Bona fide purchaser protection limits tax recovery when attachment sale is time-barred under the Second Schedule.

Section 281 of the Income-tax Act protects transfers for adequate consideration made without notice of pending tax proceedings, while recovery after a certificate is governed by the Second Schedule. In this context, bona fide purchasers of immovable property, who bought for value and were unrelated to the defaulting assessee, could not be subjected to a continuing attachment when no effective recovery step was taken within the time limit in Rule 68B for sale of attached immovable property. The attempt to rely on Rule 16 was rejected as inapplicable on the facts, and the attachment was liable to be quashed.

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Issues: Whether the attachment of immovable properties purchased by the petitioners from the assessee could be sustained under the recovery provisions of the Income-tax Act, 1961 in the light of the protection for bona fide purchasers and the limitation prescribed for sale of attached immovable property.

Analysis: The petitioners had purchased the properties for valuable consideration after the relevant assessment-related events, were in possession, and were unrelated to the defaulting assessee. The statutory scheme distinguishes assessment from recovery: once a certificate is drawn up, recovery proceeds under the Second Schedule. Section 281 of the Income-tax Act, 1961 protects transfers made for adequate consideration without notice of pending proceedings or tax dues, and the recovery rules empower attachment only within the framework of the Second Schedule. The decisive limitation was Rule 68B of the Second Schedule to the Income-tax Act, 1961, which prescribes a time limit for sale of attached immovable property. As that period had long expired and no recovery action was taken within the prescribed time, the continued attachment could not be justified. The reliance on Rule 16 was rejected as misconceived in the facts.

Conclusion: The attachment could not be sustained and was liable to be quashed in favour of the petitioners.

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