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Issues: (i) Whether the orders of attachment could survive after the expiry of the period prescribed under Rule 68-B(1) of the Second Schedule to the Income-tax Act, 1961. (ii) Whether the attachment could be sustained when the sixth respondent had no subsisting ownership or transferable interest in the properties on the date of attachment.
Issue (i): Whether the orders of attachment could survive after the expiry of the period prescribed under Rule 68-B(1) of the Second Schedule to the Income-tax Act, 1961.
Analysis: The properties had been attached for recovery of tax dues, but no sale was effected within three years from the end of the relevant financial year as required by Rule 68-B(1). Once that statutory period expired without the attached immovable property being brought to sale, the attachment lost efficacy and could not continue to bind the properties.
Conclusion: The attachment could not survive and had lost its potency.
Issue (ii): Whether the attachment could be sustained when the sixth respondent had no subsisting ownership or transferable interest in the properties on the date of attachment.
Analysis: The attachment proceeded on the footing that only the interest remaining with the defaulting assessee on the date of attachment could be proceeded against. The petitioners had already purchased the individual plots before the attachment order, and the defaulting respondent no longer had the requisite subsisting interest in those properties. On that basis, the attachment and consequential directions could not be upheld.
Conclusion: The attachment was unsustainable against the petitioners' properties.
Final Conclusion: The writ petitions succeeded and the impugned attachment orders and consequential proceedings were set aside.
Ratio Decidendi: An attachment of immovable property for tax recovery cannot continue beyond the statutory period prescribed for bringing the property to sale, and it cannot be enforced against property in which the defaulter no longer has a subsisting attachable interest.
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