1997 (10) TMI 18 - HC - Income Tax

Summary

Issues:
- Dispute over the release of registered documents by the Sub-Registrar
- Application of section 281B of the Income-tax Act in prohibiting the release of documents
- Validity of the prohibitory order issued by the Income-tax Department
- Interpretation of statutory provisions of the Income-tax Act, Indian Stamp Act, and Registration Act

Analysis:
The judgment involves two writ petitions filed by different individuals against the Sub-Registrar, seeking a writ of mandamus to release registered documents. The documents in question were sale deeds executed by the first respondent in favor of the petitioners. The main contention was the withholding of the documents by the Sub-Registrar based on a prohibitory order issued by the Income-tax Department under section 281B of the Income-tax Act. The petitioners argued that despite the prohibitory order, they were willing to receive the documents subject to the rights of the Income-tax Department. The petitioners undertook to hand over the documents to the Income-tax Department if necessary and claimed damages against the first respondent. The court considered the statutory provisions of the Income-tax Act, Indian Stamp Act, and Registration Act to determine if there was any legal bar for the Sub-Registrar to release the documents already registered but pending due to the prohibitory order.

The fourth respondent, representing the Income-tax Department, relied on section 281B of the Income-tax Act to assert the validity of the prohibitory order, which declared transfers void against any tax payable by the assessee. The court acknowledged the statutory declaration under section 281B but emphasized that the petitioners were willing to accept the documents subject to the rights of the Income-tax Department. The court noted that the petitioners had no knowledge of the prohibitory order when the documents were presented for registration and had already paid the consideration and incurred expenses for registration. The court highlighted that the petitioners' willingness to comply with the Income-tax Department's rights distinguished the case from a typical transfer scenario declared void under the Act.

In the judgment, the court directed the Sub-Registrar to complete the registration formalities for the documents and hand them over to the respective petitioners within a specified timeframe. The court allowed the release of the documents to the petitioners, subject to the rights of the Income-tax Department. The judgment clarified that the petitioners' acceptance of the documents did not absolve the first respondent of any liability towards the Income-tax Department. The court's decision was based on a balanced interpretation of the statutory provisions and the petitioners' willingness to cooperate with the Income-tax Department's rights.