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of <h1>High Court overturns Tax Recovery Officer's void sale declaration under Income Tax Act, emphasizes civil court remedies</h1> <h3>Nitaben Harishbhai Shah Versus Tax Recovery Officer I</h3> Nitaben Harishbhai Shah Versus Tax Recovery Officer I - [2018] 406 ITR 347 (Guj) Issues:1. Challenge to order declaring property acquisition as null and void under Income Tax Act.2. Jurisdiction of Tax Recovery Officer to declare sale transaction void.3. Interpretation of Section 281 and Rule 16 of the Second Schedule of the Act.Analysis:Issue 1:The petitioner challenged the order declaring the property acquisition null and void under the Income Tax Act. The petitioner acquired the property through a registered sale deed in 2008. An attachment order was issued in 2005 for outstanding tax demand against the original owner. The petitioner was unaware of this order until 2009. The High Court previously quashed a similar order in 2015. However, a fresh order was issued in 2017 for a different tax demand, leading to the current challenge.Issue 2:The core issue was whether the Tax Recovery Officer had the jurisdiction to declare the transfer of property null and void under Section 281. The Tax Recovery Officer declared the transaction void based on the penalty order against the original owner. However, the Court held that the Tax Recovery Officer lacked the authority to make such a declaration. The Court referenced Section 281 and Rule 16 of the Second Schedule, emphasizing that the Revenue must approach a civil court for such declarations.Issue 3:Section 281 of the Act deems certain transfers void, subject to specific conditions. Rule 16 of the Second Schedule further regulates private alienation in cases of attachment. The Court highlighted that the Tax Recovery Officer's power to declare transfers void is limited, and the Revenue must resort to civil court proceedings for such declarations. The Court cited relevant case law to support its decision and set aside the impugned order while affirming the Revenue's right to seek appropriate remedies under Section 281 through lawful proceedings.In conclusion, the High Court ruled in favor of the petitioner, setting aside the order declaring the sale transaction null and void. The judgment emphasized the limited authority of the Tax Recovery Officer in such matters and directed the Revenue to pursue appropriate legal avenues for declarations under Section 281.
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