Mrs.farhana Sait v. Assistant Commissioner Of Income Tax, Circle 2(1), Range-Ii, Ernakulam, Kerala State

In the High Court of Judicature at Madras Dated: 21.10.2008 Coram: The Honourable Mr.Justice S.J.MukhopadhayaandThe Honourable Mr.Justice V.Dhanapalan Writ Appeal No.862 of 2006& M.P.No.1 of 2006 Mrs.Farhana Sait .. Appellant vs. 1. Assistant Commissioner of Income Tax, Circle 2(1), Range-II, Ernakulam, Kerala State. 2. Tax Recovery Officer, Range II, Ernakulam, Kerala State. 3. Assistant Commissioner of Income Tax, Circle 1(1), Ootacamund. .. Respondents Writ Appeal filed u/s 15 of the Letters Patent Act against theorder dated 17.6.2006 passed by the single Judge, in Writ PetitionNo.5251 of 2006, on the file of this Court Petition filed underArticle 226 of India, to issue a Writ of Certiorarified Mandamus, tocall for the records relating to the order dated 11.01.2006 in herorder No.TR-02,05/04-05,TR-6/05/06/Circle-2(1) issued by the 2[nd]Respondent herein quash the same and to direct the 2[nd] respondent toproceed with the movable and immovable properties of the Late. EssaIsmail Sait and Kerala State. For appellant : Mr.K.ThiruvengadamFor respondents : Mr.N.Murali Kumaran, Senior Standing Counsel for Income Tax Judgment S.J.Mukhopadhaya,J The Writ Appeal has been preferred by the writ petitioner againstthe order dated 17.6.2006 passed in Writ Petition No.5251 of 2006,whereby and whereunder, the learned single Judge refused to decidehttps://hcservices.ecourts.gov.in/hcservices/the case on merits on the ground of the availing of the alternativeremedy under Section 264 of the Income Tax Act, 1961 (for short, 'theI.T. Act'). 2. The main plea taken in the present Writ Appeal is that theavailing of the 'Revision' under Section 264 of the I.T. Act is notapplicable in a case of attachment of property(ies) of a third party. 3. According to the appellant-writ petitioner, the secondrespondent-Tax Recovery Officer, Range II, Ernakulam, Kerala State,issued a notice on 10.2.2005 under Rule 48 of the Second Schedule tothe I.T. Act, for attachment of the property(ies) in question. Havingpreferred Writ Petition No.20918 of 2005 against the said notice,learned single Judge, by order dated 27.6.2005, allowed the writpetitioner to approach the authorities and explain about theownership of the property(ies), and the authorities in turn weredirected to consider the case in accordance with law. Thereafter,taking into consideration the representation dated 26.7.2005 of theappellant-writ petitioner, the second respondent issued the orderdated 11.1.2006, which has not been interfered with by the learnedsingle Judge in Writ Petition No.5251 of 2006, by the impugned orderdated 17.6.2006. 4. Apart from the main plea taken by the appellant-writpetitioner that the revisional remedy available under Section 264 ofthe I.T. Act, is not applicable to the facts of the present case, theother plea taken on behalf of the writ petitioner is that theproperty(ies) in question which were attached, were gifted to her byher ex-husband—Mr.Essa Ismail Sait, by two different documents, dated16.1.1999 and 5.5.2001, whereinafter, "Talaq" having been pronouncedon 21.3.2002, it was not open for the authorities to attach theproperty(ies) of the writ petitioner in a proceeding against her ex-husband—Mr.Essa Ismail Sait. 5. On the other hand, the stand taken by the respondents-IncomeTax is that the attachment proceedings having been started prior tothe pronouncement of "Talaq" in 2002, in respect of the assessmentyear 1995-1996 to 2000-2001, it was open for the authorities toattach the property(ies) in question. 5. On the other hand, the stand taken by the respondents-IncomeTax is that the attachment proceedings having been started prior tothe pronouncement of "Talaq" in 2002, in respect of the assessmentyear 1995-1996 to 2000-2001, it was open for the authorities toattach the property(ies) in question. 6. The Writ Appeal was earlier heard on merits and on 20.6.2008,the appellant-writ petitioner was allowed time to bring on record anydocument to show that the name of the appellant-writ petitioner isrecorded in the Revenue Records in regard to the property(ies)attached by the respondents or any registered deed of Gift, if anyeffected. It was also made clear in that order dated 20.6.2008 thatif the attached property(ies) are not recorded in the Revenue Recordsin the name of the appellant-writ petitioner, and there is noregistered deed of Gift, the appellant-writ petitioner may rely oncertain evidence to show the 'Oral Gift' which was accepted. 7. In spite of the time being allowed by the order dated20.6.2008 and more than three months having been lapsed, theappellant-writ petitioner failed to file any affidavit in terms ofthe said order dated 20.6.2008. https://hcservices.ecourts.gov.in/hcservices/ 8. Learned counsel appearing for the appellant-writ petitionersubmitted that the name of the appellant-writ petitioner is notrecorded in the Revenue Records and it was only an 'Oral Gift' by which the attached property(ies) were gifted to her by her ex-husband. 9. We have heard the learned counsel appearing for the partiesand noticed their rival contentions and perused the records. 10. It appears from the pleadings/records that a proceeding wasdrawn by the I.T.C.P-1, in the name of Mr.Essa Ismail Sait (ex-husband of the appellant-writ petitioner) and Mrs.Farhana Sait(appellant-writ petitioner) on 12.5.2004 and 23.11.2004 respectively,for assessment year 1995-1996 for the tax arrears of Rs.13,48,612/-.Another proceeding against both of them was initiated by the I.T.C.P-1, for the assessment year 1999-2000 on 17.1.2005 for the tax arrearsof Rs.1,48,87,953/-. Another proceeding was drawn against both ofthem on 17.5.2005 for the assessment year 2000-2001. The interestunder Section 220(2) of the I.T. Act up to 31.12.2005 amounting toRs.8,73,219/-, Rs.29,77,481/- and Rs.7,240/- respectively, weredrawn for the above assessment years against her ex-husband--late-Essa Ismail Sait alias Babu Sait. 11. Since no recovery was forthcoming from the defaulter(s), theproperty(ies) at Ootacamund was attached on 10.2.2005, giving rise tothe objection petition filed by the appellant-writ petitioner,stating that the property(ies) were gifted to her by her ex-husbandand she has been separated by the pronouncement of 'Talaq' and in noway responsible for the personal liability of her ex-husband and thesaid objection petition was rejected on 15.4.2005 by the Tax RecoveryOfficer. 11. Since no recovery was forthcoming from the defaulter(s), theproperty(ies) at Ootacamund was attached on 10.2.2005, giving rise tothe objection petition filed by the appellant-writ petitioner,stating that the property(ies) were gifted to her by her ex-husbandand she has been separated by the pronouncement of 'Talaq' and in noway responsible for the personal liability of her ex-husband and thesaid objection petition was rejected on 15.4.2005 by the Tax RecoveryOfficer. 12. Even according to the stand taken by the appellant-writpetitioner, she was married to Mr.Essa Ismail Sait on 28.12.1995 andlived with him up to middle of 1998 in Ernakulam. The husbandreportedly pronounced 'Talaq' on 21.3.2002. In her sworn-tostatement, dated 10.2.2005 filed before the Income Tax Authorities,the appellant stated that her son was studying in III Standard andthe annual expenditure of his education of Rs.40,000/- was met by herex-husband--Mr.Essa Ismail Sait. The attached building in questionwas purchased by Mr.Essa Ismail Sait in 1998 out of the transferproceedings of Kavitha Theatre at Ernakulam and the construction wasalso done out of those proceedings, which was gifted to her. Bynotarised Deed No.4501, Document No.754/1998, dated 9.9.1998, ninecents and by Document No.831/1998, dated 25.9.1998, nine cents, werestated to have been gifted to Mrs.Farhana Sait (appellant herein) byMr.Essa Ismail Sait. It is also claimed that vide another notarisedDeed No.8204, dated 16.1.1999, by 'Oral Gift' of two properties, inDocument No.740/1998 in Municipal Site No.4-D of nine cents andDocument No.746/1998, dated 1.9.1998, Municipal Site No.4.B of eightcents were gifted to the writ petitioner by Mr. Essa Ismail Sait. Thecost of the construction of the building at the site(s) in questionwas about Rs.65 lakhs, of which the market value of the land(s) comesto about Rs.35 lakhs. In her letter dated 13.11.2004 addressed tothe respondents-authorities, she stated that Mr.Essa Ismail Saitgifted Rs.97 lakhs by depositing the said sum in the State Bank ofIndia, Ootacamund. https://hcservices.ecourts.gov.in/hcservices/ 13. The respondents-Income Tax Authorities noticed that thoughthe appellant-writ petitioner's properties stand in the name of her ex-husband and oral gift of the two attached properties still standin the name of her ex-husband--Mr.Essa Ismail Sait, which werereflected in the Revenue Records. At the time of initiation ofproceedings, the writ petitioner was found to be in possession andenjoyment of the property(ies) in question and the attachment wasmade invoking the provisions of the "Explanation" to Section 222 ofthe I.T. Act. The ex-wife (appellant-writ petitioner) of the assessee(Mr.Essa Ismail Sait) is deemed to be an assessee-in-default. The'Gift Deed' was also declared to be void by the sceond respondent-TaxRecovery Officer. 13. The respondents-Income Tax Authorities noticed that thoughthe appellant-writ petitioner's properties stand in the name of her ex-husband and oral gift of the two attached properties still standin the name of her ex-husband--Mr.Essa Ismail Sait, which werereflected in the Revenue Records. At the time of initiation ofproceedings, the writ petitioner was found to be in possession andenjoyment of the property(ies) in question and the attachment wasmade invoking the provisions of the "Explanation" to Section 222 ofthe I.T. Act. The ex-wife (appellant-writ petitioner) of the assessee(Mr.Essa Ismail Sait) is deemed to be an assessee-in-default. The'Gift Deed' was also declared to be void by the sceond respondent-TaxRecovery Officer. 14. Learned counsel appearing on behalf of the appellant-writpetitioner relied on the decision of the Supreme Court in the case of"T.R.O. vs. Gangadhar Vishwanath Ranade", reported in 1998 (Vol.234)I.T.R. 188 (SC). In the said case, the Supreme Court noticed thatSection 281 of the I.T. Act, 1961, declares as void any transfer madeby the assessee during the pendency of proceedings under theprovisions of the I.T. Act with an intention to defraud the Revenue.However, it was noticed that the powers of the Tax Recovery Officerunder Rule 11 of the Second Schedule to the I.T. Act, 1961, aresomewhat different. Under Rule 11(1), where any claim is preferredto or any objection is made to the attachment or the sale of, anyproperty in execution of a certificate on the ground that suchproperty is not liable to such attachment or sale, the Tax RecoveryOfficer shall proceed to investigate the claim or objection. The TaxRecovery Officer, therefore had to examine as to who is in possessionof the property and in what capacity and can only attach the propertyin the possession of the assessee in his own right or in possessionof a tenant or a third party on behalf of/for the benefit of theassessee. He cannot declare any transfer made by the assessee infavour of a third party, void. If the Department finds that aproperty of the assessee is transferred by him in favour of a thirdparty with an intention to defraud the Revenue, it will have to filea Suit under Rule 11(6) to have the transfer declared 'void' underSection 281 of the I.T. Act 15. We accept the submission made on behalf of the appellant/writpetitioner that the respondents had no jurisdiction to declare the'Oral Gift' (if any) as void. 16. So far as the remedy under Section 264 of the I.T. Actrelating to the 'Revision' before the authority of the Income Tax isconcerned, the question of maintainability of the said 'Revision' canbe looked into, if the status of the appellant-writ petitioner isverified to find out as to whether the proceedings were initiatedagainst both the appellant-writ petitioner and her ex-husband or sheis a third party having no relationship with the assessee. 17. It is not in dispute, as it appears from the records thatITCP-1, drawn proceedings both in the name of Mr.Essa Ismail Sait(ex-husband of the appellant-writ petitioner) and in the name ofMrs.Farhana Sait (appellant-writ petitioner) for the assessmentyears, as observed earlier in this judgment and in view of initiationhttps://hcservices.ecourts.gov.in/hcservices/of such proceedings by the respondents-authorities, we are of theprima-facie view that the appellant-writ petitioner cannot claim tobe a third party on the ground that she is the ex-wife of the assessee-Mr.Essa Ismail Sait and that the property(ies) in questionwere 'orally gifted' in her favour. 17. It is not in dispute, as it appears from the records thatITCP-1, drawn proceedings both in the name of Mr.Essa Ismail Sait(ex-husband of the appellant-writ petitioner) and in the name ofMrs.Farhana Sait (appellant-writ petitioner) for the assessmentyears, as observed earlier in this judgment and in view of initiationhttps://hcservices.ecourts.gov.in/hcservices/of such proceedings by the respondents-authorities, we are of theprima-facie view that the appellant-writ petitioner cannot claim tobe a third party on the ground that she is the ex-wife of the assessee-Mr.Essa Ismail Sait and that the property(ies) in questionwere 'orally gifted' in her favour. 18. We have noticed that no evidence as to the alleged 'OralGift' was brought to our notice, in spite of the order dated20.6.2008 in this Writ Appeal. It is also not in dispute that the'Talaq' (i.e. Divorce) was pronounced by her ex-husband (Mr.EssaIsmail Sait) on 21.3.2002 and the proceedings related to theassessment years prior to the pronouncement of such 'Talaq'. In sucha situation, if the second respondent-Tax Recovery Officer rejectedthe representation/application dated 26.7.2005, of the appellant-writpetitioner, we find no ground to interfere with the same, to theextent indicated above. 19. There being no merits, the Writ Appeal is dismissed, but inthe facts and circumstances of the case, there shall be no order asto costs. The Miscellaneous Petition is closed. Sd/Asst.Registrar /true copy/ cs Sub Asst.Registrar To 1. Assistant Commissioner of Income Tax, Circle 2(1), Range-II, Ernakulam, Kerala State. 2. Tax Recovery Officer, Range II, Ernakulam, Kerala State. 3. Assistant Commissioner of Income Tax, Circle 1(1), Ootacamund. 1 CC To Mr.N.Murali Kumaran, Advocate, SR NO.58196 1 CC To Mr.K.Thiruvengadam, Advocate, SR NO.58444 Writ Appeal No.862 of 2006 rr(co)pmk/30.10.2008.