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TMI Blog2015 (10) TMI 2061X X X X Extracts X X X X X X X X Extracts X X X X ..... differently the 3rd Respondent ceased to be the owner on and from 08.02.2010, when everything for transfer of the property excepting the execution and registration of conveyance was completed. Admittedly, alleged dues are recoverable from the 3rd Respondent. Under the Income-tax Act, the dues of the Revenue do not form charge on the property and this can only be recovered under the method and mode as provided under the Income-tax Act and the Rules framed thereunder. Since the 3rd Respondent failed to pay the dues to the department on time, the property in question has been attached. In the proceedings between the Department and the 3rd Respondent, the tax liability was reduced by CIT(Appeals) and the same was also paid by the 3rd Respondent. By virtue of the completion of the entire sale transaction and registration of the same, the Petitioner became the absolute owner of the property in question. While so and when the 3rd Respondent was not the owner of the property and when on the date of passing the order of attachment, the property in question did not belong to the assessee, namely, the 3rd Respondent, the attachment of the property in question, which has been in absolute p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2007 registered as Document No. 109 of 2007 and (b) Mortgage Deed dated 28.08.2007 registered as Document No. 883 of 2007. The petitioner firm, from and out of the sale consideration on 29.1.2010 and 30.1.2010 has paid the entire dues to the said mortgagees and had cleared the entire dues of the third respondent. Necessary full discharge receipts viz., Receipt dated 30.01.2010 registered as Document No.109/2010 and Receipt dated 30.01.2010 registered as Document No. 110/2010 were also executed and registered in the Sowcarpet registration office. At the request of the 3rd Respondent, the entire sale consideration for purchase of the aforesaid property was paid by them in the following manner:- a. ₹ 19,00,000/- (Rupees Nineteen Lakhs only ) paid by Cheque No.589552 dated 20.01.2010 drawn on Bank of Baroda, Sowcarpet Branch, Chennai at the time of execution and registration of agreement of sale dated 20.01.2010; b. ₹ 5,50,00,000/-(Rupees Five Crores Fifty Lakhs Only) paid by Pay Order No. 447004 dated 27.01.2010 issued by Bank Baroda, Sowcarpet Branch, Chennai to discharge the loan availed by the 3rd Respondent under Mortgage Deed dated 28.08.2007 registered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dations Ltd under Section 147 of the Income Tax Act, 1961 and Assistant Commissioner of Income Tax, Company Circle I(32), Chennai-600 034 has passed an order dated 31.12.2009 alleging that the assessee has concealed taxable income and raised a demand calling upon the 3rd Respondent to pay a sum of ₹ 1,63,08,463/- towards the arrears of Income Tax for the assessment year 2006-2007. The 3rd respondent further informed the petitioner that he has preferred an appeal against the said order and the same is pending before the Commissioner of Income Tax (Appeals III), Chennai. Without disclosing the aforesaid facts, the 3rd respondent had sold the aforesaid property to the petitioner. The Petitioner is a bona fide purchaser of the aforesaid property and as a prudent purchaser, had done all the scrutiny and verification of title of the aforesaid property before purchasing the property. It will also be pertinent to note that the petitioner had also conducted a search with respect to any encumbrance on the aforesaid property with the registrar of companies before purchasing the property and no encumbrance was reflected on the aforesaid property. c. The petitioner also ascertained t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Sowcarpet, Chennai measuring an extent of 8992 sq.ft or thereabouts to satisfy the tax dues of the department. The Petitioner further submitted that this property itself is sufficient to discharge the tax arrears, if any, of the 3rd respondent. In spite of the fact that the first respondent had no charge over the property at Old No.510, New No.6, Mint Street, Sowcarpet, Chennai, till the entire sale transaction was completed, he had without any right and authority created a charge over the said property with the second respondent and deny the petitioner firm's enjoyment of the property that rightfully and legally belonging to them. The petitioner firm had meticulously checked the documents related to the property at Old No.510, New No.6, Mint Street, Sowcarpet, Chennai and only after being satisfied that there were no attachments on the said property, paid the entire consideration. In fact, the 3rd Respondent had not informed anything about the demand from the Income Tax Department and the petitioner is a bona fide purchaser for valuable consideration. Hence, the attachment made by the first respondent is not binding on the petitioner firm. Out of the entire sale consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 226(3) of the Income Tax Act dated 22.11.2011 and another letter dated 7.12.2011 to the petitioner requesting to furnish certain particulars and the same has been filed by the petitioner vide letter dated 16.12.2011. Vide letter dated 3.5.2012, the 3rd respondent has been informed to pay the entire arrears together with interest to consider their request for lifting of attachment of the above mentioned property. The above property itself is sufficient to discharge the tax arrears is not acceptable, since the property is in dispute and subject to many encumbrances. Hence, in the interest of Revenue, the attachment made in respect of the property at Old No.510, New No.6, Mint Street, Sowcarpet, Chennai, cannot be lifted. Though the 3rd respondent was well aware of its tax liability, he had entered into a sale transaction without the previous permission of the assessing Officer. Therefore, the action of the 1st respondent is legal and as per law. In such circumstances, this Writ Petition is liable to be dismissed as devoid of merits. 4. The 3rd Respondent has filed a counter affidavit, wherein it is averred as follows:- a. The third respondent company was the owner of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et, Sowcarpet, Chennai, for recovery of the aforesaid amount. It will not be out of place to mention here that the 3rd respondent's adjacent property comprised in Municipal Old Door No.512/1, New No.2/1, Mint Street, Chennai, comprised in O.S.No.600, R.S.No.600/2 of VOC Nagar Division, measuring an extent of 8992 sq.ft has also been attached by the 1st respondent. The 3rd respondent already sold the aforesaid property bearing Old No.510, New No.6, Mint Street, Sowcarpet, Chennai, to the petitioner and the entire transaction including receipt of the entire sale was completed in the year 2010 and handed over the possession of the property and the property became vested in the petitioner and the third respondent do not have any right, title or interest in the aforesaid property. The order of the Assessing Officer for the year assessment year 2006-07 under Section 144 read with Section 147 of the Income Tax, 1961, resulted in a demand of ₹ 1,63,08,463/-. The said order was challenged by way of an appeal instituted on 04.02.2010 against the order passed by ACIT Company Circle 1(3) Chennai (AO) before CIT (A) 1 Chennai. The CIT (A) after hearing the appellant and also the AO by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r execution and registration of agreement of sale dated 20.01.2010 by the petitioner and the learned counsel for the Petitioner contended that even on date the entire arrears have been settled by the 3rd Respondent as per the appeal order of CIT(A) and hence, the continuance of attachment is illegal and he sought to allow the Writ Petition. 6. The learned standing counsel for the 1st Respondent reiterated the averments made in the counter affidavit filed by them and supported the impugned attachment. 7. The learned counsel for the 3rd Respondent has supported the case of the Petitioner for removing the charge over the property in question and lifting the attachment created thereon. 8. This court heard and considered the submissions made by the learned counsel on either side and also perused the materials placed on record. 9. The Petitioner had entered into an agreement of sale dated 20.01.2010 for purchase of the property in question with the 3rd Respondent, by paying advance sale consideration of ₹ 19,00,000/-, out of the total sale consideration of ₹ 11,00,00,000/-. There were two encumbrances/charges over the property by virtue of two registered mortgage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t date, there was no interest because such interest has already been passed on to the petitioner therein and accordingly, held that the order of attachment of the property claimed and held by the petitioner was not sustainable under the law. 13. In the case on hand, the Petitioner has become the owner of the property in question, to put it differently the 3rd Respondent ceased to be the owner on and from 08.02.2010, when everything for transfer of the property excepting the execution and registration of conveyance was completed. Admittedly, alleged dues are recoverable from the 3rd Respondent. Under the Income-tax Act, the dues of the Revenue do not form charge on the property and this can only be recovered under the method and mode as provided under the Income-tax Act and the Rules framed thereunder. 14. Since the 3rd Respondent failed to pay the dues to the department on time, the property in question has been attached. In the proceedings between the Department and the 3rd Respondent, the tax liability was reduced by CIT(Appeals) and the same was also paid by the 3rd Respondent. By virtue of the completion of the entire sale transaction and registration of the same, the Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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