A Notice for Attachment of Property cannot be challenged before High Court: Madras High Court [Read Judgment]

Madras High Court

The Madras High Court has held that a notice proposing to attach the property by the income tax department cannot be challenged before the High Court invoking the writ jurisdiction under Article 226 of the Constitution.

The tax department proposed to attach the property belongs to M/s NEPC India Ltd., which was later transferred to the petitioner. The petitioner approached the Court challenging the notice for attachment of the property by the Tax Recovery Officer. The notice stated that the said property has been attached, as the transfer in the name of the petitioner is null and void in view of Section 281(1) and Rule-16 of the 2nd Schedule to the Income Tax Act, 1961. The petitioner was prohibited from dealing with the property in any manner.

Before the High Court, the petitioner contended that she is a bona fide purchaser of the said property for a valuable consideration and as on the date of purchase, there are no encumbrances/charge on the property.

After analyzing the relevant rules, Justice T.S Sivagnanam pointed out that if any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection.

“The procedure for such investigation and the manner in which the proceedings to be conducted are enumerated under Rule 11 of the said Rules. Therefore, if the petitioner’s claim is that the property is not liable for such attachment, then the petitioner has to make a claim before the Tax Recovery Officer and for such reason, the petitioner could not have approached this Court invoking the jurisdiction under Article 226 of the Constitution of India. Therefore, the Court holds that the writ petition is not maintainable. However, considering the fact that the Income Tax Act and Rules framed thereunder, especially Rule 11 under the 2nd Schedule, provides for a remedy to the assessee, the petitioner is at liberty to avail such a remedy,” the Court said.

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