Court Invalidates Attachment Orders Under Income Tax Act, 1961

The court allowed all writ petitions challenging the attachment orders under the Second Schedule to the Income Tax Act, 1961. The judgment favored the petitioners, emphasizing the defaulter's failure to take action within the three-year limit post-attachment and the petitioners' ownership predating the attachment. As a result, the court dismissed any pending miscellaneous petitions without costs.

---

---

Issues:
Challenge to orders of attachment under the Second Schedule to the Income Tax Act, 1961.

Analysis:
The judgment involves three writ petitions challenging the orders of attachment by the Tax Recovery Officer under the Second Schedule to the Income Tax Act, 1961. The first writ petition is filed by purchasers of individual plots, while the other two are filed by landlords on whose properties residential plots were developed by the defaulter. The defaulter, a company, failed to pay tax dues, leading to attachment orders. The petitioners argued that they were bona fide purchasers and that the attachment was improper. Assessment proceedings were initiated against the defaulter, resulting in a tax demand. The Tax Recovery Officer issued orders prohibiting property transfer, prompting the petitioners to seek relief in the writ petitions.

The department countered with assessment details and subsequent orders prohibiting property transactions. The petitioners then sought to amend their prayers in the writ petitions to challenge the attachment orders. The main contention was that the defaulter was not the property owner at the time of attachment, rendering the orders void. Rule 68-B (1) stipulates a three-year limit for property sale post-attachment, which had lapsed without property sale. Additionally, the petitioners had purchased the properties before the attachment order, strengthening their case for relief.

The judgment favored the petitioners on both grounds, highlighting the failure to take further steps within the three-year limit and the petitioners' ownership predating the attachment. Consequently, all writ petitions were allowed, dismissing any pending miscellaneous petitions without costs.

---