of Rule 16(2) is wh .....

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Sharma For the Respondent : Mr. Abhay Jain JUDGMENT (1) Both the Counsel agree that the petitions can be disposed of at this stage. (2) Admit. (3) The petitioner is a Company registered under the Companies Act 1956 having its registered Office at B-3/9, 2nd Floor, Model Town 1, New Delhi. Aggrieved of the demand notice dated 29.09.2009 issued by the Income Tax authorities (respondent No.1) holding the petitioner Company as assessee in default, the petition has been filed before this Court. In order to understand the facts it would be appropriate to quote the order of demand dated 29.09.2009 in verbatim : - OFFICE OF THE TAX RECOVERY OFFICER-2, 22, MOTI DUNGRI, ALWAR No.2550 Date:-29.09.2009 Sh. Ashok Mathur, Dy General 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 .....

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10009 for information. 2. Tax Recovery Officer 1(2), Room No.535, 5th Floor, Aaykar Bhawan, M.K. Road, Mumbai-400020 for inofrmation. Tax Recovery Officer Ranger-2, Alwar (4) The submission which the petitioner seeks to advance is on the basis of the provisions of the Income Tax Act, 1961 (hereinafter to be referred as the Act of 1961 ). (5) In the other writ petition No.8308/2016 the impugned demand notice dated 09.06.2010 is also quoted in verbatim: - OFFICE OF THE TAX RECOVERY OFFICER-2, 22, MOTI DUNGRI, ALWAR No. ITO/TRO-2/2010-11/2070 Date:09.06.2010 M/S Premier Texo Trade Pvt. Ltd. F-62-63, Ricco Industrial area, Behror. 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 includin .....

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re an attachment has already been made under this Schedule, any private transfer or delivery of the property attached or of any interest therein and any payment to the defaulter of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment. (9) However, it is his submission that as per Rule 68B to Schedule Second the sale of immovable property shall be made only within three years from the end of financial year and as per Rule 68B (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 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 .....

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Officer. (12) Per contra, learned Counsel appearing for the respondents submits that Rule 68B does not apply to the subsequent purchaser who with ulterior motives purchased the property in question during the subsistence of attachment. It is further submitted in the reply that a Court receiver had already been appointed by the Bombay High Court relating to the properties of the defaulting Company and in this regard information was sent to RIICO on 13.03.2008 and the RIICO had informed to the Income Tax Authorities that the Corporation had already released its charge over the fixed assets of the Company 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 an .....

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a statement in the prescribed form specifying the amount of arrears due from the assessee (such statement being hereafter in this Chapter and in the Second Schedule referred to as certificate ) and shall proceed to recover from such assessee the amount specified in the certificate by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule-] (a) attachment and sale of the assessee s movable property ; (b) attachment and sale of the assessee s immovable property ; (c) arrest of the assessee 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 concer .....

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id being less than the reserve price or under the circumstances mentioned in rule 57 or rule 58 or where the sale is set aside under rule 61, the aforesaid period of limitation for the sale of the immovable property shall stand extended by one year. (2) In computing the period of limitation under sub-rule (1), the period- (i) during which the levy of the aforesaid tax, interest, fine, penalty or any other sum is stayed by an order or injunction of any court; or (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 .....

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emed to be void as against the claims enforceable under the attachment of the property by Pillai. 6. But Mr Chagla appearing on behalf of Pillai raised an alternative contention. He said that at the time of sale there was another outstanding attachment and the sale in favour of Padmavathi being contrary to such attachment was, in any event, void. It appears that on January 17, 1956, Pillai 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, contra .....

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al Excise Act. Each of them is a special enactment and unless in the operation of the same any conflict arises this aspect need not be examined. In this case no such conflict arises between the corporation and the Excise Department. Hence it is unnecessary to examine this aspect of the matter. (15) A look at the aforenoted provisions show that 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 pr .....

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mpty space once sale deed is void on the day when it was executed i.e.17.11.2006. Merely on account of the period of attachment has lapsed and the attachment having been vacated, it cannot be revived and such claims of the department persist the petitioner attempted to take benefit of Rule 68(3)(4) is not made out. (18) There 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 Sectio .....

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