Smt Vanitha S Vs DCIT (Karnataka High Court)
HC Strikes Down Income Tax Attachment on Bona Fide Purchaser’s Property- Attachment under Section 281B Invalid When Property Not Owned by the Assessee
Petitioner challenged the provisional attachment orders issued u/s 281B of the Income-tax Act by the DCIT, Central Circle-1(3), Bengaluru, attaching her immovable property situated at BEML 3rd Stage, Halagevaderahalli Village, Kengeri Hobli, Bengaluru South Taluk.
The property originally belonged to a partnership firm M/s Sri Vayuputhra Electro World, constituted by the petitioner & one Mr. Venkatachalapathi Ramamurthy Rajesh under a deed dated 19.04.2019. The firm purchased the property on 29.08.2019 & subsequently sold it to Smt. Vinutha J. through a registered sale deed on 22.12.2021. Later, Smt. Vinutha J. sold it to the present petitioner on 25.01.2023.
Despite this, the Income Tax Department issued attachment orders treating the property as belonging to Mr. Venkatachalapathi Ramamurthy Rajesh, who was the sole assessee facing proceedings before the tax authorities. The petitioner was neither an assessee nor connected with the assessment proceedings. She contended that attaching her property, which was purchased bona fide through registered transactions long after its sale by the firm, was illegal & beyond jurisdiction.
The Court observed that the property had been validly sold by the firm much before the first attachment order, & that neither the petitioner nor the partnership firm was an assessee under the Act. The sole assessee was Mr. Rajesh, who had no right, title, or interest in the said property at the time of attachment. The authorities had thus committed an error by wrongly including the petitioner’s property among those belonging to the assessee. Accordingly, the High Court held that the impugned attachment orders were unsustainable. It quashed the provisional attachment orders insofar as they related to the petitioner’s property.
