Tax Recovery Officer cannot declare sale by assessee to 3rd party as void

K. N. Subramaniam Vs PCIT (Madras High Court)

Background:

This case involves a dispute between a taxpayer (the fourth respondent), the Income Tax Department, and a third-party buyer (the petitioner) of the taxpayer’s property. The taxpayer owed outstanding taxes to the Income Tax Department. While the tax proceedings were ongoing, the taxpayer sold the property to the petitioner.

Issue:

The Income Tax Department, through the Tax Recovery Officer (TRO), attached the property for recovery of tax dues. The petitioner challenged the attachment, claiming ownership of the property through the sale deed. The TRO, however, declared the sale deed void, considering it was made during the pendency of tax proceedings.

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