2017 (7) TMI 1050 - HC - Income Tax

Attachment of the immovable property and proclamation of attachment - procedure for recovery of tax - Held that - Impugned order has been passed by the Tax Recovery Officer under Rule 16 (1) and (2). A reading of Rule 16 (1) and (2) would show that the Tax Recovery Officer has no power to declare the alienation as null and void. Accordingly the impugned order is liable to be quashed and it is quashed. However it is made clear that the department is at liberty to proceed against the properties of the defaulters which according to the department have been attached on 06.01.1988. It is open to the petitioner to approach the Tax Recovery Officer under Rule 11(1) claiming that this property is not liable for attachment. Once such claim is preferred it is for the Tax Recovery Officer to adjudicate the sale of the property under Rule 11. If the claim is rejected the aggrieved party has got a right to move the Civil Court to establish his right. The writ petition is accordingly allowed. Rule nisi is made absolute. However the right of the department to proceed against the property on the basis of the attachment made on 06.01.1988 is protected with liberty to the petitioner to move the Tax Recovery Officer under Rule 11 seeking adjudication of his claim.

Summary

Issues: Challenge to order of Tax Recovery Officer declaring sale of property null and void due to attachment for income-tax arrears. Interpretation of provisions of Income-tax Act, 1961 regarding recovery of tax through attachment and sale of property. Validity of Tax Recovery Officer's power to declare alienation null and void.

In this case, the petitioner challenged the order of the Tax Recovery Officer declaring the sale of a property null and void due to attachment for income-tax arrears. The court analyzed the relevant provisions of the Income-tax Act, 1961, specifically focusing on the procedure for recovery of tax through attachment and sale of the defaulter's immovable property. The court noted that Rule 11 provides for adjudication of claims to attachment or sale of property in execution of a certificate issued by the Tax Recovery Officer. Additionally, Rule 16 restricts the defaulter from dealing with the attached property without permission. The court highlighted Rule 16(2), stating that any private transfer of the attached property shall be void against all claims enforceable under the attachment.

The court further examined Rule 48, which deals with the attachment of immovable property, and Rule 50, which pertains to the proclamation of attachment. The impugned order was passed by the Tax Recovery Officer under Rule 16(1) and (2). The court concluded that Rule 16 does not empower the Tax Recovery Officer to declare the alienation null and void. Consequently, the court quashed the impugned order but allowed the department to proceed against the defaulters' properties attached earlier. The petitioner was granted the right to approach the Tax Recovery Officer under Rule 11(1) to contest the attachment of the property. If the claim is rejected, the petitioner can seek recourse in the Civil Court to establish their rights. The writ petition was allowed, and the rule nisi was made absolute, with the department retaining the right to proceed against the property based on the previous attachment. No costs were awarded, and related motions were closed.