A. YAHIYA KOYA V. THE UNION OF INDIA

AS/468/1998

AI Insights

The case involves A. Yehiya Koya and Mohammed Niyaz, the plaintiffs, who appealed against the decision of the lower court which dismissed their suit for declaration of title and possession over certain properties. These properties were attached and sold by the Income Tax Recovery Officer under the Income Tax Act due to default in tax payments by the fifth defendant, the original owner of the properties. The plaintiffs argued that the sale deeds in their favor were valid and should not be affected by the tax recovery proceedings. However, the court found that the recovery certificate issued prior to the sale deeds rendered the plaintiffs' claim untenable under the IT Act, as they were essentially claiming under a defaulter's title which was already subjected to tax recovery proceedings.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 722442 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 10-09-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K MENON; NRK NAYAR; P K ABOOBACKER; B HILAL
• Assessee Lawyers: E K NANDAKUMAR; A K JAYASANKAR NAMBIAR
• Keywords: Attachment and Sale; Declaration of Title; Income Tax Act; Possession; Possession; Tax Recovery Certificate
• Section: 9

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HON'BLE MR. JUSTICE A.V.RAMAKRISHNA PILLAI MONDAY, THE 10TH DAY OF SEPTEMBER 2012/19TH BHADRA 1934 AS.No. 468 of 1998 (B) ---------------------- OS.NO.32/1987 of ADDL.SUB COURT,KOLLAM ------------------- APPELLANT(S)/PLAINTIFFS: --------------------------------------- 1. A. YEHIYA KOYA,NIYAZ MANZIL, KILIKOLLOOR VILLAGE, KILIKOLLOOR.P.O., KOLLAM. 2. MOHAMMED NIYAZ,S/O.YAHIYA KOYA, -DO- -DO- BY SRI.E.K.NANDAKUMAR,SENIOR ADVOCATE ADV.SRI.A.K.JAYASANKAR NAMBIAR RESPONDENT(S)/DEFENDANTS 1 TO 6: --------------------------------------------------------- 1. THE UNION OF INDIA, REPRESENTED BY THE SECRETARY TO GOVERNMENT OF INDIA, NEW DELHI. 2. THE INCOME TAX OFFICER, THIRUVANANTHAPURAM. 3. THE INCOME TAX OFFICER, CENTRAL CIRCLE INCOME TAX OFFICER, THIRUVANANTHAPURAM. 4. THE INCOME TAX RECOVERY OFFICER, INCOME TAX OFFICE, KOLLAM. 5. SMT.AMARAVATHY SOMA SUNDARAM, PROPRIETRIX OF SREERAMA CASHEW LIMITED, KOLLAM-4. *6. N.H.SHERIF,ZAYAD MANZIL, KANNIMEL, KILIKOLLOOR, KOLLAM.(DIED) *ADDL.R7 TO R10 IMPLEADED *R7: HIND SHERIEF,D/O.LATE SHAHUL HAMEED, AGED 44 YEARS, ZAVAD MANZIL, 2ND MILE STONE, KILIKOLLOOR.P.O., KOLLAM. sts 2/- -2- A.S.NO.468/1998 *R8: ZAVAD SHERIEF,S/O.LATE N.H.SHERIEF, AGED 24 YEARS, ZAVAD MANZIL,2ND MILE STONE, KILIKOLLOOR.P.O., KOLLAM. *R9: ANFAZ SHERIEF,S/O.LATE N.H.SHERIEF,AGED 22 YEARS, ZAVAD MANZIL,2ND MILE STONE, KILIKOLLOOR.P.O., KOLLAM. *R10: FOUSIA ARSHAD,W/O.ARSHAD.K., RESIDING AT KANNANKARA PUTHENVEEDU, KANNANALLOOR POST, KOLLAM. R1 TO R4 BY SRI.P.K.RAVINDRANATHA MENON,SENIOR ADVOCATE ADV. SRI.NRK.NAYAR R7 TO R10 BY ADV. SRI.P.K.ABOOBACKER(EDATHALA) SRI.B.HILAL THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 10-09-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts Thottathil B.Radhakrishnan & A.V.Ramakrishna Pillai, JJ. = = = = = = = = = = = = = = = = = = = = = = = = A.S.No.468 of 1998 = = = = = = = = = = = = = = = = = = = = = = = = Dated this the 10th day of September, 2012. Judgment Thottathil B.Radhakrishnan, J. 1.The plaintiffs are the appellants. Suit is for declaration of title and possession over the suit properties; for a declaration that the attachment and sale of suit properties by the Recovery Officer under the Income Tax Act is illegal and void; and, for a decree of perpetual injunction restraining the Union of India and the Income Tax officials from taking any recovery steps against the suit properties. Plaintiffs also sought a decree setting aside the order passed by the Sale Officer under the Income Tax Act in terms of Second Schedule to the Income Tax Act, 1961. The court below held that the suit is not maintainable in view of the provisions of the Income Tax Act and the Rules thereunder. 2.The plaintiffs' claim is founded on sale deeds AS468/98 -: 2 :- dated 10.9.1985 and 13.9.1985 stated to have been executed by the fifth defendant, the defaulter under the IT Act. The order of attachment and sale by the IT authorities were based on Tax Recovery Certificate dated 29.3.1983. Obviously therefore, the sale deeds by the fifth defendant, assessee under the IT Act, in favour of the plaintiffs were after the recovery certificate was issued on 29.3.1983. It goes without saying that recovery certificate was based on assessment or other proceedings already concluded against the fifth defendant. Not only that, it is not necessary that a Tax Recovery Certificate should be issued to treat her as a defaulter in terms of IT Act. If the Tax Recovery Certificate was issued on 29.3.1983, the demand would have, obviously, been before that and it is the non- satisfaction of that demand which had led to the Tax Recovery Certificate. Therefore, the fifth defendant's transfer in favour of the appellants would have been of no consequence. At any rate, the plaintiffs can only be treated as persons who AS468/98 -: 3 :- are representatives or persons claiming under the defaulter. Rule 9 in the Second Schedule of the IT Act provides that except as otherwise expressly provided in the IT Act, every question arising between the Tax Recovery Officer and the defaulter or their representatives, relating to the execution, discharge or satisfaction of a certificate, or relating to the confirmation or setting aside by an order under the IT Act of a sale held in execution of such certificate, shall be determined, not by suit, but by order of the Tax Recovery Officer before whom such question arises. The proviso to that rule enables a suit being brought in a civil court in respect of any such question upon ground of fraud. The suit from which this appeal arises is founded on a plea of title and not on a plea of fraud by the department or of any fraudulent act as would fall within the proviso to Rule 9. Under such circumstances, the dismissal of the suit by the court below is only to be affirmed. AS468/98 -: 4 :- In the result, the appeal fails. The same is dismissed with costs of respondents 1 to 4. Thottathil B.Radhakrishnan Judge A.V.Ramakrishna Pillai Judge kkb-sha/ AS468/98 -: 5 :- Thottathil B.Radhakrishnan & A.V.Ramakrishna Pillai,JJ. = = = = = = = = = = = = = A.S.No.468 of 1998 = = = = = = = = = = = = = Judgment 10th September, 2012 "