The main legal point established in the judgment is the applicability of Section 222(1) and its Explanation, which enables recovery of arrears due from an assessee by proceeding against any movable or immovable property of the assessee. The court also discussed the comparison with Section 281 and the limitation as provided under Rule 68B of Schedule II of the IT Act.

The petitioner, the wife of an assessee in default, is before this Court aggrieved by Exhibits P9, P10 and P12 by which the Income-tax authorities proceeded against her property comprised in Survey Number 354/17/8, Re-survey number 681/9; which also adjoins the property in which the petitioner runs a hotel. The petitioner's husband is an assessee in default, of the tax assessed on him by reason of a block assessment made, pursuant to a search and inspection conducted in his residential premises.

2. Admittedly, a search and seizure under section 132 of the Income Tax Act, 1961 [for brevity "IT Act"] was made at the residential premises of the petitioner and her husband, on 24/09/1996; the materials seized thereat leading to a block assessment for the period 1986-87 to 1995-96. The tax liability was determined at Rs.4,00,36,404/-. The statutory appeal ultimately reduced the amount to Rs.1,03,89,878/-. The impugned action was to recover the said amount by attachment and sale of the property, owned by the petitioner as per Exhibit P1 and P2 deeds; conveyed to her for consideration. Whether the conveyance was a sham transaction, insofar as there being no adequate consideration is the crux of the matter in addition to the procedural defects alleged as also the total lack of jurisdiction asserted by the petitioner.

3. The petitioner contends that the petitioner herself was running a business, namely a hotel, from which sufficient income was generated to purchase the property. It is also contended that the purchase made by Exhibit P1 was for valid consideration, which valued the property as similarly valued in Exhibits P3 and P4 transactions made of identically situated lands. An alternative contention is also taken taken up that the subject property, situated adjacent to the property in which the hotel was run by the petitioner did not have a pathway and had only access through the adjoining property; which reduced its value and gave the petitioner, the adjoining property owner, an edge in purchasing the land.

4. The petitioner has raised a number of grounds against recovery attempted of the income-tax dues defaulted by the petitioner's husband, sought to be recovered from the property of the petitioner. The petitioner also is an assessee in her individual capacity and, hence, contends that without a demand notice the petitioner cannot be deemed to be an assessee in default and proceeded against for recovery of debts due from another assessee. It is further contended that the Assessing Officer cannot proceed against the petitioner's property for recovery of dues of another without filing a suit for declaration of the conveyance as void, as has been held in Tax Recovery Officer II v. Gangadhar Vishwanath Ranade [(1998) 6 SCC 658]. There is an objection raised that the survey number of the property differs and the attachment being bad on that ground also. The ground of limitation is also raised based on Rule 68B of Schedule II of the IT Act.

5. The difference in Survey number in the attachment order has been rectified by the Recovery Officer who attached the properties. The ground that no notice has been served, on the petitioner who is also an assesssee, is untenable insofar as the Department does not intend to declare the petitioner as an assessee in default. The proceedings against the petitioner's property was initiated based on Explanation to sub-section (1) of Section 222 of the IT Act. Section 222 is extracted hereunder:

"222. (1) 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