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        Case ID :

        1990 (11) TMI 100 - HC - Income Tax

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        Mandatory notice to third parties defeats forfeiture where property is alleged to be held on behalf of the noticee. Forfeiture cannot be sustained where the record and opportunity to prove inheritance are inadequate, because a property cannot be treated as the noticee's ...
                          Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
                            Provisions expressly mentioned in the judgment/order text.

                                Mandatory notice to third parties defeats forfeiture where property is alleged to be held on behalf of the noticee.

                                Forfeiture cannot be sustained where the record and opportunity to prove inheritance are inadequate, because a property cannot be treated as the noticee's self-acquired asset merely from failure to prove a recorded owner's lineage. Where property is alleged to be held by a wife or son on behalf of the noticee, section 6(2) requires service of the notice on that other person as well; without such service, no binding finding or forfeiture can stand against their interest. The material also did not clearly establish ownership of the cow, and the kirana business was treated as being carried on by the son on behalf of the appellant, making notice service mandatory. The forfeiture order was therefore set aside and remitted for fresh consideration after proper notice.




                                Issues: (i) whether the forfeiture of the landed property claimed to be inherited could be sustained on the material on record; (ii) whether property standing in the name of the appellant's wife could be forfeited without serving her with a copy of the notice under section 6(2); and (iii) whether the movable properties, namely the cow and the kirana business standing in the name of the appellant's son, could be forfeited without compliance with section 6(2).

                                Issue (i): Whether the forfeiture of the landed property claimed to be inherited could be sustained on the material on record.

                                Analysis: The landed property did not stand in the appellant's name in the revenue records. The reasoning adopted below proceeded on the footing that, because the appellant had not proved the recorded owner to be his forefather, the property must be treated as self-acquired. That approach was unsustainable. If the recorded owner was a forefather, the appellant's claim of inheritance followed; if the recorded owner was a stranger, the property could not be forfeited as the appellant's property at all. The finding also could not stand in view of the appellant's explanation and the absence of a proper opportunity to prove inheritance.

                                Conclusion: The forfeiture of the landed property could not be sustained against the appellant.

                                Issue (ii): Whether property standing in the name of the appellant's wife could be forfeited without serving her with a copy of the notice under section 6(2).

                                Analysis: The land and the house stood in the wife's name, though they were treated as being held on behalf of the appellant. Once the property was alleged to be held by another person on behalf of the noticee, section 6(2) made it obligatory to serve a copy of the notice on that other person as well. Since the wife was not served, no effective and binding finding could be recorded against her interest in the property.

                                Conclusion: The forfeiture of the land and house in the wife's name could not be sustained for want of compliance with section 6(2).

                                Issue (iii): Whether the movable properties, namely the cow and the kirana business standing in the name of the appellant's son, could be forfeited without compliance with section 6(2).

                                Analysis: As regards the cow, no clear finding had been recorded that it belonged to the appellant, and the plea that the wife kept cows and sold milk was not negatived. As regards the kirana business, it was treated as being carried on by the son on behalf of the appellant. In that situation, a copy of the notice under section 6(1) was required to be served on the son under section 6(2). As that was not done, the forfeiture could not be sustained.

                                Conclusion: The forfeiture of the movable properties could not be sustained.

                                Final Conclusion: The forfeiture order was set aside and the matter was sent back for fresh consideration in accordance with law after the required notice procedure was followed.

                                Ratio Decidendi: Where property is alleged to be held by another person on behalf of the noticee, service of a copy of the notice on that other person is mandatory under section 6(2), and a forfeiture finding made without such service cannot stand.


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                                ActsIncome Tax
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