TMI Blog1997 (1) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... n pursuant to the said agreement to sell, and later sale deeds were also executed. Thus, according to them, they were in possession of the entire property, which included the said 1/2 share which was attached. It is their case that they are in possession as absolute owners and, therefore, the said property was not liable for the claim against the defaulters. The first respondent, the Tax Recovery Officer, by annexure "B" order, dismissed their objection. In this writ petition, the contention of the first respondent is that the property did not belong to the aforesaid firm, but it originally belonged to Mulla Akbarali and his brother, Mulla Fidali. Mulla Fidali had two sons--Hatimali and Adamali, the defaulters. Akbarali was having 1/2 share and Fidali was having the balance 1/2 share in the whole property. After the death of Mulla Fidali, his sons, Hatimali and Adamali, inherited 1/4 share each in the said property. Thus, according to the first respondent, the defaulters, Hatimali and Adamali, were having 1/2 share in the property and that the said 1/2 share was attached for satisfying the claim of arrears of income-tax due from the aforesaid two defaulters. As already indicated, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent, and Shri A. S. Bobde on behalf of respondents Nos. 2 to, 8, on the other hand, sought to support the impugned order maintaining that the first respondent has got jurisdiction to see whether the petitioners had locus to question the attachment. It is also maintained by them that as the petitioners, who were the claimants before the first respondent, since were not in possession of the said property on the date of rule 2 notice, they have no locus to agitate the validity of the order of attachment under rule 11 of the Rules. Therefore, according to learned counsel for the respondents, it was not necessary in the said context to adjudicate possession. As already noted, the impugned order, annexure "E", reveals, the first respondent rejected the claim by the petitioners chiefly on two grounds, viz., the sale deeds violate section 230A of the Income-tax Act, and since the vendor or petitioners had no title to convey, the objections to the attachment are "redundant". The first respondent also is of the view that section 281 of the Income-tax Act has no application as the vendors are not the defaulters. In the context of the aforesaid factors and arguments, it would be convenient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration [1991] 189 ITR 270 (Mad) R. Lokeswari v. State of Tamil Nadu [1992] 196 ITR 501 (Mad) and A. Mohan v. Dr. Vivekanandan [1994] 206 ITR 634 (Mad). The principle laid down in these pronouncements certainly will support the argument of learned counsel Shri V. C. Daga, that inasmuch as the value of the property that is sought to be transferred by the individual sale deed did not exceed Rs. 50,000, it was not necessary to produce certificate under section 230A of the Income-tax Act. Therefore, it is not possible to uphold the view of the first respondent that the sale deeds are void as they violated the provisions of section 230A of the Income-tax Act. Even in cases where there is violation of section 230A of the Act, such transaction would be void only against the claim of tax liability. The Karnataka High Court in the decision in P. B. Shankar v. First ITO [1981] 128 ITR 431 held, the effect of the section is that, in cases covered by the said provision, registration of the document without the certificate enjoined in section 230A(1) of the Act would not prejudicially affect the recovery of existing tax liability. The impugned order shows that the Tax Recovery Officer has go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion which the attaching creditor claims is voidable at his instance may be expressed or enforced. The argument would only establish that if the court investigating claims under Order XXI, rule 58, etc., conformed strictly to the terms of those provisions the transferee under a real sale would succeed in those proceedings and he would be a defendant and need not be a plaintiff in the suit to set aside the summary order under Order XXI, rule 63. This line of reasoning does not take into account at least the following possibilities : (1) The claim or objection by the transferee may be rejected, not on the merits but because it has been designedly or unnecessarily delayed (vide Order XXI, rule 58, Civil Procedure Code). It is certainly not the contention of learned counsel that when there is a rejection of a transferee's claim under this provision the order of rejection is any the less final and has not to be set aside by a suit contemplated by Order XXI, rule 63 of the Civil Procedure Code, in order to overcome the effect of that finality. (2) The court making the summary enquiry might come to an erroneous conclusion that the transfer is sham and not real or that the transferee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises in a claim proceeding that involves adjudication and in that regard, relying on the decision in C. Abdul Shukoor Saheb v. Arji Papa Rao, AIR 1963 SC 1150, it was held that the Tax Recovery Officer in a proceeding under rule 11 of the Second Schedule cannot entertain the claim on behalf of the taxation authorities that the transfer by the assessee is void on the ground that it was with the intention of defrauding the Revenue while proceedings against him were pending. Thus, now it is clear that section 281 of the Act cannot be entertained in a summary proceeding under rule 11 of the Second Schedule. The above conclusion is reached on account of the nature of the proceedings under rule 11 of the Second Schedule. As noticed the Tax Recovery Officer reached the conclusion that section 281 of the Act is not applicable not because the summary enquiry under rule 11 of the Second Schedule does not permit such a contention to be gone into, but because of his finding that the transfer is not by the defaulter. He has also found that the firm on behalf of which Akbarali effected the transfer has no title to the property. In the decision in Gangadhar Vishwanath Ranade's case [1989] 177 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 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 claim. (6) Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute ; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive. " A reading of the above rule clearly would show that the claimants or the objectors must adduce evidence to show that at the date of service of notice under Schedule II, he had some interest in, or was possessed of the property. Sub-rule (4) of rule 11 enjoins that where the Tax Recovery Officer is satisfied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s own account but on account of or in trust for the claimant. (See Satkari Mandal v. Tirtha Narain, AIR 1915 Cal 116), or the claimant may prove his own possession. It is only in such cases that a claim for removal of attachment can succeed. " This court in the case of Ganpati Ram Bhande v. Baliram Raghunath Jadhav, AIR 1974 Bom 155, with reference to the nature of the enquiry and also as to the interest of the claimant, at page 160, held that : " It requires to be emphasised that the direction of the investigation, which the court has to carry out, points to possession being the criteria. It is, of course, possible that in the course of such an investigation as to who is in possession of the property subjected to attachment, the question of some legal right or interest or title may also arise and if such legal right affects the determination of the question as to who is the real person in possession in fact or in law, then such a legal right or interest will naturally have to be taken into account. But it is also settled law that complicated questions as to title are not to be gone into under the summary procedure of the investigation under Order XXI, rule 58. " In that case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , yet in discerning whether the possession is on behalf of the defaulter the said question too can arise incidentally. The impugned order does not advert to the question of possession at all ; much less as to the character of possession. Instead, as indicated early, the Tax Recovery Officer proceeded to adjudicate the title. Confronted with that situation, learned counsel for the first respondent as well as Shri A. S. Bobde, for respondents Nos. 2 to 8, attempted to maintain that though complicated questions as to title cannot be gone into, the Tax Recovery Officer is entitled to peruse the record and come to the conclusion as to the title. This cannot be accepted as the decision referred to earlier does not support the aforesaid argument. Then it was urged that the petitioners have no locus to maintain an application under rule 11. The contention is based on the claim that the impugned transfer was after the service of notice under rule 2. The scheme of the Act would reveal that the Assessing Officer has to issue certificate. Thereafter, the Tax Recovery Officer issues demand notice under rule 2. As has already noticed, the interest or possession under rule 11 has to be enquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Ganpati Ram Bhande v. Baliram Raghunath Jadhav, AIR 1974 Bom 155, the same would amount to failure to exercise the jurisdiction vested in him. Shri Bobde, learned counsel for respondents Nos. 2 to 8, made an attempt to support the order of the Tax Recovery Officer contending that a finding by the Tax Recovery Officer that section 281 of the Act is not attracted as there is no valid transfer by the defaulter would tantamount to a finding that the claimant's possession, if any, is not on their own right. This argument cannot hold good for the simple reason that the scope of the enquiry under rule 11 of the Second Schedule is limited and complicated questions of title cannot be gone into under the said rule. Apart from the same it is the settled position that when an authority is invested with quasi-judicial function under the statute, the said power has to be exercised in the manner provided for in the statute, and the authority has no jurisdiction to depart from the procedure laid down by the said statute. In the decision in the case of State of Uttar Pradesh v. Singhara Singh, AIR 1964 SC 358, the Supreme Court observed that : " In Nazir Ahmed's case, 63 Ind. App. 372, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of sub-rule (6) of rule 11 of the Second Schedule, since there is effective and efficacious remedy of suit, this writ petition itself is not maintainable. Mr. Daga, learned counsel for the petitioners, relied on the decision in the case of L. Hirday Narain v. ITO [1970] 78 ITR 26, AIR 1971 SC 33, to contend that a writ petition cannot be dismissed on the ground that there is alternate remedy after the matter is heard. In the said decision, the Supreme Court observed that a writ petition cannot be dismissed as not maintainable merely on the ground of existence of alternate remedy of revision is available after the court has entertained a writ petition and heard it on the merits. Mr. Daga further relied on the decision in Dr. Smt. Kuntesh Gupta v. Management of Hindu Kanya Mahavidyalaya, AIR 1987 SC 2186, to contend that when the challenge is based on jurisdiction of the authority, the existence of alternate remedy cannot be a bar for entertaining a writ petition under article 226 of the Constitution of India. Therefore, simply because there is alternate remedy by way of suit under sub-rule (6) of rule 11 is available, the writ petition cannot be dismissed as not maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted fact that Hatimali and Adamali and after the death of Hatimali his children, were made partners who are referred to as partners in the impugned order itself, since the defaulters were Adamali and Hatimali, their 1/2 share in the partnership property is liable to be proceeded against as enjoined under rule 32 of the rules. But the impugned order does not advert to the said aspect presumably because the order proceeded as if the property is co-ownership property and it did not belong to the firm. All that is to be observed in this connection is, this alternate case was not considered by the first respondent. Now when it is demonstrated that the order of the first respondent is infirm as it did not advert to the question of possession and, in that context, had no occasion to consider the character of the possession also the order is liable to be set aside. As a consequence, ordinarily the matter has to be remitted back to the first respondent for going into the question afresh. Learned counsel, Shri Daga, maintained that in the particular facts and circumstances, a remand to the first respondent is not called for. According to learned counsel, since the possession of the writ pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on claimed by the writ petitioners. The said argument cannot be brushed aside as unsustainable ; when the said plea is read the same maintains only the possession of the defendants as a co owner. Therefore, the investigation as to possession is open in the context of rule 11 of the Second Schedule. Once it is said that complicated question of title cannot be gone into, that cannot mean that the authority who is to adjudicate the question under rule 11 is incompetent to go into the question of possession and the character of the possession in the context of the materials placed before him. As per rules 11(4) and 11(5) of the Second Schedule, the Tax Recovery Officer has to "satisfy" as to who is in possession and whether such possession is independently of the defaulter. This is so, as rule 11 mandates, the Tax Recovery Officer has to satisfy whether the possession is for the defaulter or independently of him. And that satisfaction has to be reached from the materials placed before him. The question of title could arise only incidentally in discovering the said character of possession and to that extent the Tax Recovery Officer is competent to go into the said aspect. In a similar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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