2022 (10) TMI 238 - HC - Income Tax

Attachment order issued u/s 226(3) with respect to the fixed deposits held - Petitioner herein used her personal savings for opening fixed deposits with the Bank - Petitioner is an 88 year old senior citizen and her explanation that her son was joined as a second holder in the FDRs as an abundant caution to facilitate encashment in case of any unforeseen event appears plausible - HELD THAT - No particulars of the FDRs have been enlisted in the said notice in contradistinction to the bank account numbers, which were enlisted. This fortifies the submission of the Petitioner that the FDRs are only disclosed in her ITR as her assets. There is no dispute that the said attachment order is not intended to operate against the Petitioner's assets. Whereas the notice dated 27th December, 2019, directed the Bank to remit all amounts standing to the name Sh. Ravi Chopra to his AO, admittedly, the Bank had not remitted the amounts of the FDR standing in the name of the Petitioner herein to the AO, as possibly even the Bank does not consider the said FDRs as the asset of Sh. Ravi Chopra. Bank out of abundant caution has held back on the Petitioner's FDRs and this further borne out from the letter dated 31stMarch, 2020, issued by the Bank to the AO seeking clarification with respect to the application of the attachment order to the Petitioner's FDRs. AO did not respond to the said letter of the Bank seeking clarification, which shows apathy of the AO towards the plight of the Petitioner. Department has not shown any cause against the Petitioner. The counsel for the Bank has also clarified that the only reason for not allowing the Petitioner to encash her FDRs is due to the notice dated 27th December, 2019. The contentions of the Petitioner in the writ petition have remained undisputed. The counsel for the Department and the Bank have not disputed the contentions of the writ petition or made any submission which would disentitle the Petitioner to the reliefs sought in the writ petition. Attachment order does not operate against the FDRs of the Petitioner held with the Bank and direct the Bank to permit the Petitioner to encash her fixed deposits forthwith, without any further delay. The present writ petition is accordingly disposed of.

Issues:
1. Attachment order on fixed deposits under Section 226(3) of the Income Tax Act, 1961.
2. Ownership of fixed deposits and tax implications.
3. Validity of the attachment order and its impact on the petitioner's fixed deposits.
4. Dispute over the attachment order and instructions from Assessing Officers.
5. Role of the Bank in withholding encashment of fixed deposits.
6. Examination of contentions and evidence presented by the parties.
7. Resolution of the matter and direction to lift the attachment order.

Issue 1: Attachment Order on Fixed Deposits
The petitioner sought a direction to lift the attachment order dated 27th December, 2019, issued under Section 226(3) of the Income Tax Act, 1961, concerning fixed deposits held with the Nainital Bank Ltd. The petitioner, an 88-year-old senior citizen, primarily held the fixed deposits, with her son being a secondary holder for emergency access. The petitioner asserted that the entire amount in the fixed deposits belonged to her, supported by tax filings and TDS credits to her PAN.

Issue 2: Ownership of Fixed Deposits and Tax Implications
The petitioner's counsel highlighted that the fixed deposits solely belonged to the petitioner, evidenced by tax filings and TDS credits. The Bank confirmed TDS credits to the petitioner's PAN, emphasizing her ownership. The petitioner's age and the rationale for adding her son as a joint holder for emergency purposes were considered plausible by the court.

Issue 3: Validity of the Attachment Order
The court noted that the attachment order was directed at the bank accounts of the petitioner's son, Sh. Ravi Chopra, and not the petitioner's fixed deposits. The order lacked specific details regarding the petitioner's fixed deposits, reinforcing the petitioner's claim of ownership. The Bank's cautious approach in seeking clarification on the attachment order's application to the petitioner's fixed deposits indicated a lack of clarity from the Assessing Officer.

Issue 4: Dispute Over the Attachment Order and Instructions from Assessing Officers
Instructions from the Assessing Officers revealed no records linking the petitioner to the attachment order. The petitioner's AO and Sh. Ravi Chopra's AO confirmed the lack of petitioner's involvement in the order. The court observed a disconnect between the attachment order and the petitioner's fixed deposits, leading to a resolution in favor of the petitioner.

Issue 5: Role of the Bank
The Bank, represented by counsel, acknowledged that the attachment order was the basis for withholding encashment of the fixed deposits. Despite the order, the Bank had not remitted the amounts from the petitioner's fixed deposits, indicating a reluctance to treat them as assets of Sh. Ravi Chopra. The Bank's cautious stance and attempts to seek clarification demonstrated a lack of clarity in the attachment's application.

Issue 6: Examination of Contentions and Evidence
The court reviewed the contentions raised by both parties and found no dispute regarding the petitioner's tax filings, ownership of fixed deposits, and the lack of connection between the attachment order and the petitioner's assets. The Department and the Bank did not present any argument that would disentitle the petitioner from relief sought in the writ petition.

Issue 7: Resolution and Direction
Based on the examination of facts and contentions, the court held that the attachment order did not apply to the petitioner's fixed deposits and directed the Bank to allow the petitioner to encash her fixed deposits without delay. The court disposed of the writ petition in favor of the petitioner, resolving the matter conclusively.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the court's decision, ensuring a comprehensive understanding of the legal proceedings and outcome.

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