TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 1588
X X X X Extracts X X X X
X X X X Extracts X X X X
....cents) situated at Mevalurkuppam Village, Sriperumbudur Taluk, Kancheepuram District and to direct the 2nd Respondent / Sub-Registrar to make appropriate entries stating that the said attachment has been lifted and to allow the Petitioner to enjoy the property without any hindrance. 3. By the Impugned Order dated 23.02.2024, the Writ Court dismissed the Writ Petition filed by the Writ Petitioner / Appellant with the following observations:- "... 7. Admittedly, the fourth respondent is the original owner of the property and there was a complaint against the fourth respondent before the CBI and they have also conducted raid on 16.12.2010 and they have also requested the investigation wing of the third respondent to investigate regarding the evasion of the Income Tax. They have also issued summons on 17.02.2011 under Section 131 of the Income Tax Act and issued scrutiny notice under Section 143(2) of the Income Tax for the assessment years 2009-10 and 2010-11 on 30.09.2011. Subsequently, the petitioner purchased the land from the fourth respondent only on 02.11.2011. Later, summons were issued by the third respondent and therefore, the transaction made by the fourth respon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The challenge to the Impugned Order dated 23.02.2024 of the Writ Court is on the ground that the attachment under Rule 11(5) of the II Schedule of the Income Tax Act, 1961 is not permissible in law as the Appellant / Writ Petitioner had become an absolute owner of the property on 02.11.2011. 7. The above submission cannot be countenanced as the sale was made after initiation of the assessment proceedings by the Respondents with a view to defeat the rights of the Income Tax Department / 3rd Respondent. 8. As per Section 281 of the Income Tax Act, 1961 where, during the pendency of any proceeding under the Act, or after completion thereof, before service of notice under Rule 2 of the Second Schedule, any assessee creates any charge of his assets in favour of any other person or part of the possession by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever, such charge or transfer is void against any claim in respect of any tax or any other sum payable by an assessee as a result of completion of the said proceedings or otherwise. 9. The contention of the Appellant / Writ Petitioner that the Appellant / Writ Petitioner is a bonafide purchaser cannot b....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a third party who adduces evidence to show that that he was possessed of the property under some kind of a title, the property will have to be released from attachment. The procedure is not meant to decide intricate questions of law as to title to the property. Therefore, where a claim is made to the property attached by someone claiming to be a transferee from the judgement-debtor and the claim is disallowed, the claimant can institute a suit under Order 21 Rule 63 to stablish his title to the property. In such a suit, it would be open to the attaching creditor to plead in defense that the transfer was in fraud of the general body of creditors and was void under Section 53 of the Transfer of Property Act. Similarly, if the claim of the transferee is allowed, the attaching creditor may sue on behalf of himself and all other creditors under Section 53 of the Transfer of Property Act for a decalration that the transfer was void as it was in fraud of the creditors. .... 12. In the light of this discussion about the provisions of Order 21 Rules 58 to 63, if we examine Rule 11(4) of the Second Schedule to the Income Tax Act, it is clear that the Tax Recovery Officer i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsfer declared as void under Section 281 of the Income Tax Act." 11. The decision of the Hon'ble Supreme Court in Tax Recovery Officer II Vs. Gangadhar Vishwanath Ranade (1998) 234 ITR 188 was rendered when the said provision read slightly differently. As per the said provision, only if there was an intention to defraud the revenue, such creation of charge or parting of possession by way of sale, mortgage, exchange or any other mode of transfer were void as against any claim in respect of any tax or any other amount/sum payable by an assessee as a result of completion of the said proceeding. 12. There, the Court held that the Tax Recovery Officer himself cannot declare a transfer of property made by the assessee in favour of a third party to be void as his position is in itself that of a creditor. The Court further held that if the Tax Recovery Officer finds such transfer to have been effected with the intent to defraud the Revenue, then the Department will only have to file a civil suit under Rule 11(6) to have the transfer declared void under Section 281 of the Income Tax Act, 1961. 13. Whereas, the amended provision as it stands today and during the period in disput....