TaxTMI 
TaxTMI 
1986 (4) TMI 23
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....s other reliefs mentioned in the plaint filed therein. During the pendency of the said suit, Sri Jatindra Kumar Doss also died on or about May 21, 1978, leaving him surviving no heir or heiress or legal representative. Thereafter, pursuant to an application made by the said Mercantile Bank Ltd., the Administrator-General of West Bengal was substituted as the defendant in place and stead of the said Sri Jatindra Kumar Doss in the said pending suit being Suit No. 1883 of 1969. Subsequently, by a decree dated April 25, 1980, the said suit was decreed in favour of the said Mercantile Bank Limited. On or about September 10, 1981, the said decreeholder, Mercantile Bank Ltd., made an application before this court for execution of the said decree dated April 25, 1980. On the said application, Dipak Kumar Sen J. by an order made on September 22, 1982, appointed Mr. Tarapada Das, barrister-at-law, as receiver with directions to him to sell the said premises either by public auction or by private treaty, subject to confirmation by the court. Pursuant to the said order dated September 22, 1981, passed by Dipak Kumar Sen J., the receiver caused advertisements for sale of the said premises to be....
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....tax Authorities, then the bank may, under intimation to the Tax Recovery Officer, realise its demands from the sale proceeds and remit the balance to the Tax Recovery Officer against tax arrears of late Sri Jatindra Kumar Doss. The petitioner was further informed that the Income-tax Officer had also issued notices under section 226(3) of the Income-tax Act, 1961, to the various tenants of the said property, inter alia, requiring them to pay to the Income-tax Officer any amount due from the said tenants to or held by them for and on account of the said Sri Jatindra Kumar Doss and also to pay any money which may subsequently become due from the tenants to the said Sri Jatindra Kumar Doss or which the tenants may subsequently hold for or on account of him. The petitioner was informed that in view of the fact that the Tax Recovery Officer had granted permission for sale of the said property, there is or can be no question of the said notices under section 226(3) being effect to after the said property Was purchased by the petitioner and that the charge of the Income-tax Authorities, if any, would stand shifted to the sale proceeds. In the circumstances, the petitioner was informed that....
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....of the said property, the petitioner was and is the absolute owner of the said property and that the said property does not belong to the said Sri Jatindra Kumar Doss, since deceased and that the income-tax dues of the said late Jatindra Kumar Doss cannot be realised from the said property. It was further stated that the Income-tax Officer had no right, authority or jurisdiction to attach the rent payable by the tenants of the said property to the petitioner for realisation of outstanding tax dues of late Jatindra Kumar Doss. Copy of the said letter was forwarded to respondent No. 1, the Income-tax Officer. The said respondent was requested to forthwith withdraw and/or cancel the said purported notices under section 226(3) of the said Act issued upon the various tenants of the said property. The case of the petitioner is that the petitioner had purchased the said property in view of the permission granted by the Tax Recovery Officer for sale of the said property and the charge of the Income-tax Authorities, if any, stood shifted to the sale proceeds. The petitioner has, therefore, challenged the said notices issued under section 226(3) of the said Act and the various notices iss....
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.... Morgans, Advocates-on-Record for Mercantile Bank Ltd., had discussed with the Tax Recovery Officer and pursuant to the said discussion, certified true copies of the mortgage deed and conveyance in respect of 9, Pollock Street, Calcutta, had been forwarded to the said Tax Recovery Officer. It is also on record that on March 8, 1978, the Tax Recovery Officer submitted a report to the Inspecting Assistant Commissioner, Range-X, Calcutta, wherein it has been stated as follows: " The C. Dr. mortgaged the property to the Mercantile Bank of India, Calcutta, on February 20, 1948, for obtaining overdraft facility to the extent of rupees five lakhs. The principal amount of loan advanced aforesaid is long overdue. The bank is not willing to proceed with the sale as, according to them, the property may not fetch even Rs. 6,00,000. From the perusal of certificate records, it appears that if the Department proceeds to sell the property, nothing will remain after meeting the mortgage charge of this bank. If it can be established by the Income-tax Officer that section 281 is applicable and the mortgage is declared void by the competent court, the Department may proceed to sell the property and....
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....ings whatsoever to alter defeat encumber or make void the same and free from all encumbrances whatsoever and also free from charges and/or mortgages of the Mercantile Bank Ltd. but otherwise on 'as is' basis AND SUBJECT to the purchaser paying the arrears of Corporation taxes in respect of the 'said property'." In the case of Dinendronath Sannial v. Ramkumar Ghose [1880-81] ILR 7 Cal 107, 119; 81A 65, Sir Barnes Peacock observed: " There is a great distinction between a private sale in satisfaction of a decree and a sale in execution of a decree. In the former, the price is fixed by the vendor and purchaser alone; in the latter, the sale must be made by public auction conducted by a public officer, of which notice must be given as directed by the Act, and at which the public are entitled to bid. Under the former, the purchaser derives title through the vendor, and cannot acquire a better title than that of the vendor. Under the latter, the purchaser, notwithstanding he acquires merely the right, title and interest of the judgment-debtor, acquires that title by operation of law adversely to the judgment-debtor, and freed from all alienations or encumbrances effected by him sub....
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....chedule to the Income-tax Act. Similarly, under section 226(3) of the Act, the Income-tax Officer may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay to the Income-tax Officer such money. Notices under the aforesaid provision were issued to the tenants of the original landlord and the tenants were obliged not to make any payment of the rent to the original landlord. They were required to pay the rent to the Income-tax Officer. After the sale, no money by way of rent was due to the original landlord from the tenants. The tenants were under an obligation to pay the rent to the purchaser of the property and the receiver gave notices to the tenants to attorn the tenancy in favour of the purchaser, the new landlord, i.e., the petitioner. Thus, after the sale of the premises in question was completed in favour of the petitioner, the Income-tax Department ceased to have any jurisdiction either to continue with the proceedings under section 226(3) of the Act or rule 26(1)(i) of the Second Schedule in respect of t....
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....be a ground for holding that the property sold is still available to the Income-tax Department for realisation of the outstanding dues of the deceased assessee. It is then contended by Mr. Bajoria that, in any event, section 230A will have no application in a case where the sale is made by the court or a receiver appointed by the court. Reliance has been placed in this connection on a judgment of the Delhi High Court in the case of C. S. Loganathan v. P. L. Kapur [1972] 83 ITR 430. There, the Delhi High Court held that the provisions of section 230A of the Income-tax Act, 1961, which require that no registering officer shall register a document which purports to transfer, assign, limit or extinguish the right, title or interest of any person to or in any property (other than agricultural land) valued at more than Rs. 50,000 unless the certificate, prescribed therein has been obtained, are confined to cases of voluntary deeds executed by the assessees. They have no application whatever to involuntary acts resulting in transfer, assignment, limitation or extinguishment of rights in property by the force of law or under an order of the court or under a decree (whether based on comp....