TaxTMI 
TaxTMI 
2021 (4) TMI 25
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....he attachment created in respect of the immovable property at Plot No.10A, Door No.10C, Achuthan Nagar, 2nd Steet, Ekkaduthangal, Chennai 600 032. 3. By the impugned order, the first respondent has declined to lift the order of attachment in Form 16 of the property purchased by the petitioner from M/s.Sally Thermo Plastic India Limited purportedly contrary to Section 281 of the Income Tax Act, 1961 vide order dated 28.11.2013 passed by the second respondent Tax Recovery Officer. In the impugned order, it has been concluded that the attachment of the property still exists in the name of the said company and the tax arrears was still outstanding in the case of the said company. The impugned order further states that in order to protect the interest of the revenue, the attachment made by Tax Recovery Officer under Section 221(1)(b) of the Income Tax Act, 1961 cannot be lifted. 4. The case of the petitioner before this court is that the petitioner purchased the property on 06.05.2011 from the third respondent M/s.Sally Thermoplastics India Limited vide registered sale deed No.3603 of 2011 unaware of the income tax proceedings against the said company. It is submitted that prior to pu....
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....005- 2006, 2006-2007, 2007-2008, 2008-2009, 2009-2010 and 2010-2011 and the outstanding amount of Rs. 2,87,99,555/- was due from the third respondent and therefore same was certified by the second respondent Tax Recovery Officer-VII vide Attachment Order dated 28.11.2013 . 11. By another communication dated 11.07.2016, the second respondent Tax Recovery Officer-VII also informed the Income Tax Ombudsman that enquiries were being conducted to verify the facts of the case and how the interest of the revenue can be protected with respect of arrears of tax to be collected from the third respondent. 12. The Income Tax Ombudsman by a communication dated 14.07.2016 thereafter merely forwarded the response of the Assistant Commissioner of Income Tax, Non-Corporate Circle 15(1) dated 28.06.2016 and that of Tax Recovery Officer-VI dated 11.07.2016 to the petitioner. 13. Under these circumstances, the petitioner approached the first respondent to direct lifting of the provisional order of attachment of the property purchased by the petitioner on 06.05.2011 from the third respondent. 14. It is pursuant to the aforesaid representation, the impugned order has been passed by the first respond....
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....ty Commercial Tax Officer, order dated 28.02.2020 passed by this Court in W.P No.39939 of 2005 and batch. vii.ICICI Bank Ltd., vs Tax Recovery Officer (2019) 105 taxmann.com 257 (Andhra Pradesh and Telengana) viii.T.Senthil Kumar vs Commissioner of Income Tax (2015) 57 taxmann.com 177(Madras) 18. The learned Senior Standing Counsel for the first and second respondents submitted that the attachment was perfectly in order in as much as the third respondent was in arrears of payment of tax for the Assessment Years 2005-2006 to 2010-11 for a total amount of Rs. 2,87,99,555/-. It is submitted that the purchase of the property by the petitioner was not bonafide even otherwise. 19. The learned Senior Standing Counsel for the first and second respondents further submitted that the decision of the Hon'ble Supreme Court in Tax Recovery Officer Vs. Gangadhar Vishwanath Ranade, (1998) 234 ITR 188 was distinguishable in as much as the law has changed after 1975. He submitted that the provisions as it stood for the period when the above decision was rendered was different from the provision as it stands today. It is no longer required for the revenue to prove an intention to defraud by an ....
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....e aforessaid Section deals with the alienation made by the assessee without notice of the proceeding against him under the Act. Hence, question of harmonizing Section 281 read with Rule 61 does not arise under the circumstances. The learned Senior Standing Counsel for the first and second respondents submitted that as against an order of attachment, remedy is available for the petitioner to approach the second respondent Tax Recovery Officer-VII under Rule 11 of the Schedule-II to the Income Tax Act, 1961 and therefore the Writ Petition is liable to be dismissed. 24. I have considered the arguments advanced by the learned counsel for the petitioner and the learned Senior Standing Counsel for the first and second respondents. 25. Question to be addressed in the present case is whether the first and second respondents were justified in passing the provisional order of attachment of the property purchased by the petitioner on 06.05.2011 long after the purchase. 26. The petitioner has produced a copy of the Encumbrance Certificate regarding the immovable property purchased from the third respondent. There was no encumbrance/charge over the property at the time of purchase of the pro....
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.... and fixed deposits in banks, to the extent to which any of the assets aforesaid does not form part of the stock-in-trade of the business of the assessee. 28. In Tax Recovery Officer Vs. Gangadhar Vishwanath Ranade, (1998) 234 ITR 188 : (1998) 6 SCC 658 the court held as under:- 8. Section 281 declares as void any transfer made by the assessee during the pendency of proceedings under the Act, with the intention to defraud the Revenue. The powers of the Tax Recovery Officer, however, under Rule 11 of the Second Schedule to the Income Tax Act are somewhat different. Under Rule 11(1), where any claim is preferred to or any objection is made to the attachment or sale of any property in execution of a certificate on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection. Under Rules 11(4), (5) and (6), it is provided as follows: "11. (4) Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in possession of the defaulter or of some person in trust for him or in the occupancy ....
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....ursuant to assessment orders dated 30.03.2013, 30.12.2011 and 31.03.2013 purportedly passed under Section 144 read with Section 147 for the Assessment Years 2005-2006 to 2008-2009 and under Section 144 of the Income Tax Act for the Assessment Years 2009-2010 and 2010-11 are required to be seen. 32. The machinery prescribed under the provisions of the Income Tax Act, 1961 to deal with situation arising out of wrongful attachment of property for the buyer is to approach Tax Recovery Officer-VII under Rule 11 of the Schedule-II to the Income Tax Act, 1961. Therefore, it is the second respondent Tax Recovery Officer-VII who was the competent authority to pass proper order under the circumstances. 33. Further, as per Section 281 of the Income Tax Act, 1961, where an assessee creates a charge or parts with possession by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever of any asset by an assessee in favour of any other person during the pendency of any proceeding under the Act is void. 34. Proviso to the said Section contains an exception. That exception provided in clause (i) applies to a situation where there is transfer for adequate consideration and wi....