770/CBDT. - Income Tax - 770/CBDT

Instruction No: 770/CBDT Date of Issue: 17/10/1974 Section(s) Referred: 230A of Income Tax Act , 53 AND 53A of TP Act In para 49(c) of the C AG's Report for the year 1972-73 it has been pointed out that the income-tax demand of Rs.53,635 outstanding against an assessee for the assessment year 1954-55 was written off on 16-1-71 on the ground that the assessee owned no property which could be used for recovery of tax. The demand in question was raised on three different dates viz. Rs. 46,835 on 30.3.1959, Rs.300 on 30.6.59 and Rs.6,500 on 28.3.62. The assessee sold his house property for Rs.43,000 on 23.4.59, i.e., within one month from the receipt of the first notice. On 3.7.59, viz, a few days after the receipt of the first notice, a plot of land was also disposed of for Rs.2,000. In the report of the C AG it has been observed. " The Department did not take legal action (upto 22.4.65) to counter such precipitate and swift action of the assessee to divest himself of his known immovable properties even though the ITO expressed his apprehension, once in May, 1959 and again in June, 1964 that the motive of sale of properties was to defeat recovery proceedings". The report goes on the state- "The Senior Standing Counsel to IT Department, to whom the case was referred in April, 1970 expressed the opinion that the transaction (sale of properties) were suspicious and appeared to have been made with the idea of defeating recovery of income-tax, but the remedial action had become time-barred on 23.4.1965." 2. Transaction of immovable properties of the value of Rs.50,000 or above normally come to the notice of the ITO in view of the provisions of section 230A of the IT Act, which require the production of a clearance certificate from the ITO before a document of transfer is registered under the Indian Registration Act, 1908. However, cases of transfer of properties of the value of Rs.50,000 or less do not normally come to the notice the ITO, because the IT Act 1961 does not place any restrictions on registration of such transfers. 3. In order to ensure that transfer of the type pointed out by the C AG in the Report for the year 1972-73 do not occur, the Board desire that as soon as the ITO comes to know that a property of the value of Rs.50,000 or less has been transferred with a view to defeat or delay the recovery of taxes, the advisability of taking legal action under section 53 of the Transfer of Property Act, should be examined in consultation with the Department's legal counsel. 4. There may also be instances of transfers of immovable properties of the value exceeding Rs.50,000 which have been effected without registration in order to avoid the restrictions placed by Section 230A of the IT Act, 1961, may confer rights on the transferee under Section 53A of the Transfer of Property Act. The Department's legal counsel should be consulted immediately on receipt of information relating to such transfers also. 5. These instructions may please be brought to the notice of all the officers working in your charge.