Tax Recovery Officer jurisdiction limits on void-transfer declarations under income-tax recovery rules

Section 281 of the Income-tax Act renders certain transfers void against the Revenue, but it does not itself confer adjudicatory power on the Tax Recovery Officer to declare a transfer null and void. Rule 16 of the Second Schedule governs the effect of notice and attachment in recovery proceedings, but it does not enlarge that authority or permit the officer to decide the validity of the transfer under section 281. Where the Revenue asserts that a transfer is void as against its claim, the proper course is to seek a declaration from the civil court. A nullity declaration made by the Tax Recovery Officer in recovery proceedings is therefore beyond jurisdiction.

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Issues: Whether the Tax Recovery Officer had jurisdiction under section 281 and rule 16 of the Second Schedule to the Income-tax Act, 1961 to declare the petitioner's purchase of property null and void, or whether the Revenue was required to seek such declaration before the civil court.

Analysis: Section 281 makes certain transfers void against the Revenue, but it does not create any adjudicatory machinery empowering the Tax Recovery Officer to pronounce a transfer void. Rule 16 of the Second Schedule governs the effect of notice and attachment in recovery proceedings, but it does not enlarge the Tax Recovery Officer's authority to decide the validity of a transfer under section 281. The binding legal position is that where the Revenue alleges that a transfer is void as against its claim, the proper course is to institute a civil suit and obtain a declaration from the competent court. The impugned declaration of nullity made in recovery proceedings was therefore beyond jurisdiction.

Conclusion: The Tax Recovery Officer had no jurisdiction to declare the sale transaction void in the recovery proceedings, and the impugned order was liable to be set aside in favour of the petitioner.

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