2013 (10) TMI 651 - HC - Income Tax

Provisional attachment - attachment of plots after sale by the assessee - Order u/s 281B - Petitioner contended that after selling these plots, they continued to remain in possession of various plots - when they proposed to alienate the plots, they were informed by the Sub-Registrar, the 3 rd respondent, that the documents would not be entertained for registration in view of the attachment order passed by the Income Tax Authorities under Section 281-B of the Income Tax Act, 1961 Held that - Even if the petitioners present a document for registration in respect of their plots in the subject survey numbers the document is bound to be rejected owing to the attachment order passed by the Income Tax Authorities - the attachment passed by the Income Tax Authorities would have to be limited to plots owned by SIMS in the lay out and cannot be extended to the plots owned by others, including the petitioners - The 3rd respondent would therefore have to undertake identification of the plots in Taj Baba Nagar owned by SIMS and limit the attachment effected under Section 281-B of the Income Tax Act, 1961, to such plots alone - The said attachment can have no effect over the plots belonging to third parties in the said survey numbers Decided in favour of Petitioner.

Summary

Issues:
1. Validity of attachment order passed by Income Tax Authorities under Section 281-B of the Income Tax Act, 1961.
2. Entitlement of petitioners to register documents for plots in Taj Baba Nagar.
3. Limitation of attachment order to plots owned by specific entity.

Analysis:

Issue 1: The petitioners challenged the refusal of the Sub-Registrar to register their documents due to an attachment order by the Income Tax Authorities under Section 281-B of the Income Tax Act, 1961. The 3rd respondent justified the refusal citing the attachment order against a specific entity, SIMS, and the alleged fraud committed by it. The Court noted that the attachment order was limited to the assets of SIMS and should not affect the plots owned by others, including the petitioners. The Court directed the 3rd respondent to identify the plots owned by SIMS in Taj Baba Nagar and restrict the attachment accordingly, emphasizing that the attachment should not extend to plots belonging to third parties.

Issue 2: The petitioners contended that they were in possession of various plots in Taj Baba Nagar and sought to register documents for these plots. The 3rd respondent indicated that any document presented by the petitioners for registration would be rejected due to the attachment order. The Court clarified that if the documents presented by the petitioners were for plots not owned by SIMS, the 3rd respondent should process them in accordance with the law. The Court directed the Sub-Registrar to complete the registration formalities if the documents fulfilled the requirements of the Registration Act, 1908, and the Indian Stamp Act, 1899.

Issue 3: The Court highlighted the need for the 3rd respondent to differentiate between the plots owned by SIMS and those owned by third parties in Taj Baba Nagar. The Court emphasized that the attachment order should only apply to the plots owned by SIMS and not impact the registration of documents for plots owned by others. The Court's final order directed the 3rd respondent to undertake this exercise and process documents for registration of plots not owned by SIMS in accordance with the law, closing the writ petition with no costs incurred.