High Court Of Allahabad
Dr. Manoj Kabra VS ITO
Section : 281
Tarun Agarwala And Bachchoo Lal, JJ.
Writ Tax No. 169 Of 2013
May 22, 2014
JUDGMENT
1. The petitioner is a medical doctor and purchased a property by means of a registered sale deed on September 25, 2007, from Sri Ajay Kumar Agrawal on a consideration of Rs. 7 lakhs. The stamp duty was paid in accordance with the circle rate which was Rs. 12 lakhs. Pursuant to the said sale deed, the petitioner contends that he came in possession. It transpires that assessment proceedings for the assessment year 2005-06 was pending against the seller, namely, Sri Ajay Kumar Agrawal, which culminated when an assessment order under section 143(3) of the Income-tax Act was passed on July 31, 2007, and certain demand was raised against him.
2. Based at this assessment order, a notice dated January 3, 2008, under section 281 was issued to the petitioner to show cause as to why the sale deed executed by Ajay Kumar Agrawal in favour of the petitioner should not be treated as a void document. The petitioner, on receipt of the said notice submitted his reply contending that he was a bona fide purchaser for adequate consideration and that no notice of pendency of proceedings before the Assessing Officer under the Income-tax Act was known to the petitioner nor was it brought to his knowledge by the seller. The petitioner further contended that the recital in the conveyance deed clearly mentioned that the property was free from all encumbrances. The petitioner further placed reliance on the decision of the Supreme Court in TRO v. Gangadhar Vishwanath Ranade [1998] 234 ITR 188/100 Taxman 236 in which it was held that section 281 is only a declaratory provision and is not an adjudicatory provision entitling the authority to declare a document as a void document.
3. The petitioner, in support of his submission, also filed documentary evidence, namely, sale deeds of properties sold in the vicinity where the property in question was located relating to the period in question to show that adequate consideration had been passed in the purchase of the land and building.
4. The Income-tax Officer, Muzaffarnagar, without giving any opportunity of hearing passed an order dated January 11, 2008, declaring the sale deed as void. The petitioner being aggrieved, filed a Writ Petition No. 4148 of 2008, which was disposed of with a direction that the petitioner would appear before the authority and that the authority would reconsider the matter after giving an opportunity of hearing. Pursuant to the said order, the impugned order dated January 15, 2013, was passed holding that there was inadequate consideration in the transfer of the property by Ajay Kumar Agrawal in favour of the petitioner and, therefore, the conveyance was a void document. The petitioner, being aggrieved by the said order, has filed the present writ petition.
5. Heard Sri Shubham Agrawal, the learned counsel for the petitioner and Shri Shambhoo Chopra, the learned counsel for the department.
6. The controversy involved in the present writ petition is squarely covered by the decision of the Supreme Court in Gangadhar Vishwanath Ranade (supra), wherein the provision of section 281 was analyzed and it was held that the Legislature had no intention to confer any exclusive power or jurisdiction upon the income-tax authority to decide any question arising under section 281. The Supreme Court held that section 281 merely declared what the law was, namely, that during the pendency of any proceeding under Income-tax Act in the event any assessee creates a charge or parts with the possession by way of sale, mortgage, exchange or by any other mode of transfer, such transfer would be void as against any claim in respect of any tax payable by the assessee. The Supreme Court held that section 281 did not prescribe any adjudicatory machinery for deciding any question which may arise under section 281 and that in order to declare a transfer as fraudulent under section 281, an appropriate proceeding in accordance with law was required to be taken under section 53 of the Transfer of Property Act. The Supreme Court held that the Income-tax Officer, in order to declare the transfer void under section 281 and being in the possession of the creditor, was required to file a suit for declaration to the effect that the transaction of transfer was void under section 281 of the Income-tax Act.
In the light of the aforesaid, we are of the opinion that the Income-tax Officer had exceeded its jurisdiction in adjudicating the matter under section 281 of the Income-tax Act. The Income-tax Officer had no jurisdiction to declare the sale deed as void. Consequently, the impugned order cannot be sustained and is quashed. The writ petition is allowed.
[Citation : 364 ITR 541]
