Court Overturns Tax Officer's Void Order on Property Purchases

The court set aside the Income-tax Officer's order declaring the purchases as void under section 281(1) of the Income-tax Act, 1961. It held that only courts, not tax authorities, can declare transactions void. The petitioners, purchasers of properties, had their sale deeds duly registered after income-tax clearance, establishing their title. The court emphasized that the Officer lacked jurisdiction and exceeded authority in making such declarations, allowing the writ petitions and closing the related cases.

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Issues involved: Declaration of purchases as void u/s 281(1) of the Income-tax Act, 1961 by the Income-tax Officer.

Summary:
The petitioners, purchasers of properties from a common vendor, challenged the Income-tax Officer's order declaring their purchases as void u/s 281(1) of the Act. The petitioners argued that their sale deeds were duly registered after income-tax clearance, transferring title effectively. They contended the Officer lacked jurisdiction to declare the sales null and void, asserting they were bona fide purchasers for value. The court noted the Officer's reliance on u/s 281(1) but emphasized that only courts can declare transactions void, not tax authorities. Citing a recent Supreme Court decision, it clarified that if fraud is suspected, the Revenue must file a suit u/r 11(6) to declare the transfer void u/s 281. Concluding that the Officer exceeded jurisdiction, the court set aside the order affecting the petitioners' property interests, allowing the writ petitions and closing the related cases.

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