AIR 1999 SUPREME COURT 427 ::1998 AIR SCW 3613 ::1999 TAX. L. R. 90 ::1998 (7) ADSC 231 ::(1998) 149 CurTaxRep 90 ::1998 (6) SCC 658 ::(1998) 5 Scale 241 ::1998 (234) ITR 188 ::(1998) 100 Taxman 236 ::(1998) 7 Supreme 268 ::(1998) 6 JT 277 (SC) ::1998 (6) JT 277

Supreme Court Of India

(From : BOMBAY)

Hon'ble Judge(s): Sujata Manohar, G. B. Patnaik , JJ

Attachment of property - Objections - Assessee has conveyed property to wife and daughter during pendency of proceedings under R. 11 of 2nd Sch. - Transfer declared void by Tax Recovery Officer under S. 281 without enquiry into question of possession - Is without jurisdiction. Income-Tax Act (43 of 1961) , S.281, Sch.II, R.11(4), R.11(5)— Section 281 declares as void any transfer made by the assessee during the pendency of proceedings under the Act, with the intention to defraud the Revenue. The powers of the Tax Recovery Officer, however, under R. 11 of the Second Schedule to the Income-tax Act are somewhat different. Under R. 11 (1) where any claim is preferred to or any objection is made to the attachment or sale of any property in execution of a certificate on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection. The Tax Recovery Officer, therefore, has to examine who is in possession of the property and in what capacity. He can only attach property in possession of the assessee in his own right, or in possession of a tenant or a third party on behalf of/for the benefit of the assessee. He cannot declare any transfer made by the assessee in favour of a third party as void. If the Department finds that a property of the assessee is transferred by him to a third....