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2024 DIGILAW 689 (KER)

Junus Brayan v. Tahsildhar

2024-06-20

VIJU ABRAHAM

body2024
JUDGMENT : The above writ petition has been filed seeking a direction to the 2nd respondent to effect mutation in favour of the petitioners and to accept land tax for the properties covered by Ext.P1 settlement deed. 2. The brief facts necessary for the disposal of the writ petition are as follows: Petitioners are the owners in possession of 1.80.09 hectares of land comprised in Sy.No.298/1A1A1A (Old Sy.Nos. 4712, 4711 and 4713) of Ambalavayal Village, Sultan Bathery Taluk, Wayanad District obtained as per Ext.P1 settlement deed executed by their father. When the petitioners sought to effect mutation and to pay land tax for the property, they were informed by the 2nd respondent that the 3rd respondent, the Income Tax Department had attached a portion of the said property for alleged dues of the predecessor in interest, their father. 3. Thereupon, the 1st petitioner sought information under the Right to Information Act, regarding the alleged attachment and the 2nd respondent served him with Ext.P3 proceedings dated 18.11.2019 of the 3rd respondent along with Ext.P2 letter of the 2nd respondent. In Ext.P2 letter, the 1st petitioner was informed that an attachment is in effect in respect of the subject property as per proceedings dated 18.11.2019. Ext.P3 is an intimation issued to the 2nd respondent Village Officer intimating that as part of the recovery proceedings to realize the income tax due they propose to permanently attach some of the immovable properties of the defaulter, who is the father of the petitioners and requested the 2nd respondent to make arrangement to identify the location of the properties mentioned in the said communication. Petitioners submitted that they cannot put the property to any effective use since mutation has not been effected and the petitioners are unable to remit tax for the said property. Petitioners would further contend that it is settled law that mutation and collection of land tax being only for fiscal purposes does not in any manner affect the title of the property and therefore any attachment on the property cannot be a bar to effect mutation and to collect land tax for the property. Petitioners rely on the judgment in Laila v. Village Officer, Thrikkovilvattom Village Office and Others [ 2019 (4) KHC 799 ] in support of their contention. Petitioners rely on the judgment in Laila v. Village Officer, Thrikkovilvattom Village Office and Others [ 2019 (4) KHC 799 ] in support of their contention. It is aggrieved by the refusal on the part of the 2nd respondent to effect mutation and to accept land tax for the properties covered by Ext.P1 settlement deed that the petitioners have approached this court. 4. The learned Government Pleader upon instructions submitted that the mutation has not been effected for the reason that there is an order of attachment issued by the Income Tax Department. The learned Government pleader also handed over a copy of the letter issued to the defaulter by the 3rd respondent bearing number ITBA/COM/F/17/2019-20/1020625700(1) dated 18.11.2019 which is a communication issued in Form No. I.T.C.P.16 under Rule 48 of Second Schedule to Income Tax Act, 1961 whereby an order has been issued attaching the immovable properties and intimating the defaulter that he is prohibited and restrained until further orders from transferring or charging the subject property in any way and that all persons are hereby prohibited from taking any benefit under such transfer or charge. 5. The additional 3rd respondent has filed a detailed statement contending that the petitioners’ father was assessed and the arrear demand outstanding is Rs.1,63,87,412/-. Thereupon, the Department issued a provisional attachment order under Section 281B to attach the immovable properties of the petitioners’ father to protect the interest of the revenue. The latest provisional attachment order under Section 281B was made on 22.01.2019 and no subsequent orders have been passed to withdraw the said attachment. Following the assessment and finalization of the payable demand the case was referred to the Tax Recovery Officer and Tax Recovery Certificates were issued on 12.03.2019. The notices including ITCP 1 and Form 57 under Rule 2 of the Second Schedule of the Income Tax Act, 1961 were served on the defaulter on 15.03.2019. It is only subsequent to that the properties owned by the defaulters were attached on 18.11.2019 to recover the aforesaid amount. The property mentioned in this writ petition which belonged to the father of the petitioners was also included in the attached properties. It is further averred that the attachment was on 18.11.2019 and on the very same date Ext.P1 settlement deed was executed. The property mentioned in this writ petition which belonged to the father of the petitioners was also included in the attached properties. It is further averred that the attachment was on 18.11.2019 and on the very same date Ext.P1 settlement deed was executed. Therefore, it is contended that the transfer of the property as per Ext.P1 is in violation of Rule 16 of the Second Schedule of the Income Tax Act, 1961 due to the ongoing Income Tax proceedings rendering the transfer invalid. It is also contended that the sale deed was executed on 18.11.2019 after the service of notice on 15.03.2019, which is much prior to the execution of the deed. Once notice is served, by virtue of Rule 16 (1) of the Second Schedule, the defaulter became incompetent to deal with the property and the defaulter’s attempt to sell his property constituted a breach of Rule 16 (1) and was intended to circumvent the proceedings as per the Income Tax Act, 1961 and therefore the transfer of the property as per Ext.P1 deed is void. Based on the above factual and legal contentions, the additional 3rd respondent sought for dismissal of the writ petition. 6. I have considered the rival contentions of both sides. 7. The contention raised by the petitioners, based on the judgment in Laila’s case cited supra is that the mere pendency of the revenue recovery proceedings or attachment proceedings will not be sufficient justification on the part of the Village Officer concerned for refusing to accept basic tax from the landholders and that there is no provision in the Transfer of Registry Rules interdicting acceptance of basic tax on account of said contingency, and that the competent revenue officials are obliged to accept land tax from the landholders concerned. Admittedly, Ext.P1 settlement deed was executed only on 18.11.2019. The date of Ext.P3 order of attachment is also 18.11.2019. The specific contention of the additional 3rd respondent is that a provisional attachment order was issued on 22.01.2019 as provided under Section 281B of the Income Tax Act, 1961. Admittedly, Ext.P1 settlement deed was executed only on 18.11.2019. The date of Ext.P3 order of attachment is also 18.11.2019. The specific contention of the additional 3rd respondent is that a provisional attachment order was issued on 22.01.2019 as provided under Section 281B of the Income Tax Act, 1961. As per Section 281B of the Income Tax Act, 1961 where during the pendency of any proceedings for the assessment of any income or reassessment, the property belonging to the assessee could be attached provisionally in the manner provided in the Second Schedule and that such provisional attachment shall be effective for a period of 6 months from the date of the order. Following the finalisation of the assessment, the case was referred to the Tax Recovery Officer and Tax Recovery Certificates were issued on 12.03.2019. Further notices including ITCP 1 and Form 57 under Rule 2 of the Second Schedule to the Income Tax Act, 1961 were served on the defaulter on 15.03.2019, i.e. much prior to the execution of Ext.P1 and further that the execution of Ext.P1 is on the date of the attachment of the property i.e., 18.11.2019. The Second Schedule of the Income Tax Act, 1961 deals with the procedure for recovery of Tax as contemplated under Sections 222 and 276 of the Income Tax Act, 1961. Section 222 reads as follows: “Certificate to Tax Recovery Officer. 222. When an assessee is in default or is deemed to be in default in making a payment of tax, the Tax Recovery Officer may draw up under his signature a statement in the prescribed form specifying the amount of arrears due from the assessee (such statement being hereafter in this Chapter and in the Second Schedule referred to as "certificate") and shall proceed to recover from such assessee the amount specified in the certificate by one or more of the modes mentioned below, in accordance with the rules laid down in the Second Schedule- (a) attachment and sale of the assessee's movable property; (b) attachment and sale of the assessee's immovable property; (c) arrest of the assessee and his detention in prison; (d) appointing a receiver for the management of the assessee's movable and immovable properties. Explanation. Explanation. - For the purposes of this sub-section, the assessee's movable or immovable property shall include any property which has been transferred, directly or indirectly on or after the 1st day of June, 1973, by the assessee to his spouse or minor child or son's wife or son's minor child, otherwise than for adequate consideration, and which is held by, or stands in the name of, any of the persons aforesaid; and so far as the movable or immovable property so transferred to his minor child or his son's minor child is concerned, it shall, even after the date of attainment of majority by such minor child or son's minor child, as the case may be, continue to be included in the assessee's movable or immovable property for recovering any arrears due from the assessee in respect of any period prior to such date. (2) The Tax Recovery Officer may take action under sub-section (1), notwithstanding that proceedings for recovery of the arrears by any other mode have been taken.” Going by Section 222 when an assessee is in default, the Tax Recovery Officer may draw up a statement specifying the amount of arrears due to the assessee as provided in the Second Schedule and proceed to recover the amount specified in the statement/certificate by the modes specified under Section 226 in accordance with Rules laid down in the Second Schedule. Section 276 mandates that any transfer or delivery of any property or any interest therein so as to prevent that property or interest therein from being taken in execution of a certificate under the provisions of the Second Schedule is punishable with rigorous imprisonment for a term which may extend to two years and shall also be liable to fine. Rule 2 of the Second Schedule of the Income Tax Act, 1961 reads as follows: “Issue of notice. 2. Rule 2 of the Second Schedule of the Income Tax Act, 1961 reads as follows: “Issue of notice. 2. When a certificate has been drawn up by the Tax Recovery Officer for the recovery of arrears under this Schedule, the Tax Recovery Officer shall cause to be served upon the defaulter a notice requiring the defaulter to pay the amount specified in the certificate within fifteen days from the date of service of the notice and intimating that in default steps would be taken to realise the amount under this Schedule.” The said Rules mandate that when a certificate has been drawn up by the Tax Recovery Officer for the recovery of arrears under this Schedule, the Tax Recovery Officer shall cause to be served upon the defaulter a notice requiring the defaulter to pay the amount specified in the certificate within 15 days from the date of service of the notice and intimating that, in default steps would be taken to realise the amount under this Schedule. The notice specified in the said Rules has been served on the defaulter on 15.03.2019 which is much prior to the execution of Ext.P1. 8. Rule 16 of the Second Schedule to the Income Tax Act, 1961 mandates that private alienation after an order of attachment shall be void. Rule 16 reads as follows: “Private alienation to be void in certain cases. 16. (1) Where a notice has been served on a defaulter under rule 2, the defaulter or his representative in interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer, nor shall any civil court issue any process against such property in execution of a decree for the payment of money. (2) Where an attachment has been made under this Schedule, any private transfer or delivery of the property attached or of any interest therein and any payment to the defaulter of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment.” As per the said Rule when a notice has been served on the defaulter under Rule 2, the defaulter or his representative in interest shall not be competent to mortgage, charge, lease or otherwise deal with any property belonging to him except with the permission of the Tax Recovery Officer, nor shall any Civil Court issue any process against such property in execution of a decree for the payment of money and that where an attachment has been made under this Schedule, any private transfer for delivery of the property attached or of any interest therein and any payment to the defaulter of any debt, dividend or other moneys contrary to such attachment, shall be void as against all claims enforceable under the attachment. Thus after issuance of a notice on the defaulter under Rule 2 which is admittedly made on 15.03.2019, the defaulter or his representative in interest shall not be competent to mortgage charge, lease or otherwise deal with any property belonging to him except with the permission of a Tax Recovery Officer. In the present case after receipt of the notice under Rule 2, the defaulter who is the father of the petitioners has transferred the property in the name of the petitioners as per Ext.P1 settlement deed without obtaining permission from the Tax Recovery Officer. 9. It is also pertinent to note that the learned Government Pleader upon instructions submitted that an order of attachment dated 18.11.2019 as per Rule 48 of the Second Schedule of the Income Tax Act, 1961 was also issued on the defaulter. Going by Rule 48, an attachment of the immovable property of the defaulter shall be made by an order prohibiting the defaulter from transferring or charging the property in any way and Rule 51 mandates that when an immovable property is attached under the Schedule, the attachment shall relate back to, and take effect from, the date on which the notice to pay the arrears, issued under the Schedule was served upon the defaulter. The notice contemplated in Rule 51 is a notice issued under Rule 2 of the Second Schedule of the Income Tax Act, 1961 which was served on the defaulter on 15.03.2019. Therefore, the attachment will relate back to the date on which the said notice was issued to the defaulter, i.e., 15.03.2019. Admittedly, the transfer was after issuance of notice under Rule 2, that too without obtaining permission of the Tax Recovery Officer and was after an order of attachment was issued, rendering such transfer void. 10. In view of the above facts and circumstances and the legal position as explained above, the transfer of property made as per Ext.P1 is in violation of the provisions of the Income Tax Act, 1961 and the Second Schedule to the said Act. The dictum laid down in Laila’s case cited supra relied on by the petitioners has no application in the facts and circumstances of the present case. In view of the above, I am of the opinion that the request of the petitioners for mutation of the property and to receive tax has been rightly repelled by the 2nd respondent, and I find no reason to grant any of the reliefs sought in the writ petition. The writ petition is accordingly dismissed.