Section 222 of the Income-tax Act, 1961

HIGH COURT OF BOMBAY Samson John v. Tax Recovery Officer F. I. Rebello and R. S. Mohite, JJ. Writ Petition No. 9077 of 2007 January 29, 2008 Section 222 of the Income-tax Act, 1961 - Collection and recovery of tax - Certificate proceedings - Block years 1986-96 - In year 1974, one ‘J’ purchased certain land in name of his son (petitioner) when he was a minor and also constructed a house thereon - To recover tax dues of ‘J’ for block assessment years 1986-96, TRO took steps to attach and subsequently sell said property - As against that, petitioner contended that property in question stood in his name and same could not be attached to recover tax dues of his father - Case of petitioner was further strengthened from revenue records which indicated that property along with structure (house) stood in name of petitioner atleast from assessment year 1979-80. There was no material to show that at any point of time house was shown in name of petitioner’s father - Whether on facts, purchase of property in name of minor son did not amount to a transfer within meaning of Explanation to section 222(1) - Held, yes - Whether even assuming that house was constructed by father, since his dues were for block assessment years 1986-96, and house stood in name of petitioner from 1979-80, it could not be said that there had been a gift or exchange or transfer of that house which would fall within Explanation to section 222 and consequent to which revenue could have attached and sold that house and property - Held, yes - Whether, therefore, proposed sale of land and house was without authority of law - Held, yes FACTS For recover of tax dues of one ‘J’, for the block years 1986-96, TRO took steps to sold certain land and house standing thereon. As against that, petitioner filed writ petition contending that the action of attaching the property and further proceedings for its auction sale were illegal inasmuch as the property in question stood in his name and he was the owner of the same. It was the case of the petitioner that the land in question was purchased by his father in 1974 in his name when he was a minor, that a house was constructed thereon somewhere in 1979-80 that in the revenue records, both the land and the house were standing in his name at least since 1979-80 and that on his attaining majority, necessary corrective entries were effected in the revenue records. On the other hand, the TRO contended that the property was inherited property and not self acquired property and, thus, in view of the Explanation to section 222(1), the revenue was entitled in law to attach and sell the said property. HELD A perusal of the Explanation to section 222(1) would contemplate that the movable or immovable property, transferred directly or indirectly on or after 1-6-1973, by the assessee to his spouse or minor child or son’s wife or son’s minor child, shall, even after the date of attainment of majority by such minor child or son’s minor child, as the case may be, continue to be included in the assessee’s movable or immovable property for recovering any arrears due from the assessee in respect of any period prior to such date. It would be, therefore, clear that there must be transfer of property on or after 1-6-1973 in favour of the minor child. In the instant case, the property was purchased in the name of the petitioner who was then a minor. The issue to be decided was whether purchase in the name of minor amounts to a transfer within the meaning of the Explanation to section 222(1). Transfer is defined for the purpose of capital assets under section 2(47) and includes sale, exchange or relinquishment of the assets or extinguishment of any right. In the instant case, the property was purchased in the name of the minor as in law a minor cannot contract. That purchase was in the year 1974. The property continued to be in the name of the minor. The dictionary meaning of ‘transfer’ in K. J., Aiyar’s Judicial Dictionary reads amongst others as under:- “‘Transfer must carry with it ‘from’ and ‘to’. In case either of them is wanting, there can be no transfer”. Therefore, considering the definition of transfer and its dictionary meaning, on the facts of the case, there could be no transfer insofar as the immovable property was concerned. [Para 6] The next aspect of the matter was of the house standing on the said property. The fact that the house stood in the records in the name of the petitioner right from the year 1979-80, was not disputed by the revenue. Even otherwise, the petitioner had placed the revenue records indicating and which raised a presumption that the property with the structure (house) atleast from the assessment year 1979-80 stood in the name of the petitioner. There was no material to show that at any point of time the house was shown in the name of the petitioner’s father. That would be one aspect of the matter. The other aspect of the matter was that even assuming that the house was constructed by the father, the transfer in terms of the Explanation must be for recovery of the tax arrears of the father for a period prior to the date of the transfer. The father’s dues were for the block assessment years 1986-96. The house stood in the name of the son from 1979-80. Therefore, it could not be said that there had been a gift or exchange or transfer by any other means of the house which would fall within the Explanation and, consequently, the revenue could have attached and sold the house and property. [Para 7] Therefore, the proposed sale of the land and the house by respondent No. 1 was without the authority of law. [Para 8]