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2011 Supreme(Mad) 2420
High Court of Judicature at Madras
M. JAICHANDREN
V.C. Senthilkumar
Versus
The Commissioner of Income Tax-II, Coimbatore & Others
W.P.No.29538 of 2010 & M.P.No.1 of 2010
Decided on : 28-04-2011
For the Petitioner:Mr. R. Marudhachalamurthy, Advocate.
For the Respondents:R1, R2, Mr. J. Nayanasamy, Advocate.
The central legal point established in the judgment is the importance of locus standi in challenging the attachment of property and the necessity of following the relevant provisions of law in property disputes.
Headnote:
Attachment - Property Dispute - Income Tax Act, 1961 - Rule 2, Rule 48, Rule 51, Rule 16 - The court discussed the attachment of the property in question by the Income Tax Department and the legal procedures established by the Income Tax Act, 1961. It highlighted the rules relating to attachment of immovable property, the effect of attachment on alienation, and the locus standi of an agreement holder in challenging the attachment.
Fact of the Case:
The petitioner entered into an agreement for sale with the third respondent for a property, only to later find out that the property had been attached by the income tax department due to non-payment of tax arrears by the third respondent. The petitioner filed a writ petition under Article 226 of the Constitution of India, challenging the attachment.
Finding of the Court:
The court found that the petitioner did not have the locus standi to maintain the writ petition as the attachment of the property was made in accordance with the procedures established by law. The court also emphasized that the agreement for sale with the third respondent cannot bind the authorities and that the petitioner should agitate the matter against the third respondent before the appropriate forum.
Issues: Locus standi of the petitioner to challenge the attachment, validity of the agreement for sale in relation to the attachment, and the legal procedures for attachment of property under the Income Tax Act, 1961.
Ratio Decidendi: The petitioner, as an agreement holder, did not have the standing to challenge the attachment of the property by the Income Tax Department. The court emphasized the importance of following the relevant provisions of law and agitating the matter against the third respondent before the appropriate forum.
Final Decision: The writ petition filed by the petitioner was dismissed as devoid of merits, and no costs were awarded. The court held that the attachment of the property in question by the Income Tax Department, made in accordance with the procedures established by law, cannot be questioned by the petitioner.
1. The petitioner has stated that he is an agreement holder of an agreement for sale, in respect of the property, in Survey No.111/B, situated at Bharathidasan Street, Veerappan Chathiram, Erode, belonging to the third respondent. It has been further stated that the petitioner had entered into an agreement for sale with the third respondent, in respect of the property in question, after having found from the office of the Sub Registrar concerned that there was no encumbrance in respect of the said property. The petitioner had entered into an agreement with the third respondent and his son, on 2.5.2007, having paid an advance of Rs.5,00,000/-. Thereafter, the petitioner had paid a further sum of Rs.10,00,000/- to the third respondent, as part of the sale consideration. While so, the petitioner had come to know that the property in question, belonging to the third respondent, had been attached by the income tax department, due to the non payment of tax arrears by the third respondent. The request made by the petitioner to release the property in question from attachment had been rejected by the order of the second respondent, dated 22.1.2010. In such circumstances, the petitioner has preferred the present writ petition before this Court, under Article 226 of the Constitution of India.
2. The learned counsel appearing on behalf of the petitioner had submitted that the impugned order of the second respondent, dated 22.1.2010, is arbitrary and void. The second respondent had passed the impugned order, without considering the fact that the petitioner had entered into an agreement for sale, with the third respondent, in respect of the property in question, only after proper verification of the encumbrance, created in respect of the said property. The agreement had been entered into only after it was found that there was no encumbrance, in respect of the said property.
3. It had also been stated that the petitioner had paid the full consideration to the third respondent for the purchase of the property in question in the year 2007 itself, as per the sale agreement, dated 2.5.2007. Thereafter, the petitioner has been in continuous possession and enjoyment of the property in question, till date. While so, the Tax Recovery Officer, Range-I, Erode, had issued an order of attachment of the property in question, due to the non payment of the tax arrears, by the third respondent, to the tune of Rs.1,76,00,957/-, even though the third respondent is owning a number of other immovable properties, including a shopping complex, worth several crores of rupees. The petitioner should not suffer due to the non payment of the tax arrears by the third respondent.
4. The learned counsel for the petitioner had also submitted that no notice had been issued to the petitioner and no opportunity had been given to him even though he is a bona fide agreement holder, in respect of the property in question. In such circumstances, the impugned order of the second respondent is liable to be set aside.
5. The learned counsel appearing on behalf of the petitioner had relied on the following decisions in support of his contentions:
1. Tax Recovery Officer Vs. Gangadha Viswanath Ranade (1998 Vol.234 ITR 188).
2. Ashok Chawla V. DIT [(2009) 176 Tax man 202 (Delhi)]
3. Vishwanath Agarwala V. TRO [(2009)182 Taxman 327/225 CTR (Cal.)358]
4. Jagdish Sharma V. UOI [2008(217) CTC (Raj.) 472]
5. Samson John V. TRO [(2008) 169 Taxman 227/6300 188 (Bom.)]
6. The learned counsel appearing on behalf of the first and the second respondents had submitted that the petitioner has no locus standi to maintain the present writ petition. A notice had been issued to the third respondent, under Rule 2 of the Second Schedule of the Income Tax Act, 1961, dated 6.11.2001, directing him to pay the tax arrears of Rs.1,76,00,957/-. As the third respondent had failed to discharge his liability his property, in S.No.111/B, had been attached, by an order, dated 15.11.2007, issued under Rul
