Section 281 transfer rules operate automatically, with disputed transfers void only against the Revenue for tax recovery.

Section 281 of the Income-tax Act operates by force of law when a transfer is made during pending proceedings or before the prescribed recovery notice, and it does not render the transfer void ab initio. The transfer is void only against the Revenue to the extent of the tax liability. A separate adjudicatory order under section 281 is not a statutory precondition for the Revenue to proceed against the property, though such an order may evidence the department's view that the asset remains available for recovery. Disputes over the transfer and competing claims may be raised before the Tax Recovery Officer under the Second Schedule.

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Issues: Whether section 281 of the Income-tax Act required a separate adjudicatory order, and whether the impugned order declaring the transfer void was jurisdiction.

Analysis: Section 281 is declaratory in nature and operates by force of law where a transfer is made during the pendency of proceedings or before the prescribed recovery notice. The provision does not make the transfer void ab initio, but makes it void against the Revenue to the extent of the tax liability. A formal order under section 281 is not a statutory precondition to the Revenue's right to proceed against the property, though such an order may evidence the departmental intention to treat the property as available for recovery. Any dispute as to the transfer and the competing claims of parties may be raised before the Tax Recovery Officer under the Second Schedule, with further recourse as provided by law.

Conclusion: The challenge that the Income-tax Officer lacked jurisdiction to pass the order was not accepted, and the order was not quashed.

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