Income-tax clearance certificate refused for lease of attached property where transfer would remain void during subsisting attachment.

An income-tax clearance certificate under section 230A(1) could not be directed for execution of a lease deed over property already under attachment, because rule 16(2) treated any private transfer of attached property or any interest in it as void while the attachment subsisted. A lease was treated as a transfer for this purpose, so a registered lease deed during attachment could not be given legal effect. The absence of reasons in the refusal letter did not warrant remand, as no prejudice was shown and the applicant was not entitled to the relief on the admitted facts. Section 230A(1) did not assist where the proposed transaction would prejudice recovery.

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Issues: Whether an income-tax clearance certificate under section 230A(1) of the Income-tax Act, 1961 could be directed to be issued for execution of a lease deed in respect of property already under attachment, and whether absence of reasons in the refusal order required remand on the ground of natural justice.

Analysis: The property had been attached under the recovery schedule, and rule 16(2) rendered any private transfer of the attached property or any interest therein void so long as the attachment subsisted. A lease is a transfer of property for this purpose, and a registered lease deed executed during subsistence of the attachment could not be given legal effect. In that situation, directing consideration of a clearance certificate would be purposeless, because even if a certificate were issued, the proposed transfer would remain void under the recovery rules. The absence of reasons in the refusal letter did not justify remand, because the petitioner had not established prejudice and, on the admitted facts, was not entitled to the relief sought. Section 230A(1) also did not assist the petitioner, since the proposed transaction would prejudicially affect recovery and the existence of attachment meant that satisfactory provision for payment could not be invoked to compel issuance of a certificate.

Conclusion: The refusal to issue the income-tax clearance certificate was upheld, and the writ petition failed.

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