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Issues:
1. Refusal by Tax Recovery Officer to adjudicate petitioner's claim under rule 11 based on Assessing Officer's declaration of gift deed as void under section 281 of the Income-tax Act. Analysis: The case involved a dispute where the Tax Recovery Officer attached a flat due to tax arrears of the assessee, who had gifted the flat to the petitioner. The Assessing Officer declared the gift deed void under section 281 of the Income-tax Act. The petitioner sought adjudication under rule 11, but the Tax Recovery Officer refused, citing the Assessing Officer's decision. The petitioner contended that the Assessing Officer's declaration was ex parte and lacked a show-cause notice, and there was no evidence of tax arrears by the donor at the time of gifting. In the case of Gangadhar Vishivanath Ranade, it was established that section 281 merely expresses the intention of the Assessing Officer to treat a transfer as void, not conclusively adjudicating it. The Tax Recovery Officer's jurisdiction under rule 11 remains intact, allowing claimants to challenge the voidness of transfers. The Supreme Court further clarified in TRO v. Gangadhar Viswanath Ranade that the Tax Recovery Officer's powers under rule 11 are distinct from the Assessing Officer's under section 281, emphasizing the right of claimants to object under rule 11 irrespective of the Assessing Officer's declaration. The High Court directed the Tax Recovery Officer to adjudicate the petitioner's claim under rule 11, considering the petitioner's possession rights and the timing of the gift deed in relation to tax arrears. The court highlighted that despite the declaration of the gift as void under section 281, the Tax Recovery Officer must evaluate the petitioner's claim independently under rule 11. The petitioner was instructed to file objections within two weeks, and the Tax Recovery Officer was tasked to assess the claim based on relevant documents provided by the petitioner, ensuring a fair examination of possession rights and transfer timing. In conclusion, the court maintained the attachment pending adjudication, allowing the petitioner to challenge the voidness of the gift deed under rule 11. The judgment emphasized the distinction between the Assessing Officer's declaration under section 281 and the Tax Recovery Officer's jurisdiction under rule 11, ensuring due process and the petitioner's right to contest the transfer's validity independently. Conclusion: The High Court directed the Tax Recovery Officer to adjudicate the petitioner's claim under rule 11, considering possession rights and transfer timing independently of the Assessing Officer's declaration under section 281. The petitioner was instructed to file objections within two weeks, ensuring a fair examination of the claim based on relevant documents. The court maintained the attachment pending adjudication, allowing the petitioner to challenge the gift deed's voidness under rule 11, emphasizing due process and the petitioner's right to contest the transfer's validity.
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