On a writ petition by the chit fund company contending, inter alia, that it was a bona fide transferee for value and was exempted from the provisions of section 281, partly allowing the petition, the Court held  that since the rule 2 notice was issued on February 24, 2016 and served on the assessee on February 26, 2016, section 281(1) operated only up to February 26, 2016.That the Memorandum of Deposit of Title Deeds did not mention the date of deposit of title deeds nor reveal when the sum of Rs. 50 lakhs was borrowed by the assessee although the security provided thereunder appeared to cover both present and future debts. Taking into account the date of execution thereof, the date of deposit could have been on November 16, 2016 or ear lier, but not later. The chit fund company, the mortgagee, did not assert that the mortgage was created prior to the date of service of the rule 2 notice. Thus, there was sufficient justification to proceed on the basis that the date of creation of mortgage was subsequent to February 26, 2016, i. e., the date of receipt of the rule 2 notice. Hence, section 281(1) was not applicable for purposes of testing the validity of the mortgage. As a corollary, the proviso thereto, including the exemption for bona fide transfers for adequate consideration, could not be relied on by the creditor.  That given that the property was purchased on the date of receipt of the rule 2 notice, there was no reason to conclude that the assessee was not the owner of the relevant immovable property on the date of service of the rule 2 notice. The relevant date was the date of service of such notice and not the date of issuance thereof. Because the mortgage was created after service of the rule 2 notice, the assessee was required to obtain the permission of the Tax Recovery Officer before doing so in terms of rule 16(1). In the absence of such permission, he was not competent to mortgage the property. That the Tax Recovery Officer had drawn reference to rule 51 of the Second Schedule and concluded that the mortgage was void ab initio. The declaration that the mortgage in favour of the creditor was void ab initio was liable to be set aside. That, however, the Tax Recovery Officer was entitled to proceed to take measures for the recovery of arrears by the sale of the immovable property of the defaulting assessee. If such sale was successful, the Tax Recovery Officer would also be entitled to adjust the tax dues from and out of the sale proceeds. Any surplus shall be retained by the Tax Recovery Officer and paid to the creditor after confirming that proceedings under the Chit Funds Act, 1982 had attained finality. The award was issued ex parte and the statute provided for an appeal. The execution proceedings initiated by the creditor before the civil court may be proceeded with because they pertained to the asset of V, but no civil court shall issue any process against the attached property. Any such process for the execution of a decree would contravene rule 16(1) of the Second Schedule to the Income-tax Act (AY. 2011-12)