TMI Blog2021 (4) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Section 147 for the Assessment Years 2005-2006 to 2008-2009 and under Section 144 of the Income Tax Act for the Assessment Years 2009-2010 and 2010-11 are required to be seen. The machinery prescribed under the provisions of the Income Tax Act, 1961 to deal with situation arising out of wrongful attachment of property for the buyer is to approach Tax Recovery Officer-VII under Rule 11 of the Schedule-II to the Income Tax Act, 1961. Therefore, it is the second respondent Tax Recovery Officer-VII who was the competent authority to pass proper order under the circumstances. Further, as per Section 281 of the Income Tax Act, 1961, where an assessee creates a charge or parts with possession by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever of any asset by an assessee in favour of any other person during the pendency of any proceeding under the Act is void. Proviso to the said Section contains an exception. That exception provided in clause (i) applies to a situation where there is transfer for adequate consideration and without notice of the pendency of such proceedings or, as the case may be, without notice of such tax or sum payable by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondents income tax department. There is no representation on behalf of the third and fourth respondents. 2. The present Writ Petition has been filed for a writ of certiorarified mandamus to call for the records of the proceedings of the first respondent Principal Commissioner of Income Tax-6, Chennai-34 in C-No 6126/PCIT/6/2016-17 dated 26.10.2016 and to quash the same and consequently to direct the first and second respondents to remove the charge and lift the attachment created in respect of the immovable property at Plot No.10A, Door No.10C, Achuthan Nagar, 2nd Steet, Ekkaduthangal, Chennai 600 032. 3. By the impugned order, the first respondent has declined to lift the order of attachment in Form 16 of the property purchased by the petitioner from M/s.Sally Thermo Plastic India Limited purportedly contrary to Section 281 of the Income Tax Act, 1961 vide order dated 28.11.2013 passed by the second respondent Tax Recovery Officer. In the impugned order, it has been concluded that the attachment of the property still exists in the name of the said company and the tax arrears was still outstanding in the case of the said company. The impugned order further states that in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Income Tax Officer and to the second respondent Tax Recovery Officer-VII. 10. As the representation of the petitioner to the second respondent Tax Recovery Officer-VII and to the Income Tax Officer did not evoke any response, the petitioner approached the Income Tax Ombudsman on 07.03.2016. By a communication dated 28.06.2016, the Assistant Commissioner of Income Tax informed the Income Tax Ombudsman that the third respondent was in arrears of tax for the Assessment Years 2005- 2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010 and 2010-2011 and the outstanding amount of ₹ 2,87,99,555/- was due from the third respondent and therefore same was certified by the second respondent Tax Recovery Officer-VII vide Attachment Order dated 28.11.2013 . 11. By another communication dated 11.07.2016, the second respondent Tax Recovery Officer-VII also informed the Income Tax Ombudsman that enquiries were being conducted to verify the facts of the case and how the interest of the revenue can be protected with respect of arrears of tax to be collected from the third respondent. 12. The Income Tax Ombudsman by a communication dated 14.07.2016 thereafter merely forwarded the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the following decisions:- i. Tax Recovery Officer Vs. Gangadhar Vishwanath Ranade , (1998) 234 ITR 188. ii. Noor M. Saied Vs. Commercial Tax Officer, Chennai , MANU/TN/4731/2017. iii. Rukmani Vs. Deputy Commercial Tax Officer I , MANU/TN/2674/2012 iv. D.Senthil Kumar Others Vs. The Commercial Tax Officer Others , 2006-3-L.W.627. v. C.D.Gajendran Vs. Assistant Commissioner (CT) Others, order dated 30.01.2020 passed by this Court in W.P No.29253 of 2016. vi. Tvl.K.Senthamil Selvan Vs. The Deputy Commercial Tax Officer , order dated 28.02.2020 passed by this Court in W.P No.39939 of 2005 and batch. vii. ICICI Bank Ltd., vs Tax Recovery Officer (2019) 105 taxmann.com 257 (Andhra Pradesh and Telengana) viii. T.Senthil Kumar vs Commissioner of Income Tax (2015) 57 taxmann.com 177(Madras) 18. The learned Senior Standing Counsel for the first and second respondents submitted that the attachment was perfectly in order in as much as the third respondent was in arrears of payment of tax for the Assessment Years 2005-2006 to 2010-11 for a total amount of ₹ 2,87,99,555/-. It is submitted that the purchase of the property by the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Singh vs Union of India (2011) 200 Taxman 31(Punjab Haryana). iv. Sri Sivalaya Advances vs Tax Recovery Officer, Madurai, (2018) 93 Taxman.com 143 (Madras). 23. The learned Senior Standing Counsel for the first and second respondents further submitted that in the said decision, it was held that Section 281 deals with different circumstances and Rule 16 deals with a different situation. He further submitted that Rule 16 of the Schedule-II to the Income Tax Act, 1961 declares sale made by a defaulter to be void after receipt of the notice under Rule 22. Hence, proviso to the aforessaid Section deals with the alienation made by the assessee without notice of the proceeding against him under the Act. Hence, question of harmonizing Section 281 read with Rule 61 does not arise under the circumstances. The learned Senior Standing Counsel for the first and second respondents submitted that as against an order of attachment, remedy is available for the petitioner to approach the second respondent Tax Recovery Officer-VII under Rule 11 of the Schedule-II to the Income Tax Act, 1961 and therefore the Writ Petition is liable to be dismissed. 24. I have considered the arguments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the said proceeding or otherwise: Provided that such charge or transfer shall not be void if it is made i. for adequate consideration and without notice of the pendency of such proceeding or, as the case may be, withoutnotice of such tax or other sum payable by the assessee; or ii. with the previous permission of the [Assessing] Officer. (2) This section applies to cases where the amount of tax or other sum payable or likely to be payable exceeds five thousand rupees and the assets charged pr transferred exceed ten thousand rupees in value. Explanation.-In this section, assets means land, building, machinery, plant, shares, securities and fixed deposits in banks, to the extent to which any of the assets aforesaid does not form part of the stock-in-trade of the business of the assessee. 28. In Tax Recovery Officer Vs. Gangadhar Vishwanath Ranade , (1998) 234 ITR 188 : (1998) 6 SCC 658 the court held as under:- 8. Section 281 declares as void any transfer made by the assessee during the pendency of proceedings under the Act, with the intention to defraud the Revenue. The powers of the Tax Recovery Officer, however, under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be set aside as it has not considered any of the pleas of the petitioner. 30. At the same time, when law mandates a particular thing to be done in a particular manner, it has to be done in the said manner. This principle is recognized by the Hon ble Supreme Court in State of Uttar Pradesh Vs. Singhara Singh and Others , AIR 1964 SC 358. This principle has been reiterated by the Hon ble Supreme Court in several decisions. 31. Rule 11 of the Schedule-II of the Income Tax, Act 1961 prescribes a method for a proper redressal of all the issues by a Tax Recovery Officer-VII, namely the second respondent herein. Therefore, the claim of the petitioner that the provisional attachment and the consequential final attachment pursuant to assessment orders dated 30.03.2013, 30.12.2011 and 31.03.2013 purportedly passed under Section 144 read with Section 147 for the Assessment Years 2005-2006 to 2008-2009 and under Section 144 of the Income Tax Act for the Assessment Years 2009-2010 and 2010-11 are required to be seen. 32. The machinery prescribed under the provisions of the Income Tax Act, 1961 to deal with situation arising out of wrongful attachment of property for the buyer is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The issue as to whether the case of the petitioner would fall within the proviso to Section 281 of the Income Tax Act is also to be decided by the second respondent Tax Recovery Officer-VII. Therefore, while setting aside the impugned order and the observation contained therein, I remit the case back to the said second respondent Tax Recovery Officer to pass appropriate orders on merits in accordance with Rule 11 of the Schedule-II to the Income Tax Act, 1961. 38. The petitioner would require copies of the assessment orders dated 30.03.2013 purportedly passed under Section 144 read with Section 147 for the Assessment Years 2005-2006 to 2008-2009 and order dated 31.12.2011 under Section 144 for the Assessment Year 2009-2010 order dated 31.03.2013 under Section 144 for the Assessment Year 2010-2011. 39. Therefore, the Deputy Commissioner of Income Tax, Company Circle IV(1), Chennai within whose jurisdiction the third respondent was assessed is suo motu impleaded as fifth respondent. 40. In the result, the impugned order dated 26.10.2016 bearing reference C.No.6126/PCIT-6/2016-17 passed by the first respondent Principal Commissioner of Income Tax-6 is quashed and the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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