2022 (7) TMI 1565

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....the property at the instance of the 5th respondent, the Tax Recovery Officer, Kottayam Range, Kottayam. 2. The brief facts are that the petitioner, a retired Central Government employee, had invested a part of his terminal benefits with the 4^th respondent, NSS Karayogam, which had promised the payment of interest on the said amount to the petitioner. Though initially the 4th respondent paid the interest on the deposits, they later defaulted, following which the petitioner filed O.S. No. 150 of 2006 before the Sub Court, Alappuzha, a suit for money against the 4th respondent and also attached certain properties belonging to the 4th respondent through I.A. No. 1514 of 2006 in the above original suit. The said attachment was on 28.10.2006.....

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....t the property of the 4^th respondent had been attached by the 5th respondent on account of certain amounts payable to the Income Tax department. 3. The learned counsel appearing for the petitioner would contend that the petitioner is entitled to the protection under the first proviso to Section 281 of the Income Tax Act, (hereinafter referred to as the Act), which provides that the transfer of title in the property in question pending recovery proceedings by the Income Tax department will not be void, if it is for adequate consideration and without notice of pendency of proceedings and without notice of the tax or other sum payable by the assessee. It is submitted that the Income Tax department is also not prejudiced in this matter as t....

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.... to that Section read as under:- "281. Certain transfers to be void.-(1) Where, during the pendency of any proceeding under this Act or after the completion thereof, but before the service of notice under rule 2 of the Second Schedule, any assessee creates a charge on, or parts with the possession (by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever) of, any of his assets in favour of any other person, 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 proceeding or otherwise: Provided that such charge or transfer shall not be void if it is made- (i) for adequate considerat....