TMI Blog2003 (4) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... ng money for or on account of the petitioner. The petitioner is an assessee under the Act. The petitioner received a notice dated February 15, 2000, under section 158BC of the Act from the office of the Joint Commissioner of Income-tax, Special Range-8, directing the petitioner to submit a return for the block period, viz., 1989--December 2, 1999. Pursuant to such notice, the petitioner submitted a return on March 30, 2000, under protest. Ultimately, the petitioner was assessed and on December 31, 2000, a demand of Rs. 2,29,50,263 was raised. Subsequently, the petitioner came to know from his bankers that respondent No. 1 had issued purported notices under section 226(3) of the Act asking the various banks to pay money deposited in the petitioner's account to the said respondent pursuant to the demand against the petitioner. The petitioner challenged those notices before this court under article 226 of the Constitution of India and Dilip Kumar Seth J., by order dated May 10, 2002, quashed those garnishee notices and directed the respondents to repay the amount debited from the petitioner's account. In the meantime, an order dated December 9, 2000, passed by the Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing on behalf of the petitioner, has raised two pure questions of law in this application. The first question advanced by Mr. Bhattacherjee is that once an appeal has been preferred before the income-tax appellate authority and a stay application has also been filed in such appeal, till the disposal of such stay application the income-tax authority cannot proceed for recovery of the amount which is a subject matter of the appeal. In other words, Mr. Bhattacherjee contends that filing of a stay application before the appellate forum constitutes automatic stay of recovery proceeding so long as such stay application is not disposed of by the appellate authority. The other point put forward by Mr. Bhattacherjee is that without serving a notice under section 226(3)(iii) of the Income-tax Act upon the assessee, the income-tax authority cannot recover any amount by taking aid of section 226(3) of the-Income-tax Act. Mr. Bhattacherjee contends that in this case till date, the petitioner has not been served with any notice as required under section 226(3)(iii) of the Act so far as the collection of the amount from the State Bank of India is concerned. Under such circumstances, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after going through the scheme of the Income-tax Act, 1961, it is apparent that after the tax has been assessed and a notice of demand is issued under section 156, the tax so assessed becomes payable and after the expiry of the period mentioned in section 220 if the tax remains unpaid, the assessee becomes a defaulter enabling the Tax Recovery Officer to proceed by any of the modes prescribed in section 222 of the Act. Section 220(6) of the Act, however, authorises the Assessing Officer to treat the assessee as not being in default in his discretion subject to such condition as he may impose during the pendency of an appeal under section 246 of the Act. The aforesaid provision manifests the intention of the Legislature that the fact of mere filing of an appeal does not constitute stay of the demand. As pointed out by the Supreme Court in the case of ITO v. M.K. Mohammed Kunhi [1969] 71 ITR 815, although the Act is silent, section 254 of the Act impliedly grants the authority to the Appellate Tribunal to make necessary order staying recovery proceeding. But the apex court hastened to add that such power should not be exercised in a routine way or as a matter of course in view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Union of India [1992] 59 ELT 505 (Bom), although an appeal was filed before the Tribunal and a date was fixed for hearing the stay application, the Department encashed the bank guarantee given by the assessee and the Tribunal directed the Department to hold the money till the disposal of the appeal. Under such circumstances, a Division Bench of the Bombay High Court set aside the order of the Tribunal with a direction to refund the money; however, the assessee was directed to give fresh bank guarantee which should continue. The aforesaid decision rather upholds the contention that there should not be unconditional stay even during the pendency of an application for stay. The case of K.T. Building Materials Pvt. Ltd. v. Commissioner (A), Central Excise and Customs [1997] 94 ELT 59 (Raj) was one where during the pendency of stay application before the appellate forum, coercive process was employed for recovery of the amount. The Division Bench disposed of the writ application by directing the appellate authority to dispose of the stay application within two months with further observation that if in the meantime the amount has already been recovered, then the appeal itself sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son 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) A notice under this sub-section may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and for the purposes of this sub-section, the shares of the joint-holders in such account shall be presumed, until the contrary is proved, to be equal. (iii) A copy of the notice shall be forwarded to the assessee at his last address known to the Assessing Officer or Tax Recovery Officer, and in the case of a joint account to all the joint-holders at their last addresses known to the Assessing Officer or Tax Recovery Officer. (iv) Save as otherwise provided in this sub-section, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overy Officer, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him, in the manner provided in sections 222 to 225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under section 222." A bare reading of the aforesaid provisions leaves no doubt that there is no scope for giving further hearing to an assessee once the Assessing Officer proceeds under section 226(3). All that the aforesaid sub-section directs is to "forward" a copy of the notice given to the person from whom money is payable to the assessee or who holds money on account of the assessee, to the assessee for his information. The assessee at this stage has no role to play except to be informed that the Assessing Officer has proceeded to recover the amount. Such notice is generally forwarded to the assessee after the issue of notice upon the debtors or bankers of the assessee lest he can escape the recovery, Therefore, I find no substance in the contention of Mr. Bhattacharya th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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