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TMI Blog2016 (7) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... ground floor of the property in question. Its instructions to the contrary to Respondent No. 3 are, therefore, unsustainable in law. Consequently, the attachment order dated 25th November 2013 issued by the ITD insofar as it relates to the ground floor of the property in question is hereby set aside. Respondent No. 3 will, within a period of not later than four weeks from today, proceed to register the sale deed executed by IDBI in favour of the Petitioner in respect of the ground floor of the property in question. - W.P.(C) 3430/2016 & CM No. 14665/2016 - - - Dated:- 13-7-2016 - S.MURALIDHAR JUSTICE NAJMI WAZIRI JJ. Petitioner Through: Mr. Prasouk Jain, Advocate. Respondents Through: Mr. Ashok K. Manchanda, Senior Standing Counsel with Lakshmi Gurung, Advocate for R-1. Mr.Sanjay Bhatt and Mr. Abhishek Anand, Advocates for R-2/IDBI. Mr. Satyakam, Additional Standing Counsel with Mr. Naveen Jakhar, Advocate for R-3. O R D E R Dr. S. Muralidhar, J.: 1. The principal challenge in this writ petition, filed by Mr. Suresh Kumar Goyal, is to an order dated 25th November 2013 passed by Tax Recovery Officer ( TRO ), Respondent No. 4 to the extent it attche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15th October 2014, 3rd January 2015 to the TRO. 6. On 24th January 2015 the IDBI issued an advertisement in the newspaper offering for sale by public auction, both the ground floor and the entire basement of the property in question. While the reserve price for the ground floor was fixed at ₹ 1.50 crores, the reserve price for the entire basement was at ₹ 61 lakhs. A bidder had to deposit 10% of the bid amount together with the bid. The last date for submission of the bids was 25th February 2015. 7. Meanwhile, a further reminder was sent by the IDBI to the TRO, CITVII on 11th February 2015 pointing out that despite several reminders no response regarding the authenticity of the attachment order dated 25th November 2013 was received. 8. On 25th February 2015 the Petitioner submitted his bid for the ground floor of the property in question in the sum of ₹ 1.54 crores. He simultaneously deposited earnest money in the sum of ₹ 15.40 lakhs, i.e. 10% of the bid amount offered by him. On 26th February 2015 the Petitioner was declared as the successful bidder. 9. On 3rd March 2015 the IDBI wrote to the TRO, CIT-VII intimating them about the ground floor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner s name. On 29th July 2015 a letter was written by TRO, CIT-12 to the IDBI seeking explanation as to how the ground floor and basement of the property in question was sold by IDBI by public auction without following proper procedure. It was stated that no NOC could be issued till the outstanding tax liability was paid by IDBI out of the sale proceeds. 14. On 21st August 2015 IDBI wrote to the Petitioner issuing a corrigendum to the sale certificate issued on 21st April 2015 by amending the particulars under the Column list of encumbrances from Nil to attachment order dated 25th November 2013 of the Income Tax Department (copy attached) on the said property On the same day, the IDBI also issued a letter to the Petitioner refusing to refund the money deposited by the Petitioner. On the very next day, i.e., 22nd August 2015 IDBI sent the Petitioner a copy of the attachment order issued by the TRO, CIT-12 which had been inadvertently not enclosed with the letter dated 21st August 2015. 15. The Petitioner made a representation on 26th August 2015 to the TRO, CIT-VII praying for removal of the attachment. On 26th September 2015 and 30th September 2015 representations were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r for a direction to IDBI to refund the amount deposited by the Petitioner together with interest. 19. Mr. Sanjay Bhatt, learned counsel for the IDBI/Respondent No. 2 supported the case of the Petitioner insofar as the main prayer for registering the sale deed in favour of the Petitioner. He submitted that the attachment resulting from notice under Section 13 (2) of the SARFAESI Act issued by the IDBI on 24th May 2012 would have precedence over the impugned attachment order dated 25th November 2013 issued by the TRO. 20. In the counter-affidavit filed on behalf of the ITD, it is stated that there was huge outstanding against the Assessee and therefore, the TRO, CIT12 attached the property in question strictly in accordance with the provisions of the IT Act. The attachment order was issued under Section 222 of the IT Act read with Rule 48 of the Second Schedule of the IT Act. It is submitted that since the Sub Registrar, Respondent No. 3, had informed IDBI about the attachment of the property by the ITD, there was no need for the IDBI to write to the ITD to confirm the authenticity of the said order. It is further submitted that failure on the part of Respondent No. 4 to rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it is made- (i) For adequate consideration and without notice of the pendency of such proceeding or, as the case may be, without notice of such tax or other sum payable by the Assessee; or (ii) With the previous permission of the Assessing Officer. (2) This section applies to cases where the amount of tax or other sum payable or likely to be payable exceeds five thousand rupees and the assets charged or transferred exceed ten thousand rupees in value. Explanation : In this section, assets means land, building, machinery, plant, shares, securities and fixed deposits in banks, to the extent to which any of the assets aforesaid does not form part of the stock-in-trade of the business of the Assessee. 24.1 The question that arose for consideration before the Gujarat High Court in Asset Reconstruction Company (India) Limited v. Commissioner of Income Tax (supra) was similar to the one that arises in the present case. The Petitioner, Asset Reconstruction Company (India) Limited [ ARCIL ] had invoked 13 (2) of the SARFAESI Act and issued a notice dated 24th December 2009 to Mardia Steels Limited ( MSL ) upon failure by MSL to repay the loans to the banks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th intention of defrauding the Revenue, the only remedy available to the ITD was to file a suit under Rule 11 (6) of the Second Schedule to the IT Act to have the transfer declared void under Section 281 of the IT Act. However as far as the case of the ARCIL was concerned, the Gujarat High Court concluded as under: It is declared that the claim put-forward by Respondent No. 1 Income Tax Department by way of attachment of assets covered by Section 13 (2) notice for priority over the Petitioner for realization of the income-tax dues is contrary to the settled position of law and illegal. It will be open for the Petitioner to exercise his right under the SARFAESI Act and the Rules made thereunder and the Income Tax Department shall not in any manner hamper or restrain the Petitioner in proceeding further under the SARFAESI Act, regardless of the attachment orders passed by the Income Tax Department for realization of income tax dues of Respondent No. 3 company. Rule is made absolute. 25. The Supreme Court in Bombay Stock Exchange v. V.S. Kandalgaonkar (2015) 2 SCC 1 was addressing the question whether the ITD could require the Bombay Stock Exchange ( BSE ) to deposit the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed assets and therefore, such a notice, which in the present case is dated 6th January 2003, is not a mere show-cause notice but it is an action taken under the provision of the NPA Act. 27. In view of the above legal position, IDBI was entitled, in terms of Section 13 (2) read with Section 35 of the SARFAESI Act, to proceed to bring to sale by way public e-auction the property in question on 25th February 2015 notwithstanding that the ITD had passed the impugned attachment order dated 25th November 2013. In view of the legal position explained in Bombay Stock Exchange v. V.S. Kandalgaonkar (supra) the ITD is precluded from relying on the proviso to Section 281 of the IT Act to prevent the registration of the sale deed executed in favour of the Petitioner in respect of the ground floor of the property in question. Its instructions to the contrary to Respondent No. 3 are, therefore, unsustainable in law. 28. Consequently, the attachment order dated 25th November 2013 issued by the ITD insofar as it relates to the ground floor of the property in question is hereby set aside. Respondent No. 3 will, within a period of not later than four weeks from today, proceed to register th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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