9911796707
|
Home
Issues: Tax Recovery Officer's notice to banks for attachment of funds, validity of attachment, petitioner's claim of being a genuine company, lack of notice to petitioner, entitlement to interest on unlawfully deprived funds.
Analysis: The judgment by the High Court of Allahabad involved a case where the Tax Recovery Officer (TRO) issued a notice to two banks, directing them to hold and remit certain amounts of money belonging to individuals as arrears of income tax. The notice listed the amounts due from each individual and instructed the banks to remit the funds to the TRO. The banks complied, remitting substantial amounts from the accounts of a company named M/s. Shaukat Trading Co. (P) Ltd., which was allegedly owned by the individuals in question. The individuals were under detention during this period, and the company claimed ignorance of the attachment and subsequent remittance of funds. The company made efforts to rectify the situation but received no response from tax authorities, leading to the court intervention. The counter-affidavit filed by the Income Tax Officer (ITO) alleged that the petitioner company was not genuine but a dummy company owned by one of the individuals. However, the company contended that it was a duly registered entity that had filed returns and appeals in its capacity as a private limited company. The court noted that no authority had found the company to be illegitimate, and there was no mention of such in any assessment or appellate orders. The court examined the provisions of section 226(3) of the Income Tax Act, 1961, which allows the ITO to require a person holding money for or on account of the assessee to pay the amount due. The court found that no notice was issued to the petitioner company, which held the funds in its accounts, not on behalf of the individuals. The TRO directly notified the banks, bypassing the company, which was unjustified. The court ruled that the petitioner company was unlawfully deprived of funds and was entitled to interest at 6% per annum. In conclusion, the court directed respondents to refund the amounts received from the banks to the petitioner company, totaling Rs. 2,34,040.40, with 6% interest. The banks were instructed to credit the refunded amount to the petitioner company's accounts. The judgment favored the petitioner company, emphasizing fair treatment and rightful entitlement, and allowed for further legal actions by the respondents if deemed necessary.
|
