Law:

Section:

Section 281 of the Income-tax Act, 1961 - Certain transfers to be void - Whether question of validity of transfer arises only when specific demands are made against properties and proceedings are taken to recover same by proceedings against properties - Held, yes - Petitioner/assessee transferred certain properties to his son by way of gift - As proceedings for assessment years 1964-65 to 1967-68 were pending and huge tax liabilities were anticipated, Income-tax Officer held that transfer of immovable properties to son was with intention to defraud revenue and provisions of section 281 were clearly attracted - He, therefore, issued sale proclamation to recover amount of tax due for assessment years 1964-65 and 1965-66 - Whether in view of fact that so far as assessments made for 1964-65 and 1965-66 were concerned, they had been set aside and as yet there was no demand outstanding for those years, it was, therefore, clear that properties in question could not be sold for recovery of any tax for said two assessment years - Held, yes - Whether, consequently, sale proclamation had become infructuous order made under section 281 and was liable to be quashed - Held, yes FACTS The petitioner/assessee who was the owner of certain properties transferred said properties to his son by way of gift. The proceedings for assessment years 1964-65 to 1967-68, were pending and huge tax liabilities were anticipated and accordingly the Income-tax Officer held that the transfer of the immovable properties to the sons was with the intention to defraud the revenue and the provisions of section 281 were clearly attracted. The sale proclamation was issued to recover the amount of tax due for the assessment years 1964-65 and 1965-66, pursuant to the certificate issued in that behalf. On writ : HELD It was common ground that so far as the assessments made for 1964-65 and 1965-66 were concerned, they had been set aside and as yet there was no demand outstanding for those years. It was, therefore, clear that the properties could not be sold or any recovery proceedings taken for the recovery of any tax for the said two assessment years. Consequently, the sale proclamation had become…

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