INCOME TAX ACT, 1961

Section 226

Recovery - Garnishee proceedings - Assessment made with respect to amount sought to be recovered was under challenge in an appeal -

Petitioner, co-operative bank was issued notice of attachment and recovery for realization of amounts due as garnishee. Petitioner pleaded grant of refund contending that assessment made with respect to amount sought to be recovered was under challenge in an appeal and that 'garnishee proceeding' was initiated and amount was recovered without issuing any notice to petitioner, as required under section 226(3). Held: Single Judge, without adverting to claim for refund, disposed of writ petition by directing Tribunal to pass order, within stipulated period. It was found that attachment and recovery was effected at a great haste, without taking into consideration relevant parameters and further, issue pertaining to liability of petitioner for payment of income-tax remained settled, subsequently. Thus, recovery from garnishee bank was done in a manner depriving interest and without following guidelines which ought to have been followed in matter of garnishee attachment and recovery, because amount was already collected against existing demand. ITO was directed to make refund of amount to petitioner subject to furnishing bank guarantee.

Followed:Mavilayi Service Co-operative Bank v. CIT 2019 (2) KLT 597 : 2019 TaxPub(DT) 4909 (Ker-HC)

REFERRED : Suntec Business Solutions (P.) Ltd. v. Union of India (2015) 232 Taxman 367 (Ker.) : 2014 TaxPub(DT) 4026 (Ker-HC); Purnima Das v. Union of India (2010) 329 ITR 278 (Cal.) : 2010 TaxPub(DT) 2017 (Cal-HC); Mother India Educational & Cultural Charitable Trust v. Dy. CIT 2014 KHC 353

FAVOUR : In favour of petitioner

A.Y. :

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