Sec. 48 of Income Tax Act, 1961 – Recovery of Tax – As the charge over the property was created much prior to the issuance of notice under Rule 2 of Schedule II by Revenue, submission of assessee seeking a restraint order against the Tax Recovery Officer for enforcing the attachment made for recovery of the dues was accepted.

Facts: Assessee filed the Writ Petition in the High Court of Judicature at Bombay seeking a restraint order against the Tax Recovery Officer for enforcing the attachment made for recovery of the dues. The Writ Petition was dismissed by the High court, aggrieved by which the Appeal has been filed before Supreme Court.

Held, that property in dispute was mortgaged by BPIL to the Union Bank of India in 2000 and the DRT passed an order of recovery against the BPIL in 2002. The recovery certificate was issued immediately, pursuant to which an attachment order was passed prior to the date on which notice was issued by the Tax Recovery Officer under Rule 2 of Schedule-II. It is true that the sale was conducted after the issuance of the notice as well as the attachment order passed by Respondent No.4 in 2003, but the fact remains that a charge over the property was created much prior to the notice issued by Respondent No.4 on 16.11.2003. The High Court held that Rule 16(2) is applicable to this case on the ground that the actual sale took place after the order of attachment was passed by Respondent No.4. The High Court failed to take into account the fact that the sale of the property was pursuant to the order passed by the DRT with regard to the property over which a charge was already created prior to the issuance of notice on 11.02.2003. As the charge over the property was created much prior to the issuance of notice under Rule 2 of Schedule-II by Respondent No.4, we find force in the submissions made on behalf of the assessee. The judgment of the High Court is set aside and the Appeal is allowed – CONNECTWELL INDUSTRIES (P.) LTD. Vs. UOI [2020] 424 ITR 018 (SC)