Sell of properties of borrower by bankers/ARCs – Govt should ensure mechanism to recover tax from recipient

Abbasbhai A. Upletawala Vs ITO (ITAT Mumbai)

ITAT asks the Govt. to bring out a mechanism to ensure tax recovery from ARCs/Banks on the sale of security assets

The Income Tax Appellate Tribunal, Mumbai Bench (“the ITAT”) in the case of Abbasbhai A. Upletawala v. Income Tax Officer Ward 16(1)(1) [ITA No. 5332/Mum/2015 dated October 21, 2022] asked the government to bring out a mechanism to ensure tax recovery on the sale of security assets from the Asset Reconstruction Companies (“the ARCs”) or banks.

Facts:

Mr. Abbasbhai A. Upletawala (“the Appellant”) is the director of M/s Abid Steels Co Ltd (“the ASCL”) and had given a personal guarantee to, on behalf of the ASCL and in respect of its commercial borrowing from the State Bank of India (“the SBI”). The Appellant had owned a land measuring 2291.9 square meters, which he had purchased for Rs. 2 Lakh on August 22, 1983. The Appellant had given it as collateral security for the commercial borrowings to the SBI. The Appellant was also a party to the recovery proceedings before the Debts Recovery Tribunal (“the DRT”) as a director and personal guarantor to the ASCL.

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