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2016 (9) TMI 153 - HC - Income TaxAttachment orders - recovery proceedings - Held that - The petitioner has raised an objection to the attachment of the subject-property. In such circumstances, it has to be seen as to what has to be done by the Tax Recovery Officer. Rule 11 of the Rules provides for the procedure to be adopted by the Tax Recovery Officer and he is required to investigate the claim or objection. Therefore, it is incumbent upon the first respondent to take note of the objection raised by the petitioner, vide representation dated 26.07.2016 and proceed to investigate into the matter. One another issue, which would also fall for consideration of the first respondent is with regard to the property, which has been mentioned by the petitioner in the representation, said to be belong to another partner of the firm. Therefore, under the scheme and the Rules, the first respondent is bound to take note of the petitioner s objection and proceed in accordance with Rule 11 of the Rules, by investigating into the objection. Writ petition stands disposed of, by directing the first respondent to investigate the claim / objection made by the petitioner, dated 26.07.2016, on merits and in accordance with law, after affording an opportunity of personal hearing, and pass orders within a period of eight weeks from the date of receipt of a copy of this order. It is needless to state that the petitioner should cooperate in the process of investigation and if any details or documents are called for by the first respondent, the same shall be produced by the petitioner.
Issues:
Challenge to order of attachment under Rule 48 of the Second Schedule to the Income Tax Act, 1961 - Property owned by Hindu Undivided Family (HUF) - Interpretation of Section 222 of the Act - Definition of defaulter under Rule 1 (b) of the Second Schedule - Procedure under Rule 11 of the Rules for Tax Recovery Officer to investigate objections - Appeal process under Rule 86 of the Rules. Analysis: The writ petition challenges the attachment order passed by the first respondent under Rule 48 of the Second Schedule to the Income Tax Act, 1961, attaching a property owned by a Hindu Undivided Family (HUF). The petitioner, a partner of the firm with tax arrears, argues that as the property belongs to the HUF, it cannot be attached for the firm's dues. The petitioner invokes Section 222 of the Act, emphasizing that recovery can only be made from the assessee, not the owner of the attached property, who is the HUF in this case. The petitioner's counsel highlights the definition of "defaulter" under Rule 1 (b) of the Second Schedule, emphasizing that recovery can only be initiated against the assessee mentioned in the Certificate. Referring to Rule 4 of the Rules, it is argued that recovery can be done through attachment of the defaulter's properties, movable and immovable, and other specified measures. The counsel contends that the attachment order should be quashed based on these legal provisions. The petitioner submitted a representation pointing out the ownership of certain properties by another partner of the firm who is liable to pay the tax. The Senior Standing Counsel for the respondents argues that the Rules provide a procedure for the Tax Recovery Officer to investigate such claims or objections. Rule 11 empowers the Officer to investigate objections to attachment or sale of property, with provision for appeal to the Commissioner under Rule 86 against the Officer's decisions. The Court directs the first respondent to investigate the petitioner's objection to the attachment order, dated 26.07.2016, in accordance with Rule 11 of the Rules. The Officer is instructed to consider the petitioner's objection and investigate the property mentioned in the representation, belonging to another partner of the firm. The first respondent is required to pass orders within eight weeks, affording the petitioner a personal hearing and following due process. The petitioner is instructed to cooperate in the investigation and provide any requested details or documents. No costs are awarded in this disposition.
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