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The controversy then remaining in the present petition is whether the Revenue is entitled to attach the properties belonging to a private trust to recover dues of the trustees, who was a director of a company which had allegedly defaulted in paying its tax dues. The contention of the Revenue appears to be that the property being attached does not belong to the trust but is a property of one late Mrs. Sushila Laliwala-the mother of the defaulting trustee. Therefore, the properties could be attached to the extent it devolved upon the ex-director of the defaulting company as her legal heir.

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Sec. 222 & 226(3) of Income-tax Act, 1961 - Recovery - The subject properties belong to the trust which was settled by Smt. Sushila R. Laliwala's will before initiation of recovery proceedings by the Revenue against the original petitioner No. 1. The said properties did not belong to the original petitioner No. 1 or his legal heirs/representatives. The trust being formed in the year 1978 and the will of Smt. Sushila R. Laliwala made in 1985 much before initiation of recovery proceedings, there is no question of the said properties being diverted to the trust to evade payment of due tax. However, Revenue is free to pursue proceedings against the estate of original petitioner No. 1 in the hands of his legal-heirs and representatives in accordance with law. - RAJESH T. SHAH V/s TRO - [2020] 315 CTR 490 (BOM)

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