Tax recovery attachment sustained where disputed transfer could not defeat Revenue's claim; title challenge left to civil court remedy.

Under the amended Section 281 and Rule 11 of the Second Schedule to the Income-tax Act, 1961, a transfer inconsistent with tax recovery provisions could not defeat the Revenue's attachment, so the sale deed was not treated as overriding the department's claim and the attachment was sustained. Questions of title and competing proprietary rights in execution proceedings were not finally resolved in the writ petition, and the petitioner was relegated to the civil court remedy contemplated by Rule 11(6) to establish any claimed right. The writ petition therefore failed and the impugned order was upheld.

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Issues: (i) Whether the Tax Recovery Officer could declare the petitioner's sale deed void and confirm attachment of the property under the Second Schedule to the Income-tax Act, 1961; (ii) Whether the petitioner was required to seek relief by instituting a civil suit.

Issue (i): Whether the Tax Recovery Officer could declare the petitioner's sale deed void and confirm attachment of the property under the Second Schedule to the Income-tax Act, 1961.

Analysis: The attachment was effected for tax arrears already due, and the impugned transfer was found to be inconsistent with Section 281 of the Income-tax Act, 1961. The Court distinguished the earlier Supreme Court precedent relied upon by the petitioner on the ground that Section 281 had been amended and the earlier "intention to defraud the Revenue" context no longer governed the present facts. The Court held that the claim of the petitioner could not displace the department's attachment and that the impugned order did not warrant interference.

Conclusion: The challenge to the impugned order was rejected and the Revenue's attachment was sustained.

Issue (ii): Whether the petitioner was required to seek relief by instituting a civil suit.

Analysis: The Court applied Rule 11(4) and Rule 11(6) of the Second Schedule to the Income-tax Act, 1961, and held that disputes over title and the right to the property in execution proceedings cannot be finally resolved by the writ court in the petitioner's favour on the present facts. The petitioner was left to establish any claimed right through the remedy contemplated under Rule 11(6) in a civil court.

Conclusion: The petitioner was relegated to the civil court remedy and could not obtain release of the property in the writ proceedings.

Final Conclusion: The writ petition failed, the impugned order was upheld, and the attachment stood confirmed for recovery of tax dues.

Ratio Decidendi: Under the amended Section 281 and Rule 11 of the Second Schedule to the Income-tax Act, 1961, the Tax Recovery Officer examines the claim to attached property but does not finally adjudicate title as against the Revenue, and any serious challenge to the transfer or proprietary right must be pursued through the civil court remedy under Rule 11(6).

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