Income‑tax‑‑‑

‑‑‑‑Provisional attachment‑‑‑Transferee without knowledge of attachment order presenting documents for registration‑‑‑Sub‑Registrar completing formalities but not releasing sale‑deeds due to prohibitory order‑‑‑Transferee willing to take sale‑deed subject to rights of Income‑tax Department and undertaking to deposit sale‑deeds with Income‑tax Department‑‑‑Direction for release of documents subject to undertaking‑‑‑Indian Income Tax Act, 1961, Ss.230A, 281 & 281B‑‑‑Indian Stamp Act, 1899‑‑‑Indian Registration Act, 1908.

In terms of section 281B of the Income Tax Act; 1961, all transfers either by way of sale, mortgage, gift, exchange or otherwise shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceedings or otherwise. Section 281 of the Act, thus, in effect, declares all transfers as void.

The respondent‑company, owner of land in Valasarawalkam, executed two separate sale‑deeds in favour of the petitioners for consideration of Rs. 1,24,867 and Rs.1,33,712, respectively. The sale‑deeds were presented for registration before the Sub‑Registrar on March 4, 1992. A prohibitory order under section 281B had been issued by the Assistant Commissioner of Income‑tax on December 31, 1981, .to the respondent and the said property had already been attached to protect the interests of the Revenue for the arrears of income‑tax due for the assessment years 1984‑85 to 1991‑92 and the same had been extended from time to time and was still in force. The Sub‑Registrar had stated that in view of the prohibitory order issued by the Assistant Commissioner the sale documents could no be released. In writ petitions, the petitioners contended that they had not knowledge about the prohibitory orders and stated that they were willing to take the sale‑deeds subject to whatever rights the Income‑tax Department had over the property. The writ petitioners had also given an undertaking to hand over the original documents to the Income‑tax Department.

The High Court after taking into consideration the statutory provisions of the Income‑tax Act, the Indian Stamp Act and the Indian Registration Act held that there could be no bar for the Sub‑Registrar releasing the documents, registration of which had already been completed and kept pending in view of the prohibitory order issued by the Assistant Commissioner of Income‑tax. The writ petitions were allowed to this limited extent and tile Sub‑Registrar was directed to complete the registration formalities relating to the two documents and hand over the documents.

S. Sampath Kumar for Sampathkumar Associates for Petitioners. Ashok Kumar for Respondent No. 1. Mrs. T. Kokilavani for Respondents Nos.2 and 3. Mrs. Chitra Venkataraman for C.V. Rajan for Respondent No.4.

JUDGMENT

E. PADMANABHAN, J. ‑‑‑Writ Petition No. 16771 of 1993 is filed by one Paranjothi Shanmugham praying for the issue of a writ of mandamus directing the third respondent, the Sub‑Registrar, Virugambakkam, to hand over the document No. 151 duly registered.

Writ Petition No. 16772 of 1993 has been filed by one Shanmugham against the very same respondents praying for the issue of a writ of mandamus directing the third respondent, Sub‑Registrar, Virugambakkam, to hand over the document No. 150 duly registered.

Heard Mr. S. Sampathkumar, learned counsel appearing for the petitioner in both the writ petitions, Mr. Ashok Kumar, learned counsel appearing for the first respondent, Mrs. T. Kokilavani, learned Government Advocate and Mrs. Chitra Venkataraman, learned counsel appearing for the fourth respondent. On both the writ petitions identical questions have been raised.

The first respondent is the owner of a large extent of land comprised in S. No.77 of Valasaravakkam Village, who executed a separate sale‑deed in favour of the writ petitioner for a consideration of Rs. 1,24,867 and Rs. 1,33,712, respectively. The sale‑deed was presented by the first respondent before the third respondent for registration on March 4, 1982, and they are pending in their office as documents Nos. 151 and 150, respectively. As the sale consideration was less than Rs. 2,00,000 no clearance certificate is required under section 230A of the Income‑tax Act and it is also accepted by counsel appearing on either side.

The petitioner contends that the petitioner had been approaching? the third respondent for the completion of registration and releasing of the document executed by the first respondent on March 4, 1992, which the third respondent without any authority is withholding. The petitioner was informed about the circular issued by the fourth respondent, which is not binding on the petitioner according to the petitioner.

Learned counsel for the petitioner contends that even if there is a prohibitory order, there is nothing in the Income‑tax Act or the rules made there under which would prohibit the third respondent from releasing the sale-?deed and that subject to the prohibitory order, the petitioner is willing to get the sale‑deed.

In fact, the petitioners in each of the writ petitions have given an undertaking that in the event of the fourth respondent being entitled to proceed against the property, the writ petitioner will hand over the original document to the Income‑tax Department if necessity arises and thereafter claim damages against the first respondent. It is contended that under the pretext of the circular issued by the fourth respondent, the third respondent is declining to release the sale‑deed executed and presented for registration on March 4, 1992.

A counter‑affidavit was filed oil behalf of respondents Nos.2 and 3. In that the second respondent has merely stated that the prohibitory order has been issued by the fourth respondent and, as such, the documents cannot be released or, handed over to the petitioner. It is also stated that the petitioner should have verified with the fourth respondent before entering into the sale transaction and before presenting the document for registration.

The fourth respondent has also filed a counter‑affidavit stating that the sale‑deeds have been presented for registration on March 4, 1992, that the prohibitory order has been issued earlier, i.e. on December 31, 1991, under section 281B of the Income Tax Act, 1961 to the first respondent and the property in question has already been attached or charged only to protect the interests of the Revenue for arrears of income‑tax due for the years 1984‑85 to 1991‑92 and the prohibitory order has been extended from time to time and it is still in force. It is further stated that during the currency of the prohibitory order, no sale‑deed can be released to the petitioner.

Mrs. Chitra Venkataraman, learned counsel appearing for the fourth respondent, places reliance on section 281B of the Income‑tax Act and states that the prohibitory order is operative as it has been extended from time to time and, as such, the right of the Income‑tax Department for the realisation of the tax arrears is protected by this attachment over the property. Section 281B of the Income-tax Act reads thus:

"(1) Where, during the pendency of any proceeding for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment, the Assessing Officer is of the opinion that for the purpose of protecting the interests of the Revenue it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Commissioner by order in writing, attach provisionally any property belonging to the assessee in the manner provided in the Second Schedule.

Explanation.‑‑‑For the purposes of this subsection, proceedings under subsection (5) of section 132 shall be deemed to be proceedings for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment.

(2)??????? Every such provisional attachment shall cease to have effect after the expiry of a period of six months from the date of the order made under subsection (1):

Provided that the Chief Commissioner or Commissioner may, for reasons to be recorded in writing, extend the aforesaid period by such further period or periods as he thinks fit, so, however, that the total period of extension shall not in any case exceed two years:

Provided further that where an application for settlement under section 245C is made, the period commencing from the date on which such application is made and ending with the date on which an order under subsection (1) of section 245D is made shall be excluded from the period specified in the preceding proviso."

In terms of section .281B of the Act all transfers either by way of sale, mortgage, gift, exchange or otherwise shall be void as against any claim in respect of any tax or any other sum payable by the assessee as a result of the completion of the said proceedings or otherwise. Section 281 of the Act, thus, to effect, declares all transfers has void. Despite such declaration by the said statutory provision, learned counsel for the petitioner represents that the writ petitioner is willing to take the sale‑deeds subject to whatever rights the ‑fourth respondent or the Income‑tax Department has‑ over the property conveyed by the first respondent in favour of the writ petitioner. It is true that the prohibitory order has been issued by the fourth respondent prior to the execution of the sale‑deed in favour of the petitioner who has no knowledge on the date when the document was presented for registration by the first respondent. It is a case where no clearance is required in terms of section 230A of the Act as the value of the property was less than Rs. 2,00,000 as per the provisions which then existed. As such the writ petitioner had no knowledge about the prohibitory orders and the petitioner has not only paid the consideration to the first respondent, but also spend substantial amount towards sale‑deeds and registration purpose. Despite that, the writ petitioner is willing to receive the sale‑deeds subject to the charges or property rights of the Income‑tax Department in realising the arrears of income‑tax. It is pointed out that an appeal is pending against' the assessment proceedings and if ultimately, the appeal is allowed, the first respondent will not be liable for arrears, and the charge will stand extinguished from the date on which the prohibitory order was made. The statutory declaration under section 281 of the Act or for that matter section 281B of the Act will definitely render the transactions void, but nothing prevents the third respondent from releasing the sale‑deed which had already been submitted for registration and when no further formality is required.

In fact, the petitioners in both the writ petitions have given an undertaking which is filed in support of the writ petitions, which reads thus:

"I undertake that in the event of the fourth respondent being entitled to proceed against the property, I will hand over the original document to the Income‑tax Department, if need be, and thereafter claim damages against the first respondent."

Taking into consideration the statutory provisions of the Income‑tax Act, the provisions of the Indian Stamp Act and the Registration Act there can be no bar for the third respondent releasing the document, registration of which has already been completed and kept pending in view of the Brohibitory order issued by the fourth respondent.

Mrs. Chitra Venkataraman, learned counsel appearing for the fourth respondent, fairly states that the statutory declaration that the transfer is void is more than sufficient and whatever rights the petitioner in each of the writ petitions will get will be subject to the rights of the Income‑tax Department. Mr. S. Sampathkumar, learned counsel for the petitioner, has no quarrel over this proposition.

Mrs. Chitra Venkataraman, learned counsel for the fourth respondent, has no objection to the documents, viz., the sale‑deed in Nos.‑150 and 151 of 1992 being released to the respective petitioners. To this limited extent, the writ petitions are allowed and the third respondent is hereby directed to complete the registration formalities relating to documents Nos. 150 and 151 of 1992 and hand over the said documents to the respective petitioners within six weeks from the date of communication of this order. No costs.

Consequently W.M.P. Nos.26102 and 26103 of 1993 are dismissed.

M.B.A./350/FC?????????????????????????????????????????????????????????????????????????????????? Petitions dismissed.