Law:

Section:

Rule 26 of Schedule II to the Income-tax Act, 1961 - Debts and shares etc -In order to realise arrears of tax, TRO issued notices for attachment and sale of certain properties - While petitioner-trust claimed that properties in question were belonging to trust, department asserted that in reality, those were owned by defaulter i.e. sole trustee of trust - Whether this was a disputed question of fact which could properly be disposed of in manner provided in statute or by a regular suit but could not be determined in these proceedings under Article 226 of constitution - Held, yes - Whether therefore, instant writ petition was to be dismissed - Held, yes FACTS The petitioner-trust of which 'S.N.' was the sole trustee upto 31-3-1954 and 'SS' was the sole trustee thereafter, was recognized as a charitable trust by the department since 1944-45. The income of the trust from the property it held and the investments made were spent in furtherance of the objects of the trust. The trust was not being assessed to any income-tax and it was not a 'defaulter' as defined in the Act. For the assessment years 1951-52, 1953-54 to 1955-56 and 1960-61, 'SN' was assessed to income-tax in his individual capacity. While his appeals against the assessment were pending, on his death department attempted to recover the arrears of income-tax from his sons, but on objection against their liability, no steps were taken for the recovery of that amount from them. Subsequently, the TRO in exercise of his powers under rule 26 in the Second Schedule, issued notices and attached certain properties lying with the petitioner - trust on the ground that the said properties ostensibly standing in the name of the trust really belonged to the defaulter i.e. 'SN'. On writ: HELD The TRO, under the law, is authorised to attach the property ostensibly standing in the name of a person other than the defaulter on the assertion by the department that the property really belongs to the defaulting assessee. The ostensible owner will then have the right to prefer objections to the attachment before the TRO, in accordance with rule 11 in the Second Schedule. He will decide these objections according to law after…

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