Pre-attachment transfer remained valid for tax assessment because revenue did not avoid it under the attachment rules.

A transfer made before attachment was not void merely because a default notice had been issued or transfer restrictions existed. The revenue's attachment rule did not automatically invalidate the alienation; it only permitted avoidance where lawfully invoked. As the department had not taken steps under the applicable avoidance provision, and the income from the properties had been treated in the transferees' hands, the transfer had to be recognised for assessment purposes. The income from the three properties could not be brought back into the assessee's taxable income, and the matter was remitted for fresh assessment in accordance with law.

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Issues: Whether the assessee's surrender of life interest in the properties was valid and effective against the revenue, and whether the income from those properties could be brought back to tax in the assessee's hands.

Analysis: The transfer was executed before the order of attachment, so the provision that renders an alienation void against claims enforceable under attachment had no application. A notice under Rule 2 and the restriction in Rule 16(1) did not by themselves make the transaction void; they only enabled the revenue, for tax recovery purposes, to avoid the transfer where permitted by law. Since the department had not taken action under Rule 16(2) to avoid the transaction, and the parties had given effect to the partition by showing the income in the hands of the transferees, the transaction could not be ignored for assessment purposes.

Conclusion: The transfer was recognised as valid, and the income from the three properties could not be added back in the assessee's assessment. The matter was remitted for fresh assessment in accordance with law.

Ratio Decidendi: A transfer made before attachment is not void merely because a notice of default has been served or a restriction on transfer exists; unless the revenue avoids the transfer under the applicable attachment rule, the transaction must be given effect to for assessment purposes.

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