TaxTMI 
TaxTMI 
2007 (11) TMI 257
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....ized was added to the income of the petitioner on protective basis. According to the Revenue, Shyam Sunder Aggarwal, the husband of the petitioner had alleged in his statement that this amount belongs to his wife. However, later, it was found that the petitioner is only a housewife, having no independent source of income and this amount of Rs. 1,56,8 75 was deleted from the income of the petitioner and added to the income of her husband Shyam Sunder Aggarwal. On the basis of such assessment made, according to the Revenue, an amount of Rs. 43,89,705 was recoverable from Shyam Sunder Aggarwal the husband of the petitioner. Interest was also payable on this amount in terms of section 220(2) of the Act. At the time of the filing of the reply to the writ petition, this amount had swelled to Rs. 84,86,942. 3. A notice of attachment under rule 48 of the Second Schedule to the Act was issued to the petitioner by the Tax Recovery Officer (hereinafter referred to as "the TRO") on October 10, 1996, to the effect that her husband Shyam Sunder Aggarwal (defaulter) had failed to pay Rs. 43,93,194 and the interest thereon. It was ordered that the two properties, namely, houses Nos. 183, 183A, ....
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....before the Tax Recovery Officer and the Tax Recovery Officer on the basis of the material placed before him, came to the conclusion that the petitioner has no independent source of income as she was simply a house wife. The Tax Recovery Officer came to the conclusion that the properties were purchased by her husband out of his funds but in the name of his wife. The Tax Recovery Officer further held that the provisions of the Explanation to sub-section (1) of section 222 of the Act were duly attracted as the properties were enjoyed by Shyam Sunder Aggarwal and his family for residential purposes. Thereafter, the proclamation of sale was drawn up on February 9, 2000, and these are under challenge in this writ petition. 6. The main ground of challenge is that the Tax Recovery Officer has no right or jurisdiction to determine the question whether the properties were held benami by the petitioner for her husband. It is alleged that the only option open to the petitioner is to establish her claim in a civil court. 7. On behalf of the respondents, it is alleged that the writ petition is not maintainable and the petitioner has an alternative efficacious remedy of filing an appeal. Th....
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.... from the asses- see in respect of any period prior or to such date. (2) The Tax Recovery Officer may take action under sub-section (1), notwithstanding that proceedings for recovery of the arrears by any other mode have been taken." 10. A perusal of the section itself shows that when an assessee is in default, the Tax Recovery Officer shall proceed to recover from the assessee the amount specified in the certificate by attachment and sale of the assessee's property or by arresting him or detaining him in prison. The Explanation to this section further provides that for the purpose of this sub-section, the assessee's movable or immovable property shall include any property which has been transferred directly or indirectly on or after the 1st day of June, 1973, by the assessee in favour of his relatives specified therein and stands in their names. 11. Rule 11 of the Second Schedule reads as follows- "11. Investigation by Tax Recovery Officer.- (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 Off....
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....e has some interest or was possessed of the property in question. Reliance has also been placed on sub-rule (5) wherein if the Tax Recovery Officer is specified that the property was in the possession of the defaulter as his own property or was in possession of some other person in trust or in the possession of the defaulter, the Tax Recovery Officer. shall disallow the claim. Sub-rule (6) provides that an aggrieved party can file a suit to establish his/her claim despite the order of the Tax Recovery Officer. 13. Reference may also be made to section 281 of the Act which provides that where during the pendency of any proceeding under the Act or after the completion thereof, but before the service of notice under rule 2 of the Second Schedule, any assessee encumbers or transfer his property by creating a charge thereon, such charge or transfer shall be void as against any claim in respect of any tax payable by the assessee. 14. The provisions of rule 48 of the Second Schedule to the Act, reads as follows : "48. Attachment.- Attachment of the immovable property of the defaulter shall be made by an order prohibiting the defaulter from transferring or charging the property in....
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.... adjudication of the transfer as void under section 281 is without, jurisdiction. The Tax Recovery Officer has relied upon the earlier order of the Income-tax Officer dated May 9, 1974, declaring that the transaction is void under section 281 of the Income-tax Act. In the earlier proceedings, however, although the High Court has not set aside this order of the Income-tax Officer, the High Court has expressly held that the order amounted only to an intention or declaration on the part of the Department to treat the transaction as void under section 281. Such a declaration cannot affect the legal rights of the parties affected under rule 11. The High Court expressly held that the rights of the parties under rule 11 were not affected in any way by this declaration. The Department, therefore, cannot proceed on the assumption that the transaction is void under section 281, nor can the Tax Recovery Officer, while proceeding under rule 11, declare a transaction of transfer as void under section 281 by relying on the order of May 9, 1974, or otherwise. His jurisdiction relates to examining possession, and only incidentally, any question of right to possession as claimed by the objector. Th....
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....her husband. The court struck down the attachment of the property. 21. In view of the law laid down by the apex court in Gangadhar ViswanathRanade's case [1998] 234 ITR 188, the judgment of the Madras High Court in Iqbal Begum's case [1974] 97 ITR 310 (Mad) can no longer be treated as good law. In fact, the case of the petitioner stands on a better footing than the case of the appellant before the apex court. In the case before the apex court, the transaction was apparently void in terms of section 281 of the Act. The transfer had been made after the assessment had been finalized by the assessee in favour of his wife and daughter. Any transaction made in violation of the terms of section 281 was void. Despite this, the apex court held that the Tax Recovery Officer had no jurisdiction to declare the transaction void and the only remedy was to file a civil suit. It held that the Department could not proceed on the assumption that the transaction is void under section 281 nor can the Tex Recovery Officer while proceeding under rule 11, declare a transaction of transfer as void under section 281. His jurisdiction relates to examining possession, and only incidentally, any question o....