KAPOOR B M HUF Vs. DEPUTY CIT

JUDGEMENT

(1.) THE petitioner, an income-tax assessee, became a member of the Cozihom Co-operative Housing Society Limited, Pali Hill, Bombay, and purchased certain shares in his name. In lieu of the same, he was given possession of a Flat No. 82-B. As per the bye-laws of the society on transfer of the shares held by the member, the possession and ownership of the flat also stand transferred to the transferee. In September, 1988, the petitioner transferred the shares in the name of his wife and, consequently, the flat also stands transferred in her name. At the time of transfer of the shares by the petitioner in the name of his wife certain assessment proceedings were pending for various years, i.e., from 1978-79 to 1987-88. THErefore, the Deputy Commissioner of Income-tax, Special Range, Jalandhar, passed an order dated December 4, 1991, under Section 281 of the Income-tax Act, 1961, holding the sale of the property, flat No. 82-B, Cozihom Co-op. Housing Society Limited, Pali Hill, Bombay, void in view of Section 281 of the Income-tax Act and the same would continue to be the property of the assessee.

(2.) CHALLENGING the said order of the Deputy Commissioner of Income-tax, Jalandhar, dated December 4, 1991, the petitioner approached this court.

(3.) THUS, from a reading of Section 281, it is clear that any transfer by the assessee during the pendency of any proceedings under the Act or after completion thereof shall be void against any claim in respect of any tax or any other sum payable by the assessee as a result of the said proceeding or otherwise. THUS, it is clear that the transaction or the transfer is not void ab initio. Section 281 only declares that any transfer is void against the claims of the Revenue in respect of the tax finally determined in a proceeding which has been pending at the time of the transfer. Section 281 does not say that even after the transfer of the property the ownership continues to be with the assessee till all the claims of the Revenue are satisfied. Section 281 does not declare the transfer to be void ab initio so that the title of the transferee is lost. It only declares that the transfer is void to the extent of the tax liability that might finally be determined by the authorities on completion of the proceeding under the Income-tax Act. In fact, no separate orders under Section 281 are also required to be passed to give effect to the provisions of Section 281 as it is declaratory in nature and it does not require any adjudication on the nature of the transfer and the rights of the parties to the transaction in general.