The judgment of the court was delivered by MR.JUSTICE M.R. SHAH J- By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for appropriate writ, direction and order to quash and set aside the impugned order dated 21.09.2011 passed by the respondent no.1, by which, the respondent no.1 has declared the transaction between the petitioner and the original owners (original assessee) with respect to property situated at Plot No. 48/B, Sector 19, Gandhinagar as void in exercise of powers under Section 281(1) of the Income Tax Act (hereinafter referred to as the “Actâ€).
2.0. It is the case of the petitioner that petitioner purchased the aforesaid property in question by registered sale deed and on payment of full sale consideration and after giving public notice for title clear certificate in Gujarat Samachar, Gandhinagar Edition. That after obtaining title clear certificate from his Advocate Shri F.K. Lakhani Associates after making thorough investigation and search along with search report and it was found that the title of the property in question is clear, the petitioner purchased the property in question from the respondent no.2 herein – original owner for total sale consideration of Rs. 1,25,00,000/, by registered sale deed dated 06.02.2010. That thereafter, the petitioner was put in possession of the property and the petitioner started using the same. That thereafter, the petitioner received impugned order dated 21.09.2011, passed by the respondent no.1 whereby respondent no.1 has declared the sale between the petitioner and the original owner as void under Section 281(1) of the Act.
2.1. Feeling aggrieved and dissatisfied with the impugned order passed by the respondent no.1 declaring the sale between the petitioner and the respondent no.2 as void under Section 281 of the Act, the petitioner has preferred present Special Civil Application under Article 226 of the Constitution of India.
3.0. Shri Dipak Dave, learned advocate for the petitioner has vehemently submitted that the impugned order dated 21.09.2011 passed by the respondent no.1 declaring the sale between the petitioner and the respondent no.2 herein is in breach of principle of natural justice. It is submitted that before passing the impugned order and declaring the sale between the petitioner and respondent no.2 as void, neither any notice was served upon the petitioner nor the petitioner was given any opportunity to show cause as to why the sale may not be treated to be void. It is submitted that admittedly before passing the impugned order, the respondent no.2 came to be heard. It is submitted that as such the petitioner is a bona fide purchaser of the property and on payment of full sale consideration, the petitioner purchased the same without notice of pendendy of any proceedings against the respondent no.2. It is submitted that if the opportunity would have been given to the petitioner, the petitioner would have pointed out that sale between the petitioner and respondent no.2 is not required to be declared as void as the same was made for adequate consideration and without notice of pendency of any proceedings against respondent no.2. It is submitted that therefore, the impugned order deserves to be quashed and set aside.
3.1. It is further submitted by Shri Dave, learned advocate for the petitioner that even otherwise in exercise of powers under Section 281(1) of the Act as held by the Division Bench of this Court in the case of Karsanbhai Gandabhai Patel vs. Tax Recovery Officer reported in 2014(362) ITR 374, the Assessing Officer has no jurisdiction to declare the sale as void and only remedy available to Assessing Officer is to file suit declaring sale between the purchaser and the original assessee void. It is submitted that therefore, the impugned order declaring the sale between the petitioner and the respondent no.2 as void is wholly without jurisdiction. Making above submission and relying upon the above decision, it is requested to allow the present petition.
4.0. Ms. Mauna Bhatt, learned advocate has tried to oppose the present petition by submitting that the impugned order passed by the respondent no.1 is absolutely in consonance with the provisions of Section 281(1) of the Act and therefore, the same is not required to be interfered with by this Court in exercise of powers under Article 226 of the Constitution of India.
4.1. It is vehemently submitted by Ms. Bhatt, learned advocate for the Revenue that before passing the impugned order, notice was issued and served upon the respondent no.2 and having found that at the time when the property was sold by the respondent no.2 there was income tax dues and therefore, as it was found that the original assessee act of transferring / selling the property in question, without seeking permission of the respondent no.1 is void under Section 281(1) of the Acct, the respondent no.1 is justified in passing the impugned order.
Making above submissions, it is requested to dismiss the present petition.
5.0. Heard the learned advocates for the respective parties at length.
6.0. At the outset, it is required to be noted that by impugned order, respondent no.1 has declared the sale / transaction between the petitioner and the respondent no.2 as void in exercise of powers under Section 281(1) of the Act. It is undisputed fact that before passing the impugned order, no opportunity of being heard has been given to the petitioner – transferee. It is not in dispute that before passing the impugned order a notice was issued and served upon the respondent no.2 only who did not appear before respondent no.1. Considering proviso to Section 281(1) of the Act any charge or transfer has required to be declared as void under subsection (1) of Section 281 of the Act, shall not be void if it is made for adequate consideration and without notice of pendency of any proceedings under the Act or without notice of such tax or other sum payable by the assessee; or with the previous permission of the Assessing Officer. Therefore, if the transferee is in a position to point out that such transfer was made for adequate consideration and without notice of the pendency of any proceedings under the Act, or without notice of such tax or other sum payable by the assessee, such a transfer is not required to be declared as void. Therefore, if the opportunity would have been given to the petitioner transferee, in that case, the petitioner transferee could have pointed out and / or satisfied respondent no.1 that the sale in favour of the petitioner was for adequate consideration and without notice of pendeny of proceedings under the Act or without notice of such tax or other sum payable by the assessee. At this stage, it is required to be noted that it is not the case on behalf of the respondent no.1 that the sale in favour of the petitioner was either without adequate consideration and / or petitioner – transferee had knowledge / notice of pendency of any proceedings under the Act against the original assessee or petitionertransferee had in knowledge / notice as such tax such tax or other sum payable by the assessee. Under the circumstances, the impugned order is absolutely in breach of principle of natural justice and same deserves to be quashed and set aside on the aforesaid ground alone.
7.0. In view of the above and for the reasons stated above, he impugned order dated 21.09.2011 passed by the respondent no.1 declaring the sale between the petitioner and the respondent no.2 with respect to property situated at Plot No. 48/B, Sector 19, Gandhinagar as void in exercise of powers under Section 281(1) of the Act is hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No costs.
