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TMI Blog2007 (10) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... an amount of 65 lacs in the Monthly Income Plan (III) offered by the Unit Trust of India under Capital Gains Scheme, the predecessor in interest of the petitioner in the year 1998 with an object to seek exemption under Section 84-E of the Act. The "Highlights" projected for such an offer were as under : -A five year close ended income plan -The plan offers three options : (1) Monthly Income Option, (2) Annual Income Option (3) Cumulative Option -The face value of a unit is Rs.10/- and units will be sold at par. -The Trust shall pay an assured income @ 12.50% p.a. payable monthly under monthly income option and @ 13.25% p.a. payable annually under annual income option, for all the five years of the plan. -Under the Monthly Income Option, income distribution warrants for the period upto March 1999 will be sent along with the membership advice/unit certificate. Thereafter income warrants payable monthly will be sent in advance for every April-March period. -Repurchase allowed from 1st September, 2001 at NAV based repurchase price under all the three options. -Scheme shall be listed on the whole sale debt segment of the NSE within six months from the closure of subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand, would support the impugned judgment. 10. Sub-section (3) of Section 226 of the Act reads as under : "(3)(i) The Assessing Officer or Tax Recovery Officer may, at any time or from time to time, by notice in writing require any person 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 to pay to the Assessing Officer or Tax Recovery Officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount. (ii) to (v) … . (vi) where a person to whom a notice under this sub-section is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then nothing contained in this sub-section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Whether the action on the part of the appellant to act thereupon was valid, is the question. The scheme, the relevant provision whereof had been noticed by us hereinbefore, goes to show that the lock-in period was for a period of five years. Purchase of the units, however, was allowed from 1 st September, 2001 at NAV based repurchase price. The scheme constituted a contract between the parties. The option of the purchase was to be exercised by the respondent. Appellant, on the basis of the said purported notice dated 8.2.2002, could not have placed itself in the shoes of the respondent. It is not in dispute that the respondent was a defaulter to the extent of Rs.157.77 lacs. He had sold some of his properties in 1998. A portion of the sale proceeds, namely, 65 lacs had been invested with the appellant. He had sought for exemption under Section 54AE of the Act. The amount of 65 lacs was secured under the said units with the appellants. It is not in dispute that an application for settlement was filed before the Settlement Commissioner by the respondent. He had deposited a sum of Rs.25 lacs when moving an application for deposit of the amount. Upto October 2000, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 1.9.2001 even without the consent of the respondent. It was for the respondent to give his option. The Income Tax Officer could not have exercised the said option on behalf of the assessee. Curiously, the Income Tax Department itself, in its counter affidavit filed before the High Court, categorically stated : "In reply to the averments made in para 10 of the affidavit, it is submitted that the letter addressed to the petitioner on 7.12.2001 which was served on the same date clearly speaks about the actual demand outstanding for payment. From out of that, the petitioner paid an amount of Rs.25,00,000/- on 31.1.2002. Hence the net figure reported in the attachment proceedings is quite correct i.e. (Rs.73.08 lakhs Rs.25.00 Lakhs). It is pertinent to mention here that though the petitioner once again approached Settlement Commission on the levy of interest as wholly unjustified and untenable on 4.2.2002, nothing is heard from the Settlement Commission before initiating the proceedings for attachment, i.e., by way of any letter from the Settlement Commission for stay of demand till the outcome of the Settlement Commission's Report. Secondly, though the units have been attac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Unit Trust of India was fully authorised to dispose of the units on its own without any notice to the holder of the units. 19. Reliance has been placed on Life Insurance Corporation of India Anr. v. Gangadhar Vishwanath Ranade (dead) by Lrs . [(1989) 4 SCC 297] is misplaced. In a situation of this nature, having regard to sub-section (3) of Section 226 of the Act, it cannot be said that the appellant was holding the money of the respondent. The amount in question could have been held by the appellant only whether the respondent had exercised his option therefore. The fact situation obtaining therein was absolutely different. In that case, the paid up policies taken by the respondent. He assigned the same in favour of his wife. Assignment made was registered although notice under sub-section (3) of Section 226 was issued before the policy was matured. No statement on oath was made under clause (vi) thereof raising an objection on the basis of the registered assignment. It was in that situation opined : "It is, therefore, obvious that the question of revocation of the notice under Clause (vii) of Sub-section (3) of Section 226 of the Income Tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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