RITU RAJ GARG vs. DEPUTY COMMISSIONER OF INCOME TAX

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CWP/26246/2019HC Punjab & HaryanaPHHC01111837201918 February 2020Bench: MR. JUSTICE AJAY TEWARI,MR. JUSTICE AVNEESH JHINGAN2 pages

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What did the High Court hold?

The High Court held that the provisional attachment could not be made in the name of the previous owner if the property was transferred before the search, especially when the revenue had not initiated proceedings under Section 281 of the Income Tax Act, 1961, to challenge the transfer. The Court found that at the time of the search, the property was in the ownership of the petitioner. Therefore, the provisional attachment was deemed to be in the hands of the petitioner. Furthermore, the Court held that the provisional attachment comes to an end after the passing of the assessment order. Consequently, the writ petition was allowed, directing that the property be treated as provisionally attached in the petitioner's name and that the provisional attachment had ended with the finalization of the assessment. The respondent was given liberty to proceed under Section 281 of the Act if advised.

What were the facts?

The petitioner, Ritu Raj Garg, challenges the provisional attachment of a property. Originally, the property was jointly owned by the petitioner and her husband with a 50% share each. On January 17, 2018, the husband transferred his 50% share to the petitioner. A search was conducted on June 6, 2018, and at that time, the property was provisionally attached based on the original 50:50 ownership. The petitioner argued that the attachment should not have been in the name of the previous owner (husband) since the transfer occurred before the search. The revenue contended the transfer was fraudulent but admitted no proceedings under Section 281 of the Income Tax Act, 1961, were initiated. The petitioner further argued that with the finalization of the assessment, the provisional attachment could not continue, a fact the revenue could not deny.

What were the issues?

1. Whether the provisional attachment of the property could be made in the name of the previous owner (husband) when the property was transferred to the petitioner much before the search, turning on Section 281 of the Income Tax Act, 1961. Assessee's contention: The property was transferred prior to the search, and therefore, it could not be attached in the name of the previous owner. Revenue's contention: The transfer was fraudulent, but no proceedings under Section 281 of the Act were initiated. 2. Whether the provisional attachment can continue after the assessment has been finalized, turning on the procedural implications of assessment finalization on provisional attachments. Assessee's contention: Once the assessment is finalized, the provisional attachment cannot continue. Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

281

AI-generated summary — verify with the full judgment below

220 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH **** CWP-26246-2019 DECIDED ON:FEBRUARY 18, 2020 RITU RAJ GARG PETITIONER VERSUS DEPUTY COMMISSIONER OF INCOME TAX RESPONDENTS CORAM: HON'BLE MR. JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE AVNEESH JHINGAN Present: Ms. Radhika Suri, Sr. Advocate with Mr. M.S. Kanda, Advocate for the petitioner. Mr. Tajender K. Joshi, Sr. Standing Counsel for the respondent. **** AJAY TEWARI, J (Oral): By this petition, petitioner has challenged the provisional attachment of the property. 2. The facts are that originally the property in question was in the joint names of the petitioner and her husband. On 17.01.2018 the husband of the petitioner transferred his 50% share of the property in the name of the petitioner. On 06.06.2018, a search was conducted and at that time the property was provisionally attached as per the original ownership of 50:50 (½ in the name of the petitioner and ½ in the name of her husband). 3. The first argument of the learned Senior counsel for the petitioner is that once it was admitted that the property was transferred much before the search it could not have been attached in the name of the previous owner. SHAM SUNDER 2020.02.25 16:27 I attest to the authenticity and integrity of this document HIGH COURT CHANDIGARH

CWP-26246-2019 -2- 4. Learned counsel for the revenue sought to argue that the transfer was fraudulent but has accepted that no proceedings have been initiated under Section 281 of the Income Tax Act, 1961 (for short 'Act'). In the circumstances the stand cannot be accepted and it has to be held that at the time of search the property was in the ownership of the petitioner and, therefore, its provisional attachment is deemed to be in the hands of the petitioner. 5 Learned Senior Counsel has further argued that once the issue of ownership of the property and in whose hands it could be provisionally attached has been clarified, the fact is that subsequently the assessment has been finalized and consequently the provisional attachment cannot continue. Learned counsel for the revenue is not in a position to deny this factual aspect also. 6. Consequently, the writ petition is allowed and it is directed that first property be treated to have been provisionally attached in the name of the petitioner and secondly provisional attachment has come to an end after the passing of the assessment order, while giving liberty to the respondent to proceed under Section 281 of the Act, if so advised. [AJAY TEWARI] JUDGE [AVNEESH JHINGAN] JUDGE FEBRUARY 18, 2020

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Whether speaking/ reasoned : Yes / No 2. Whether reportable : Yes / No SHAM SUNDER 2020.02.25 16:27 I attest to the authenticity and integrity of this document HIGH COURT CHANDIGARH

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