Court held that the charge of a secured creditor would have priority over Government dues under the Income-tax Act, 1961. There is no provision in the Income-tax Act which provides for any paramountcy of the dues of the Income-tax Department over secured debt. The Revenue could not come in the way of the petitioner’s rights as secured creditor. The order of attachment was not valid.
Edelweiss Asset Reconstruction Co. Ltd. v. Tax Recovery Officer (2021) 438 ITR 568 / 205 DTR 1 / 322 CTR 137 (Bom.) (HC)
S. 226 : Collection and recovery-Modes of recovery-Attachment by income tax department-Priority of debts-Mortgaged property-Secured creditors-Income-Tax Department does not have priority of Income-tax dues-Secured creditors have priority over Income-Tax Department-The order of attachment was held to be not valid. [Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, S. 13(2), 13(4) Art. 226]