2004 (11) TMI 44

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..... t and proper in the circumstances of the case. Exhibit P 6 is a notice issued under section 226(3) of the Income-tax Act, 1961, demanding an amount of Rs. 38,50,000 from out of the amount, if any, payable by the Federal Bank to the petitioner. The Federal Bank is the tenant in occupation of the building owned by the petitioner. Exhibits P 7 and P 8 are similar notices issued to other respondents/tenants. The contention of the petitioner is that it is a sick industry registered under the provisions of the Sick Industrial Companies (Special Provisions) Act and an appeal from the order passed by the Board for Industrial and Financial Reconstruction under the SICA is pending before the appellate authority. In view of the pendency of the appeal .....

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..... ry of any amount due under the Income-tax Act or Wealth-tax Act cannot be a distress proceeding coming within the ambit of section 22 of the said Act. In this connection, it has to be noticed that not only a distress proceeding but also no execution or the like against any of the properties of the industrial company shall lie except with the consent of the Board or, as the case may be, by the Appellate Authority. Admittedly, the present proceedings as per exhibits P 6 to P 8 are initiated for realisation of the amount in execution of the order of assessment, passed by the respondent. In this connection, the apex court in Gram Panchayat v. Shree Vallabh Glass Works Ltd. [1991] 71 Comp Cas 169 considered the question as to whether Gram Panch .....

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..... d if any party ignoring the said provisions in spite of notice of pendency of such proceedings, proceeds to recover the amount in execution or distress, then as per section 33 of the Act, he is also liable for penal consequences. Thus, the provisions contained in section 22 is mandatory as the violation of the provision will visit with penal consequences. In these circumstances, the proper course open to the first respondent is to approach the Appellate Authority under the Act and obtain consent before proceeding to realize any amount in execution of the order passed under the Income-tax Act or the Wealth-tax Act as the case may be. The writ petition is, therefore, allowed. There will be a direction to the first respondent not to proceed a .....

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