Law:

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Section 281 of the Income-tax Act, 1961 - Certain transfers to be void Section 281 does not prescribe any adjudicatory machinery for deciding any question which may arise under it; in order to declare a transfer fraudulent under section 281, appropriate proceedings have to be taken before competent Civil Court Section 281 does not prescribe any adjudicatory machinery for deciding any question which may arise under it. In order to declare a transfer fraudulent under section 281, appropriate proceedings have to be taken before competent Civil Court. The issue, therefore, whether the order is passed by the TRO or Assessing Officer is immaterial. As held by the Supreme Court in TRO v. Gangadhar Viswanath Ranade (Decd.) [1998] 149 CTR (SC) 90 : [1998] 234 ITR 188 (SC), if the department finds that a property of the assessee is transferred by him to a third party with the intention to defraud the revenue, it will have to file a suit under rule 11(6) to have the transfer declared void under section 281. Gaurav Joshi, Jitendra Jain and Rajesh Rathod for the Petitioner. G. Kulkarni, Satish Bejai, R. Ashokan, P.S. Sahadevan, Ms. Pradnya and T. Acharya for the Respondent. JUDGMENT (ORAL JUDGMENT) F. I. Rebello, J.-Rule. Heard forthwith. 2. It is the case of the petitioners that by a registered deed of sale dated July 30, 2002, they purchased the premises from respondent No. 5. Admittedly, there were proceedings pending under the Income-tax Act, 1961, against respondent No. 5 on that date. The order of attachment under section 226(3) of the Income-tax Act made on June 19, 2002, was lifted some time in July, 2002. Admittedly, on the date of the sale of the property there was no order of attachment. The order of attachment was subsequently passed on October 22, 2003. 3. Respondent No. 5 had taken a loan from respondent No. 1 and to secure the loan had created a mortgage in favour of respondent No. 1. Respondent No. 5 has also created leave and licence in favour of respondent No. 1. The licence amounts were to be adjusted against the loan amount advanced by respondent No. 1 to respondent No. 5. 4. Though the petitioners had served the notice of allotment on respondent No. 5…

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