For Full Access To All Latest Judgments on Income Tax
Click Here To Subscribe Now
Take a tour of our Income-Tax Library

he property in dispute was mortgaged by BPIL to the Union Bank of India in 2000 and the DRT passed an order of recovery against the BPIL in 2002. The recovery certificate was issued immediately, pursuant to which an attachment order was passed prior to the date on which notice was issued by the Tax Recovery Officer- Respondent No.4 under Rule 2 of Schedule II to the Act. It is true that the sale was conducted after the issuance of the notice as well as the attachment order passed by Respondent No.4 in 2003, but the fact remains that a charge over the property was created much prior to the notice issued by Respondent No.4 on 16.11.2003. The High Court held that Rule 16(2) is applicable to thiscaseon the ground that the actual sale took place after the order of attachment was passed by Respondent No.4. The High Court failed to take into account the fact that the sale of the property was pursuant to the order passed by the DRT with regard to the property over which a charge was already created prior to the issuance of notice on 11.02.2003. As the charge over the property was created much prior to the issuance of notice under Rule 2 of Schedule II to the Act by Respondent No.4, we find force in the submissions made on behalf of the Appellant. 11. The judgment of the High Court is set aside and the Appeal is allowed. The MIDC is directed to issue a ‘No Objection” certificate to the Appellant. Respondent No.4 is restrained from enforcing the attachment order dated 17.06.2003.

Shanti Prime Publication Pvt. Ltd.

Section 220 of Income Tax Act, 1961— Stay petition— BPIL obtained a loan from the Union Bank of India. Property along with plant machinery and building was mortgaged as security to Union Bank of India. Bank filed OA before the Debt Recovery Tribunal III, Mumbai for recovery of the loan advanced to BPIL. The DRT allowed the OA filed by bank and directed BPIL to pay a sum along with interest at the rate of 17.34% per annum from the date of the application till the date of payment and/or realisation. A recovery certificate in terms of the order passed by the DRT was issued and recovery proceedings were initiated against BPIL. The Recovery Officer, DRT III attached the property on 29.11.2002. Recovery officer issued a proclamation of sale of the said property on 19.08.2004. A public auction was held on 28.09.2004. The DRT was informed that there were no bidders except the Appellant. The offer made by the Appellant to purchase the property was accepted by Recovery officer. On 14.01.2005, a certificate of sale was issued in favour of the Appellant. The possession of the disputed property was handed over to the Appellant on 25.01.2005 and a certificate of sale was registered on 10.01.2006. The Maharashtra Industrial Development Corporation informed Recovery officer that it received a letter dated 23.03.2006 from the Tax Recovery Officer, herein stating that the property in dispute was attached by tax recovery officer on 17.06.2003. The Appellant requested the Regional Officer, MIDC by a letter dated 10.04.2006 to transfer the property in dispute in its favour in light of the Sale Certificate issued by DRT on 25.01.2005. As the MIDC failed to transfer the plot in the name of the Appellant, the Appellant filed a Writ Petition before the High Court seeking a direction for issuance of ‘No Objection’ in respect of the plot and to restrain tax recovery officer from enforcing the attachment of the said plot, which was performed on 11.02.2003. Relying upon Rule 16 of Schedule II to the Act, the High Court came to the conclusion that there can be no transfer of a property which is the subject matter of a notice and after an order of attachment is made under Rule 16(2), no transfer or delivery of the property or any interest in the property can be made, contrary to such attachment. the High Court dismissed the Writ Petition. Held that the High Court failed to take into account the fact that the sale of the property was pursuant to the order passed by the DRT with regard to the property over which a charge was already created prior to the issuance of notice on 11.02.2003. As the charge over the property was created much prior to the issuance of notice under Rule 2 of Schedule II to the Act by tax recovery office. The court find force in the submissions made on behalf of the Appellant.
The judgment of the High Court was set aside and the Appeal was allowed. The MIDC was directed to issue a ‘No Objection” certificate to the Appellant. Tax recovery officerwas restrained from enforcing the attachment order dated 17.06.2003. --- ONNECTWELL INDUSTRIES PVT. LTD. vs. UOI [2020] 23 ITCD Online 17 (SC)