Facts of the Case

The petitioners approached the High Court seeking relief against an attachment notice dated 15.03.2010 issued by the Income Tax Department. The notice wrongly treated the entire property located at C-28, Mayfair Garden, New Delhi as belonging to an alleged tax defaulter, Mr. Romesh Sharma.

However, the petitioners were the lawful owners of a specific portion (first-floor flat), and Mr. Romesh Sharma had ownership only in the basement. Due to this incorrect assumption, the property of the petitioners was also subjected to attachment.

Subsequently, when the petitioners sought registration of a sale deed, the Sub-Registrar withheld action and eventually rejected the application vide order dated 08.07.2021, citing lack of clarification from the Income Tax Department.

The petitioners asserted that they had never defaulted on any income tax obligations.

Issues Involved

  1. Whether the Income Tax Department could attach property belonging to persons other than the alleged tax defaulter.
  2. Whether the impugned attachment notice dated 15.03.2010 was legally sustainable.
  3. Whether the rejection of registration by the Sub-Registrar was justified. 

Petitioner’s Arguments

  • The petitioners contended that the attachment was based on a mistaken belief that the entire property belonged to the tax defaulter.
  • They argued that their ownership rights were independent and unrelated to Mr. Romesh Sharma.
  • It was submitted that they had no tax liability or default, and therefore, their property could not be attached.
  • The rejection of registration was arbitrary and unjustified due to the absence of any valid legal impediment.

Respondent’s Arguments

  • The respondents did not file any counter-affidavit despite multiple opportunities.
  • However, during the hearing, the counsel for the Revenue admitted that:
    • Mr. Romesh Sharma had ownership only in the basement portion.
    • He had no right, title, or interest in the remaining portions of the property.

Court’s Findings

  • The Court observed that the attachment notice was issued under a mistaken assumption of ownership.
  • Since the alleged tax defaulter had no ownership over the petitioners’ portion, the attachment could not legally survive.
  • The Court held that the impugned notice dated 15.03.2010 was unsustainable in law.

Court Order

  • The High Court quashed the impugned attachment notice dated 15.03.2010.
  • With respect to the rejection order dated 08.07.2021, the Court held that:
    • The petitioners must take fresh steps, as the rejection was not based on the impugned notice.
  • The writ petition was accordingly disposed of. 

Important Clarification by Court

  • Attachment proceedings under tax laws must strictly relate to property owned by the tax defaulter only.
  • Authorities cannot proceed on incorrect or assumed ownership.
  • Administrative actions affecting property rights must be based on verified ownership records.

Sections Involved

  • Article 226, Constitution of India – Writ jurisdiction of High Courts
  • Principles governing attachment of property under Income Tax law

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/60804082023CW138402021_173251.pdf

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