Law: Income Tax Act, 1961

Section: 11,220

Income-tax-----Recovery of tax---Attachment of property---Only property in possession of defaulter in his own right can be attached---Property in possession of a third party ---TRO must determine whether such possession is in possessor's own right---Possession of property by an educational society for more than twenty years---Municipal documents in name of society---School constructed and being run in property---Attachment of property for arrears of tax of ostensible owner of property was not valid---Indian Income Tax Act, 1961, S.220, Sched. II, Part I, R.11. The Tax Recovery Officer has to examine who is in possession of the property and in what capacity. He can only attach property in the possession of, the assessee in his own right, or in the possession of a tenant or a third party on behalf or for the benefit of the assessee. If the property attached is claimed by a third party who adduces evidence to show that he was possessed of the property under some kind of title, the property will have to be released, from attachment. As per rule 11(4) of Part I of Schedule II to the Income Tax Act, 1961, the Tax Recovery Officer is required to examine whether the possession of the third party is of a claimant in his own right or in trust for the assessee or on account of the assessee. If he comes to the conclusion that the transferee is in possession in his or her right, he will have to raise the attachment: Held, that, in the instant case, the petitioner which was an educational society had failed to produce any documentary evidence to show when actually the land in question was handed over to the municipality and also when the municipality handed over the same to the petitioner for the purposes of the school. But at the same time, it was admitted even by the Income-tax Department that in the sanctioned layout an area of about 20 grounds was reserved for the school and that the petitioner-society had been in occupation of the said land. That apart the petitioner herein had placed a lot of documentary evidence before the Court to show that it had obtained sanction from the authorities to start a school in the property in question even in the year 1972 and now it was…

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