TaxTMI 
TaxTMI 
TaxTMI 
2021 (4) TMI 1368
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....kam, Chennai 126, forming Sithalapakkam Village, Sholinganallur Taluk, Kancheepuram District comprised in O.S.Nos.39/1, R.S.Nos.39/3A, 39/C, 39/4A, 39/4D, 39/4J, present Survey No. 39/4A2, land measuring an extent of 861 sq.ft and building measuring an extent of 2300 sq.ft belonging to the 5 th respondent with the office of second respondent and Plot No. H 49 B, Kalashetra Colony, Besant Nagar, Chennai-90, comprised in Survey No. 171, forming part of Thiruvanmiyur Village, Velachery Taluk, Chennai District, measuring an extent of 1593 sq.ft belonging to the fourth respondent with the office of third respondent so as to enable the petitioner bank to register the sale certificate issued under SARFAESI Act in favour of successful bidder. 2. The petitioner is State Bank of India. The petitioner states that the subject properties, which were mortgaged with the petitioner-Bank by way of raising loan by the fourth and fifth respondents, were attached in an illegal manner by the first respondent. In view of the said attachment, the petitioner-Bank is unable to deal with the said properties with reference to the terms and conditions stipulated in the Deed of Mortgage. Thus, ....
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....iles vs. Grover (1832) 9 Bing 128 in which it has been held that Crown has no precedence over a pledge of goods..........." 8. Further, the learned counsel relied on the orders passed by this Court in M/s. Well Stores (Madras) Private Limited & Ors. Vs. Tax Recovery Officer, Chennai & Ors. [W.P. Nos. 40656 of 2015 etc., batch dated 18.07.2017] wherein, the following observations are made:- "6. Therefore the petitioner being the successor would step into the shoes of the financing Bank, which admittedly, is a secured creditor. Further more, the document has been valid by stamped for the purpose of stamp duty as assignment deed as could be seen from the endorsement in the reverse of page No. 1 of the Assignment agreement dated 07.02.2017. Thus, in the light of the decision of the Full Bench, taking note of the Amendment Act, 2016, the order of attachment made by the Income Tax Department should yield to rights of the petitioner, secured creditor. Therefore, they are required to be set aside." 9. Relying on the judgments, the learned counsel for the petitioner reiterated that the Bank holds the first charge over the subject properties and when the properties in question were....
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....point of time, the Income Tax Office was not aware of the fact that the scheduled properties are under mortgage with the petitioner-Bank. It is stated that there had been no board displayed by the Bank at the subject properties stating that the same are under attachment. The fact regarding mortgage came to the notice of the Income Tax Department only through the present writ petition filed by the petitioner-Bank. The Income Tax Department is empowered to attach the properties in the interest of revenue, even though the properties are attached by the other agencies. 14. The learned Senior Standing Counsel mainly contended that Section 281 of the Act provides about "certain transfers to be void". However, the charge of the Income Tax Department, over the immovable properties attached, precedes the charge of the Bank and the claim of precedent by the Bank is no basis. Overriding powers in terms of Section 35 of the SARFAESI Act applies to the Bank only, if it has precedent of the charge on the properties of its clients. In the case on hand, it is the Income Tax Department, which holds the first charge, as the initial demand was made prior to the subject properties were mortgaged and ....
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....ads pari materia with Section 26E of the SARFAESI Act. Admittedly, the petitioner-Bank is the secured creditor in the present case. Thus, under the SARFAESI Act, the petitioner-Bank gains priority over the revenue tax payable to the Central Government or the State Government. As per the above provision, the petitioner-Bank holds the first charge in respect of the properties mortgaged. What is relevant in the present case is that the question of understanding the priority to secured creditor under Section 26E of the SARFAESI Act would arise only if the mortgage is in existence or valid in the eye of law. 19. Contrarily, Section 281 of the IT Act unambiguously stipulates that during the pendency of any proceedings under the IT Act, if certain transfers are made, such transfers are void as against any claim in respect of any tax or other sum payable by the assessee. In this context, it is made clear that as far as the demands outstanding in respect of respondents 4 and 5 are concerned, they are relating to the income tax assessment years 2012- 13 and 2013-14 and the earliest demand notice was issued by the Income Tax Department on 31.03.2015. Thereafter, repeated reminders were sent ....
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....st demand notice by the Income Tax Department on 31.03.2015. Thus, respondents 4 and 5, the partners of M/s. Beetle Experts and M/s. Ultimate Solutions were aware of the fact that they have to clear the dues to the Income Tax Department. In spite of the fact that they are aware of the dues, they have mortgaged the properties in favour of the petitioner-Bank. 21. The learned counsel for the petitioner made a submission that the registration was done before the Sub Registrar on 22.09.2015 and the attachment of immovable properties was done by the Income Tax Department on 23.05.2017. Thus, even before issuing the attachment order by the Income Tax Department, the mortgage was in existence and therefore, the petitioner-Bank holds the first charge over the subject properties. Undoubtedly, the deposit of title deeds was made on 22.09.2015. However, before such date, the income tax proceedings were pending under the provisions of the IT Act against the assessees concerned. 22. Section 281 of the IT Act stipulates that if any mortgage or transfer is made in any manner, then all such transfers, mortgage, gift, etc., became void and therefore, such mortgage, gift or transfer is non-existen....
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....rs are to be construed as fraudulent transfers or mortgage and therefore, the mortgage in favour of the petitioner-Bank cannot be held as valid in the eye of law and since it is held as invalid, the question of invoking Section 26E of the SARFAESI Act would not arise at all. 26. In the case of Abdul Jamil and Others vs. Secretary, Income Tax Department and Others [Second Appeal No. 1294 of 1984, dated 26.03.1998], the scope of Section 281 of the IT Act was considered by this Court and it was held as follows:- "In considering s. 281 of the said Act, the said provision is declaratory in nature. It declares that the transfers effected by any assessee with intent to defraud the Revenue during the pendency of any proceedings under the Act shall be void against any claim in respect of any tax or any sum payable by the assessee as a result of the completion of the said proceedings ".Therefore, the three requirements under the section are : (i) that there must be a transfer of the property; (ii) that it should be during the pendency of a proceeding under the Act; and (iii) that the transfer must be with intent to defraud the Revenue and if these conditions are satisfie....