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of <h1>Court rejects petitioner's grounds, directs Tax Recovery Officer on under-valuation issue. Further proceedings ordered for fair resolution.</h1> <h3>T.S. SUJATHA Versus TAX RECOVERY OFFICER, KOTTAYAM AND THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTTAYAM.</h3> T.S. SUJATHA Versus TAX RECOVERY OFFICER, KOTTAYAM AND THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTTAYAM. - TMI Issues Involved:1. Validity of the conveyance of property from the petitioner’s husband to the petitioner.2. Procedural defects and jurisdiction in the recovery process.3. Applicability of limitation period under Rule 68B of Schedule II of the IT Act.4. Adequacy of consideration for the property transferred.Detailed Analysis:1. Validity of the Conveyance of Property:The petitioner, the wife of an assessee in default, challenged the Income-tax authorities' actions against her property, which was conveyed to her by her husband, an assessee in default. The core issue was whether the conveyance was a sham transaction due to inadequate consideration. The court noted that the property transfer occurred during the block period (1986-87 to 1995-96) when suppression was found against the assessee. The conveyance was deemed liable to proceedings for recovery under the Explanation to Section 222(1) of the IT Act, which includes properties transferred to relatives without adequate consideration.2. Procedural Defects and Jurisdiction:The petitioner argued that she was running a business and purchased the property from her income, contending that the purchase was for valid consideration. She also raised procedural objections, including the lack of a demand notice and the need for a suit to declare the conveyance void. The court dismissed these objections, stating that the Department did not intend to declare the petitioner as an assessee in default. The recovery was initiated under the Explanation to Section 222(1), which allows proceeding against properties transferred by the assessee to relatives without adequate consideration.3. Applicability of Limitation Period:The petitioner raised the issue of limitation under Rule 68B of Schedule II of the IT Act, arguing that the block assessment attained finality on 03.11.2008. The court noted that the limitation period would commence from 31.03.2009 and expire on 31.03.2012, with provisions for extension due to appeals. The writ petition was filed within the limitation period, and the court extended the period by 180 days due to the ongoing proceedings.4. Adequacy of Consideration:The petitioner contended that the consideration for the property was adequate, citing documents showing similar valuations for nearby properties. The Revenue refuted this, producing documents to show inadequate consideration. The court acknowledged that these factual issues needed examination by the original authority. The petitioner was directed to appear before the Tax Recovery Officer, file objections, and present documents within the specified timeframe. The Tax Recovery Officer was instructed to grant a hearing and pass orders accordingly.Conclusion:The court rejected all grounds raised by the petitioner but directed the Tax Recovery Officer to consider the question of under-valuation. The writ petition was disposed of with instructions for further proceedings to ensure a fair hearing and resolution of the valuation issue. Both parties were ordered to bear their respective costs.
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