TMI Blog2021 (6) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... void as against any claim in respect of any tax or any other sum payable by an assessee as a result of completion of the said proceedings or otherwise. Since Section 158 BD of the Income Tax Act, 1961, proceedings were pending for the Block Assessment Period from 01.04.1988 to 15.12.1998, all transfers are void under Section 281 of the Income Tax Act, 1961. In the facts of the case what is evident is that, the so-called transfer of undivided share in the land by the two brothers namely the paternal uncles of the petitioner in favour of the petitioner s father has not been proved. Such transfer would been contrary to Section 281 inasmuch as notice under Section 158BD had been initiated against Late Milapchand Dadha and Sons (HUF) as early as 09.07.2001. The so-called family arrangement pursuant to which transfers were allegedly affected are to be declared as void. As far as, the arrears of tax from M/s.Dadha Estates (P) Ltd is concerned, it is not clear on what basis the Income Tax Department had issued the impugned notice inasmuch as the said company is not the owner of the property. Encumbrance Certificate dated 20.02.2009 filed along with the typed set of papers seem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the petitioner is not only in possession of the property but is also receiving rents from the tenants and therefore the question of attaching the property under the provisions of Section 226(3) of the Income Tax Act, 1961 does not arise. 4. The learned counsel for the petitioner submitted that the property in question is a commercial complex located at New No.365, Old No.133, Mint Street, Chennai 600 079. The commercial complex was built on the immovable property that originally belonged to his grandfather viz., Late.Milapchand Dadha who had divided the property in favour of his three sons viz., M.Mahendrachand Dadha, M.Mahipalchand Dadha and M.Maherchand Dadha on 31.07.1981 by a deed of declaration and late Milapchand Dadha constituted a HUF with his sons. The petitioner is the son of M.Maherchand Dadha. 5. The learned counsel for the petitioner submitted that under a lease deed dated 01.03.1985, the said property was leased to M/s.Dadha Estates (P) Ltd., with the knowledge of the Income Tax Department for a period of 15 years. The rental period was from 1985 to 2002. Income Tax Returns were filed since 1985. On 30.06.1986, Form 34A was filed for issuance of a Tax Clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red Family Settlement Deed dated 12.11.2002 signed between the descendants of M.Maherchand Dadha therein, i.e., the father of the petitioner and two paternal uncles of the petitioner. It was agreed the value of the property was ₹ 78,00,000/- and that the petitioner s father would transfer a sum of ₹ 26,00,000/- each to the two brothers. 7. It is submitted that on 12.11.2002, the Memorandum of Understanding was entered between three brothers i.e., the son of late Milapchand Dadha along with M/s.Dadha Estates (P) Ltd. It was mutually agreed upon that i) Maherchand Dadha the father of the petitioner had bought balance of 2/3rd shares in land belonging to his brother Mahendrachand Dadha and Mahipalchand Dadha , and ii) M/s Dadha Estates would transfer its lease rights to Pokhran Investments Pvt., Ltd., However, there is no sale deed evidencing sale by M.Mahendrachand Dadha and M.Mahipalchand Dadha to petitioner s father M.Maherchand Dadha. 8. The learned counsel for the petitioner drew my attention to Para 10 of the counter filed by the respondent which reads as under:- 10(a) that in pursuance to petitioner petition dated 03.07.2009, the petitioner was c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent yet another detailed representation to the respondent. The respondent replied on 28.05.2010 and sought for details of the ownership of the property and the agreements executed. 13. It is submitted that the petitioner appeared before the respondent and produced all the required documents and established that the petitioner was the absolute owner and therefore, the tenants cannot be asked to pay the rent for the arrears of the tax of M/s.Dadha Estates Pvt. Ltd. 14. On 19.07.2010, the petitioner s request was rejected by the respondent on the ground that Agreements dated 11.10.2002 and 12.11.2002 were unregistered documents. The respondent once again directed the petitioner to produce the relevant documents to establish ownership over the property. Again, the petitioner produced all the relevant documents to establish ownership of the property. 15. The learned counsel for the petitioner submitted that the attachment proceedings were contrary to provision of the Income Tax Act, 1961. A reference was made to the decision of the Hon'ble Supreme court in Tax Recovery Officer II Vs. Gangadhar Vishwanath Ranade , (1998) 6 SCC 658 : (1998) 234 ITR 188 (SC), wherein, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of himself and all other creditors under Section 53 of the Transfer of Property Act for a declaration that the transfer was void as it was in fraud of the creditors. 12. In the light of this discussion about the provisions of Order XXI Rules 58 to 63, if we examine Rule 11(4) of the Second Schedule to the Income-tax Act, it is clear that the Tax Recovery Officer is required to examine whether the possession of the third party is of a claimant in his own right or in trust for the assessee or on account of the assessee. If he comes to a conclusion that the transferee is in possession in his or her own right, he will have to raise the attachment. If the Department desires to have the transaction of transfer declared void under Section 281, the Department being in the position of a creditor, will have to file a suit for a declaration that the transaction of transfer is void under Section 281 of the Income-tax Act. 13. In the present case the Tax Recovery Officer could not have examined whether the transfer was void under Section 281 of the Income-tax Act. His adjudication of the transfer as void under Section 281 is without jurisdiction. The Tax Recovery Officer has rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department submits that the impugned attachment notice was issued as early as 22.03.2007 and has been challenged in this writ petition belatedly suppressing material facts. He further submits that after the impugned attachment notice dated 22.03.2007 was issued, there were several rounds of communication exchanged between the Income Tax Department and the petitioner himself. Under such circumstances, by a letter dated 28.05.2010, in response to the petitioner letter dated 03.07.2009, documents were called for from the petitioner to substantiate his rights in respect of the property which was allegedly settled prior to the impugned notice dated 22.03.2007. A specific reference was made to letter dated 28.05.2010 followed by another letter dated 16.11.2011. However, without furnishing any of the documents, the petitioner has filed the present Writ Petition. It is therefore submitted that the present Writ Petition is liable to be dismissed. 19. The learned counsel for the respondent also drew my attention to counter filed by the respondent wherein it has been mentioned that the petitioner's grandfather i.e., Late.Milapchand Dadha and his sons which included the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ather) were the Directors, notice under Section 158 BD had been issued on 09.07.2001 and duly served on 13.07.2001 for the block period from 01.04.1988 to 15.12.1998 and the assessment was completed on 31.01.2007. It is further submitted that proceedings were initiated for the Department in both the cases on the above date and were pending during the relevant time. It is further submits that purported family arrangements pursuant to which the property was allegedly transferred in favour of the petitioner based is the family arrangements made with a view to circumvent to recovery proceedings initiated with the Income Tax Department and therefore he prayed for dismissal of the present writ petition. 22. I have considered the arguments advanced by the learned counsel for the petitioner and the respondent/Income Tax Department. I have also perused the impugned communication dated 22.03.2007 which has been challenged belatedly in the year 2014 on 10.09.2014. On this score itself, the writ petition is liable to be dismissed for latches. Be that as it may, it appears that the petitioner was in communication with the office of the respondent questioning the basis of the impugned communi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show that the petitioner s paternal grandfather late Milapchand Dadha died on 12.10.1976 who had carried on business as the kartha of a Hindu Undivided Family (HUF) consisting of his three sons namely, 1) M.Mahendrachand Dadha; 2) M.Milapchand Dadha and 3) the petitioner s father M.Maherchand Dadha and their respective family and that the business was carried by them after the death of late Milapchand Dadha and the income of HUF was assessed to tax as M/s.Milapchand Dadha and Sons (HUF) and that the said HUF was in arrears of tax for the Block Assessment Period from 01.04.1988 to 15.12.1998. 28. Though the petitioner claims that for his paternal uncle s namely, 1) M.Mahendrachand Dadha and 2) M.Milapchand Dadha had transferred their undivided share in the land in favour of his father namely, M.Maherchand Dadha pursuant to which the HUF consisting of the petitioner s father, mother and brother settled the property in favour of the petitioner vide Registered Settlement Deed dated 11.06.2007, there are no records to show that there was a transfer of 2/3rd of UDS in the land where Dadha Complex, New No.365, Mint Street, Sowcarpet, Chennai-600 079 is located. 29. As per section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued the impugned notice inasmuch as the said company is not the owner of the property. 35. That apart the Encumbrance Certificate dated 20.02.2009 filed along with the typed set of papers seems to indicate that the same property is under a charge in favour of Andhra Bank. M/s.Dadha Brothers Ltd and the petitioner s father are shown to be party to the transactions and defaulted and proceedings were initiated before the Debt Recovery Tribunal, Hyderabad in O.A.No.146 of 1996 by the lending bank and they were default of ₹ 82,58,660/- and that a Recovery Certificate dated 10.04.2002 had been issued. 36. These factors raises serious doubt as to the ownership over the property in respect of which the petitioner is now seeking to exercise an exclusive right as an owner. There are several disputed questions of facts which remain unanswered and there it cannot be unravelled in the course of a summary proceedings under Article 226 of the Constitution of India. The petitioner has to therefore necessarily approach a civil court in accordance with law to establish his rights, if any, over the property. 37. Prima facie, it appears the petitioner is fighting a proxy battle for a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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