2024 (6) TMI 739 - HC - Income Tax

Challenge to notice u/s 226(3) for attachment of joint saving accounts - case of the petitioners that the petitioners are farmers and are doing agricultural activities and they have sold agricultural goods out of the produce from the joint holding land with their uncle as they collectively cultivated the land and sold the seasonal crops - petitioners submitted that no notice under Section 226(3)(iii) of the Act was issued by the respondents upon the petitioners before attaching the account. HELD THAT - When we inquired from the petitioner as to whether the petitioners are primary account holders or secondary, it was informed that the petitioners are secondary account holders and their uncle is primary account holder in the said joint saving account. In view of such facts, when the impugned notice is issued for recovery of the outstanding dues of Kiritbhai Bachubhai Gamit, who is defaulter in making payment of dues to the department, merely because the petitioners are joint account holders, no separate notice is required to be issued to the petitioners for having joint account as secondary holder in view of provisions of Section 226(3)(iii) of the Income Tax Act, 1961. Notice is required to be forwarded to the assessee from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee. Meaning thereby notice is required to be issued, as per aforesaid provisions, from whom amount is due and not to joint account holder. If the petitioners have any grievance against recovery of the above dues in the account of their uncle along with them, they can initiate necessary proceedings in accordance with law before appropriate forum. Present petition is not entertained.

Summary

Issues involved: Challenge to notice u/s 226(3) of the Income Tax Act for attachment of joint saving accounts.

Summary:
The petitioners challenged the notice issued under Section 226(3) of the Income Tax Act, 1961, for attachment of joint saving accounts with the Bank of Baroda. The petitioners, who are farmers, sold agricultural goods from joint holding land with their uncle and deposited the proceeds in a joint account. However, they were unable to withdraw the amount due to attachment over the account for their uncle's outstanding dues to the Income Tax Department.

The petitioners argued that no notice was issued to them before attaching the account, citing a Karnataka High Court decision emphasizing the mandatory nature of the notice under Section 226(3) of the Act. It was revealed that the petitioners were secondary account holders, while their uncle was the primary account holder.

The court held that since the impugned notice was for the recovery of the uncle's outstanding dues, no separate notice was required for the petitioners as joint account holders. Section 226(3)(iii) of the Act mandates forwarding a notice to all joint holders in the case of a joint account. The court clarified that the notice should be sent to the assessee from whom money is due, not to joint account holders. The petitioners were advised to take appropriate legal action if they had grievances against the recovery of dues from their uncle's account.

Therefore, the petition was not entertained, and the matter was disposed of accordingly.