1976 (2) TMI 5

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....r, are challenged and it is prayed that the same may be quashed. The petitioner was the owner of these properties and according to him, he transferred these properties to his sons on January 24, 1966, by way of gift. The gift was an oral one and in accordance with the Mohammadan law. The ITO, on February 26, 1973, issued a notice to the petitioner and notice dated February 28, 1973, to his sons and others asking them to show cause why the transfers of the said properties on January 24, 1966, should not be held as void and were intended to defraud the revenue. On the ground that the petitioner and others did not show any cause, the ITO made an order dated April 7, 1973. In that order he stated that proceedings for assessment years 1964-65 t....

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..... Act, 1961, is as follows: " Where, during the pendency of any proceeding under this Act, any assessee creates a charge on or parts with the possession by way of sale, mortgage, exchange or any other mode of transfer whatsoever, of any of his assets in favour of any other person with the intention to defraud the revenue, such charge or transfer shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceedings ........ " (Proviso omitted as unnecessary) The section by itself does not contemplate making of any order by any authority. It is declaratory in nature. It declares that transfers effected by any assessee with intent to defraud the revenue during ....

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.... will have to be adjudicated. Rules, under Schedule II to the I.T. Act provide for adjudication of such claims. It is, therefore, clear that the declaration or order made by the ITO at this stage is without the authority of law. It is contended by Sri Sarangan, the learned advocate for the petitioner, that proceedings for the assessment years 1966-67 and 1967-68 were not pending as at the date of transfer as the notice to file the return for the assessment year 1966-67 was dated May 19, 1966, and was served on the assessee only on June 4, 1966, and in regard to the year 1967-68 the return had been filed voluntarily on August 14, 1967. He contended that in view of these dates the transfer as had been notified by the ITO being on January 24,....