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2021 (7) TMI 166 - HC - Income TaxRecovery proceedings - Attachment orders - rights over the property - seeking transfer of property in favor of purchaser - HELD THAT - In this case, the petitioner has been fighting for her rights over the property in terms of a sale agreement dated 30.06.1994. The Hon ble Supreme Court ultimately accepted the contention of the petitioner that the third and fourth respondent s mother late Mrs.J.Padmini ought to have executed a sale deed in favour of the petitioner in terms of the aforesaid sale agreement dated 30.06.1994. The third and the fourth respondents who were minors at the time of execution of the sale agreement on 30.06.1994 ought to have executed the sale deed in favour of the petitioner. Therefore, the subsequent tax liability of the fourth respondent and her husband for the Assessment Years 2012-13 and 2013 -14 cannot be to the disadvantage of the petitioner, since the petitioner has been diligently litigating since 2004. Therefore, fruits of the decree in a contested suit cannot be denied merely because the seller or one of the persons had incurred subsequent tax liability. The fruits of a decree will date back to the date of the suit. The records also indicate that earlier an application was filed by late Mrs.J.Padmini before the Principal District Court, Coimbatore to obtain court s permission to execute the sale deed. If IT was however withdrawn by her. Thus, the attachment of the property on 27.03.2017 by the officer of the 1st respondent cannot override the commitment under sale agreement dated 30.6.1994. Section 281 of the Income Tax Act, 1961 applies only to a situation where an assessee during the pendency of any proceeding under the Act, or after completion thereof, but before the service of a notice under Rule 2 of the Second Schedule, creates a charge on, or parts with the possession (by way of sale, mortgage, gift, exchange or any other mode of transfer whatsoever) of, any of his/her assets in favour of any other person. Only such charge or transfer is void as against any claim in respect of any tax or any other sum payable by the assessee as a result of completion of the said proceedings or otherwise. The tax liability of the aforesaid firms of which the fourth respondent and her husband were the partners are subsequent to the commitment in the sale agreement dated 30.6.1994. Therefore, there is no justification in not releasing the registered sale deed in favour of the petitioner as the petitioner is a bonafide purchaser who has purchased the property after a long drawn litigation . In this case admittedly the transfer was on account the final culmination of the litigation by the order of Hon ble Supreme Court.There was only a delay in the execution of sale deed due to the pendency of the proceedings as the third and fourth respondent s mother declined to execute sale deed under the sale agreement dated 30.6.1994 - Therefore, there is no justification in not releasing the registered sale deed in favour of the petitioner as the petitioner is a bonafide purchaser who has purchased the property after a long drawn litigation . This Court is inclined to allow this writ petition as prayed for.
Issues:
1. Challenge to impugned communication regarding attachment of property for tax arrears. 2. Amendment of prayer from writ of certiorari to writ of certiorarified mandamus. 3. Dispute over sale agreement and execution of sale deed. 4. Judgment and decree of Additional District Court and Sessions Court. 5. Appeal before High Court and Supreme Court. 6. Execution of sale deed and tax arrears attachment. 7. Interpretation of Income Tax Act, 1961 regarding property attachment. 8. Justification for releasing registered sale deed to petitioner. Issue 1: Challenge to impugned communication regarding attachment of property for tax arrears The petitioner, a senior citizen, challenged a communication stating that the property was attached due to tax arrears. The petitioner was required to obtain a certificate confirming no tax dues from the Income Tax Department. The petition evolved from a writ of certiorari to a writ of certiorarified mandamus to obtain records and direct the release of a registered sale deed. Issue 2: Dispute over sale agreement and execution of sale deed The petitioner entered a sale agreement in 1994 with the mother of minor respondents for a house property. Despite payment, the sale deed was not executed. Legal proceedings ensued, leading to a court order for refund of the advance payment. The Supreme Court later allowed the petitioner's appeal, leading to the execution of the sale deed in 2018. Issue 3: Interpretation of Income Tax Act, 1961 regarding property attachment The first respondent opposed the petition citing tax default by partnership firms related to the property owners. The property was attached for tax arrears, contending that the sale deed was executed contrary to the Income Tax Act. The petitioner's counsel argued that subsequent tax liabilities should not affect the property transfer, given the prolonged litigation. Issue 4: Justification for releasing registered sale deed to petitioner The court analyzed Section 281 of the Income Tax Act, which deems transfers void if made during or after tax proceedings without clearance. However, in this case, the transfer was delayed due to litigation, and the sale agreement predated the tax liabilities. The court ruled in favor of the petitioner, directing the release of the registered sale deed and cancellation of encumbrances related to tax arrears. This detailed analysis of the judgment covers the issues involved comprehensively, providing insights into the legal aspects and the court's reasoning behind the decision.
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